Over the past year, the PAAO has been visible more and more while a previous aircraft appraisal organization (The National Aircraft Appraisers Association – NAAA) has been observed far less. So, what is the difference between these two organizations? Is the PAAO just a “warmed over” version of the NAAA? Is the PAAO a “fly-by-night” type of operation (pardon the pun) and who makes up the PAAO? Let’s try to unpack these questions and help individuals better understand the PAAO and why it is important to the aircraft appraisal industry that they exist.
What Happened to the NAAA?
The short answer to this question is that the NAAA ceased operations in December 2018. The exact reasons are unclear. While there were several rumors swirling around during the latter part of 2018, none of these appeared to have any credibility. At this point, it is important to simply understand that the NAAA no longer exists – even though several individuals still refer to themselves as NAAA members (more on this point later).
Where Did the PAAO Come From?
Attempts were made by several NAAA members with years of aircraft appraisal experience to acquire the NAAA in an effort to keep the previous 200+ NAAA members under a well-established professional “umbrella” in order to sustain their respective aircraft appraisal businesses with a minimum level of interruption to them or their clients. However, those efforts were unsuccessful. At the very end of 2018 (literally with only a few days left in the year), these aircraft appraisers decided that the best and most effective course of action was to establish the Professional Aircraft Appraisal Organization. LLC (PAAO). The thinking was to take attributes from the previous organization that served clients well (such as the training, field visits and so forth) and establish other attributes that focused more on promoting the public trust and providing credible, reliable reports to our clients. In fact, “promoting the public trust” is part of the PAAO Value Statement.
With this background in mind, the focus of the PAAO Board was to move forward and focus on the future of the PAAO versus looking back at the NAAA – and that focus will continue here.
Is There a Difference Between the Two Organizations?
The short answer is “yes” but the differences extend well beyond the PAAO and the previous organization as there are also differences with every other organization in the aircraft appraisal industry.
For starters, the PAAO is focused on ethical behavior and is currently the ONLY appraisal organization that performs a criminal background check on all Associates BEFORE they enter the PAAO. Those individuals who have a felony conviction are denied access into the PAAO – regardless of their qualifications or skillset. After all, would ANYONE (client or owner) want a convicted felon looking through the subject aircraft? The most likely answer is “no”.
PAAO Appraisers are also the only ones in this industry who consistently perform field visits to research the aircraft and its records. After all, this is where the key data points are located – in the logbooks and on the aircraft itself.
The PAAO Board of Directors reviews the qualifications of all applicants but the PAAO essentially requires applicants to have a background in aviation. This specific difference is also important because other organizations believe that if an individual is trained to appraise “heavy machinery” or if they possess a pilot’s license, then they can also appraise aircraft. The reality is that those attributes alone do not promote credible, reliable reporting as most individuals are trained to never leave their office to look at one rivet on the airframe or turn a single page in a logbook thereby missing important details.
How Do PAAO Appraisers Determine the Value of Aircraft and How is This Different Than Other Methods?
Without getting too far into the weeds on appraisal techniques and terminology, most appraisal projects develop an opinion of value by researching the selling price of similar property or equipment. The thinking is that knowing the selling price of X allows the appraiser to estimate the value of Y – although a few adjustments may be needed due to the differences in value points between X and Y. This method may work well with real estate or items that have reasonably well documented selling prices and/or a limited number of variables or value points.
Real estate is a good example because the appraiser can see what similar properties sold for at the local courthouse and, given a few parameters, can estimate the value of a given house or a piece of property. This explanation is greatly simplified but the important point to take away is that aircraft are very different when compared to other types of property. The number of value points is greater, and the permutations along with the combinations of these value points makes the typical process challenging. These differences are important to understand if the objective is to provide a credible, reliable opinion of value.
For example, there is no public database of aircraft selling prices. The value guides simply take information from their subscribers and there is no indication that they validate the information they receive. Others who have actual selling price information treat it as confidential and are generally unwilling to share any details. But, even if these individuals did provide pricing information, there is another part of the equation that is missing. That missing information includes details of the deal itself and details about the aircraft. Neither of these factors can be confirmed with any degree of confidence so one piece of information without the other is somewhat meaningless as the selling price may involve other considerations, it may be misstated, the buyer may be under some pressure to purchase, etc. and all of these impact the selling price of an aircraft.
The PAAO recognizes the limitations of the described appraisal methodology when aircraft are involved and uses a more analytical tactic in developing an opinion of value. While specific sources and methods are confidential, the PAAO Appraisers look at the current market values of components (value points) along with aircraft information in the marketplace from a variety of sources to arrive at a Computed Base Airframe Value which is the starting point for our modeling (this is NOT the same as the Average Retail number observed in most publications). The strategy PAAO appraisers use develops a mathematical model based on field research and market data to establish our opinion of value. In other words, PAAO Appraisers examine far more datapoints when modeling and developing an opinion of value when compared to current methods. The thinking is that developing a model based as close as possible to the subject aircraft and current market information will result in a more credible and reliable opinion of value. As a result, items such as damage history, high airframe time, missing logbooks, etc. become more straightforward to address in our reporting and calculations. Other methods that rely on “extraordinary assumptions” instead of field research develop models that have little in common with the aircraft under consideration and are therefore incorrect in their conclusions. Those reports by their very nature are less credible and therefore unreliable.
I See Individuals Who Continue to Advertise Their Credentials as “NAAA” Certified. Is that Legitimate?
Because the NAAA ceased operations at the end of 2018, anyone who claims to be an “NAAA Appraiser” is betting that individuals who hire them as a result of their “NAAA Credentials” hasn’t read this text or is unaware that the NAAA no longer exists. In my opinion, it is an overt attempt to mislead the public regarding their credentials and their legitimacy.
Today, those in need of a professional aircraft appraisal that uses trained professionals who are unbiased and impartial should be looking on the PAAO website at www.appraiseaplane.com.