Foreclosing on a Plane, Then Flying It Away
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By SEAN SILCOFF
THE NEW YORK TIMES
March 14, 2009
Ken Hill’s last business trip took him through eight states in January and netted him 12 planes. His current one is a 30- to 45-day trip for 27 more planes, his biggest ever.
Mr. Hill is an airplane repo man, one of the best and busiest in the business. With the economy sinking and the general aviation industry suffering, Mr. Hill is working flat out as he makes his way from one airport to another, carrying just a few basic tools — a propeller lock, a portable radio, hand-held GPS device and a fanny pack stuffed with hundreds of keys. “I’m busy, always on the move, up early in the morning, late to bed at night,” Mr. Hill said in a telephone interview from his hotel in Knoxville, Tenn., between repossessions in January. “My wife never asks me where I’m going. She just says, ‘Call me when you’re there, and tell me where you are.’ ”
A career plane dealer and licensed pilot, Mr. Hill, 66, estimates that he has repossessed hundreds of aircraft since his first propeller-powered Piper Cherokee 180 in 1969. Friends call him the Grim Reaper, an image he seems to alternately relish and detest.
Whether times are good or bad, the costs of owning a plane are considerable.
Besides the purchase price, there are maintenance, hangar, fuel, catering and insurance costs. Many owners help pay the bills by chartering their airplanes, but demand is shrinking in this economy.
“You cannot own an airplane without it costing money, whether you’re using it or not,” said Terence Haglund, an aviation lawyer based in Williamsburg, Va., who uses Mr. Hill’s services.
Mr. Hill, who lives in Santa Barbara, Calif., said he typically repossessed about 30 planes a year, ranging from propeller-powered Piper trainers to twin-engine Gulfstream business jets. Last year, he brought in 50 aircraft. This year, “it could be 100,” he said.
Among his clients, primarily banks that specialize in aircraft loans, Mr. Hill has a reputation for always finding his plane.
“We use Ken because he’s full of integrity and he’s a cooperative kind of guy,” said Joseph J. Dini, senior vice president of the aircraft loans group with Sovereign Bank, one of Mr. Hill’s top clients. “He’s performing a service for financial institutions that requires a certain amount of delicateness.”
Although Mr. Hill has a small staff, he says he does all the research, tracking, tracing, repossessing and flying himself, and hires others to perform on-site tasks like repairs.
Given the burdensome costs of storing and maintaining seized airplanes, banks are loath to call on the repo man. By the time Mr. Hill gets involved, a borrower is typically 60 days behind on payments.
Jeff Buhr, senior vice president, credit and loan administration manager with the specialty finance group of 1st Source Bank, which is based in South Bend, Ind., and occasionally uses Mr. Hill’s services, said that most of the time, borrowers realized that they were in trouble and that their best option was to surrender the aircraft.
But Mr. Dini said many borrowers with debt troubles “will default on other loans first.” He added, “They think, ‘Things will turn around, things will get better, why give up the airplane?’ ”
For Mr. Hill, the job can be as simple as showing up, talking to the owner and flying the plane away. One borrower even cleaned the windshield and offered Mr. Hill a home-cooked meal before he took the repossessed plane.
But in many other cases, owners do not return calls, do not acknowledge letters and, sometimes, disconnect their phone lines, Mr. Hill said. “I have to find out where the plane is,” he said. “Sometimes that’s not easy.”
He starts by tracking the movements of the planes he seeks to repossess. The public site FlightAware.com tracks flights and locations of planes that have filed flight plans with the Federal Aviation Administration. Mr. Hill also uses other, costly databases that he would not identify but, he said, “give you more capability” to track planes that have not filed their whereabouts with the F.A.A.
He will also call airport service centers. “If somebody has plane problems, they have fuel problems, and I can track planes by where they’re buying fuel,” Mr. Hill said. “You start piecing it together. Sometimes it takes a couple of months.”
After zeroing in on his target, Mr. Hill said, he arrives at the airport and tries to reach the owner. About one in four defaulters agree to make payments current, he said. In such instances, Mr. Hill leaves empty-handed and charges his clients only out-of-pocket expenses for his efforts.
Mr. Hill said he must have free and clear access before he can start the repossession. That can take days and may even require a court order if the owner or the service center does not cooperate.
If he is granted access or if the plane is parked outdoors, Mr. Hill first secures his cable lock around the propeller or the landing gear on a jet. (He usually carries one lock at a time, buying replacements along the way.) Then he tapes a notice of repossession from the lender to the door of the plane. In his fanny pack, he can usually find a master key that opens the plane door. If not, he calls a local locksmith.
Once inside, he will take photographs and do an inventory of the plane’s equipment for the bank. If any communications devices are missing, that is where his portable radio and GPS device come in handy — so that he can safely fly the plane. No hot-wiring is involved, he said, and usually the only key required is the one to open the door.
Mr. Hill’s goal is to move the plane out of state, often to a service center in Greenwood, Miss., that he has used for years, to avert any problems with local authorities and associated costs. “You try to avoid getting it into the legal system,” he said.
But he will not fly off, he said, until the plane has a clean bill of health from a mechanic, a process that is more complicated if the logbooks cannot be found. Mr. Hill emphasized that he did not jump into planes after dark and fly away. “I’ll do a thorough preflight inspection and make sure there are blue skies all the way,” he said. “I won’t expose the bank to more problems than it has.”
Once the plane is airworthy and secure, Mr. Hill will have it appraised, check with the F.A.A. for outstanding liens and sell it for the bank. On any given day in recent weeks, he has had at least a dozen planes advertised on his Web site.
Mr. Hill would not disclose any financial details, but he said repossession is not a lucrative career. (He did, however, say it is more interesting than his a somewhat similar sideline career as a registered bounty hunter in California.) Nor does his day always run smoothly.
“I once had a lady chase me through a hangar with a yard rake,” he said. “I just tell them, ‘I have a job to do.’ If they did what they were supposed to do, I wouldn’t be here.”
Copyright 2009 The New York Times Company |
