A longtime pilot and savvy airplane broker at Lunken Airport named Jerry Swart used to say, “Sooner or later, every crook ends up at the airport.”
When you think about it, airports do seem to be a magnet for an array of colorfully shady characters — maybe more so in the days before the “benefits” of so much government regulation and industry oversight. Aviation enterprises that charge highway robbery rates for fuel, parts, work and services are still common but probably not larcenous — well, depending on how you look at it.
But there has always lurked a subculture of shade-tree operators in T hangars and offices — guys who stay afloat (aloft?) with schemes that are less than ethical, if not illegal. The word finally gets around, and they pull up stakes and disappear in the night only to spring up like noxious weeds at some other ’drome.
I don’t know much about drug runners or big-time criminals, but I’ve seen some unique and interesting shenanigans, such as a pilot I knew who landed back home after a weeklong trip only to find he was unable to back his new red Corvette out of the T hangar because the engine had been removed.
An almost-clever avionics scheme involved removing identical boxes (like Garmin 530s) from two airplanes. These guys would switch the box from airplane No. 1 into the panel of airplane No. 2 and fence or sell the second one. The guy from airplane No. 1 with a gaping hole in his panel would report the theft, but his box with a “hot” serial number would never be found because it was safely installed in the panel of airplane No. 2. The whole thing fell apart when an airplane No. 2 owner — having no idea he was flying with a different radio — noted that flight plans and other data he’d saved were missing. An avionics shop pulled the radio out and discovered the serial-number discrepancy.
The distinction between criminal and moderately illegal can be a fine one. Think about moonlighting mechanics who sign off on annual inspections after an owner and his buddy with little or no oversight do the work. The owner drops off the logbooks with a few hundred bucks tucked between the pages and retrieves them, properly endorsed, a few days later.
Scams work by offering deals that are too good to pass up and too good to be true — and, of course, they are. But people keep taking the bait and coming away with financial, if not physical, scars … albeit more cynical and a lot smarter. Hal Shevers once advised a guy who’d been “taken” to write it off as what he’d pay in tuition at a good business school.
How many fly-by-night flight schools convince star-struck neophytes they can learn much more economically in the ragged-out Tomahawk parked behind a hangar than by going to a fancy school up the road? At one airport, I remember no fewer than six people who plunked down thousands of bucks up front for guaranteed courses. The end was always the same: The student would arrive to fly one day only to find the airplane and operator long gone.
There are flying clubs … and flying clubs. One entrepreneurial CFI operated a club with a Piper PA-28-161 and a J-3 Cub. He sold memberships in the Warrior to students and renters who were delighted with the cheap rate, which was possible, of course, because maintenance was minimal and the owner wasn’t paying airport fees or carrying insurance. The Cub club was structured as a partnership; he sold, I believe, eight shares at $5,000 each for an airplane worth maybe $25,000. When the Cub was damaged on landing during his checkout, the new buyer learned he was liable for the damage. He hadn’t read the contract or asked about (nonexistent) insurance coverage.
After a prop strike with the PA-28 somewhere in Pennsylvania, the owner pounded out the prop and flew it home for an annual inspection. But he pulled the airplane out of the shop when the mechanic told him what needed to be done and flew it to a remote airport in Kentucky where another mechanic signed it off — bent prop, mount and all. (How do people like that sleep at night?) The FAA finally got involved after a call from the first mechanic.
Leasebacks, like flying clubs, aren’t de facto bad deals, but people need to understand what’s involved. “You buy an airplane, we collect the revenue, and at the end of the month, we send you a check if revenue exceeds expenses. For taking care of everything (maintenance, storage, insurance and so on), we charge a modest management fee, which is deducted from the revenue, if there is any. When expenses exceed revenue, we send you a bill.”
The pluses? Coverage of fixed costs, accelerated depreciation credits, use of the airplane for the cost of fuel, a gain in equity, and you may even see a positive cash flow.
The downsides? Higher maintenance expenses, people who don’t take care of the airplane, tied up capital, having to schedule flights like any renter, and playing by somebody else’s maintenance rules. You’re responsible for finance charges and usually some of the maintenance, and when business slows down, it’s you, not the flying club or operator, who pays to keep the airplane airworthy.
The bottom line is even if the operator is squeaky-clean honest, you’re not going to make money or even see a good return on your investment. The only benefit of a leaseback is a reduction in the cost of ownership on something you really want to buy anyway.
Ebby Lunken told me about leasing his Cessna UC-78 Bobcat to a nefarious character at Lunken Airport known as “TV Tom.” The airplane had no recording tachometers, and Ebby believed Tom when he said the charter business was flat; the airplane just wasn’t flying. Believed him, that is, until a day at lunch downtown when a businessman friend mentioned he’d seen Ebby’s airplane sitting at La Guardia in New York earlier that week.
My final crook story involves a colorful and innovative engine overhauler whose company was located at a drag strip across town. It was on the skids, so all deliveries were COD, which was a problem because, more often than not, they didn’t have the cash to pay for a crate of desperately needed cylinders or parts.
The delivery guy would agree to drop off the crate in the morning and come back that afternoon for a check. If there was no check, he’d take the crate back downtown to the warehouse, and this process could go on for up to three days, after which the box went back to the shipper.
Unknown to the delivery guy (I guess), the overhaul guys would open the crate on the first day, take out the needed parts, and fill the box with rocks or junk parts. They were always able to scare up the money for the shipment from a new sale before the three days were up — until the time things fell apart. Either they lost count of the days or simply couldn’t get the cash together.
Continental (or maybe Lycoming) was less than happy when a box of junk parts arrived back at the factory.
The guy who owned the company was already in trouble with the FAA, and there were rather large “irregularities” with foreign shipments, so U.S. Customs, the State Department, the FBI and the IRS were also on his trail. He eventually went to jail, but you probably won’t be surprised that some larcenous part of my black soul was fascinated with his innovative, outrageous and almost successful escapades.
