Digitizing 100 Years of Aircraft Logbooks

Tony Kioussis (00:33):
Welcome to another Asset Insight Podcast, covering the aircraft ownership life cycle. I am Tony Kioussis, President of Asset Insight and your host.

Tony Kioussis (00:42):
Vision Logbooks is an Aircraft Digital Logbook system provider, whose business aviation clients utilize Vision’s electronic record keeping system to secure and manage their aircraft maintenance logbooks. The company’s digital conversion process, transforms paper based aviation maintenance logbooks into Aircraft Digital Logbooks, framed by an electronic record keeping system, in compliance with FAA regulations.

Tony Kioussis (01:10):
Vision Logbooks currently manages over 500 million in logbook value, and provides the first FAA approved electronic logbook, that enables users to enter data directly into an accessible, re searchable, and legally recognizable electronic system. Joining me to discuss the company’s logbook digitization system, is Mark Leeper, CEO of Vision Logbooks. And I’d like to start off by better understanding the size or scope, the issue Vision Logbooks is trying to address. Could you elaborate on that?

Mark Leeper (01:43):
As you know, maintenance logbook management really hasn’t changed since the Wright brothers era. We’ve got approximately 25,000 business aviation aircraft flying today, 13,000 of them are business jets, approximately 220,000 plus general aviation aircraft and business aircraft. And the interesting thing is that, majority of all of these airplanes in the business aircraft arena, are still recording their maintenance events in paper logbooks, with no backup records in place, with no ability to research these records.

Mark Leeper (02:14):
These logbooks sometimes, worth millions of dollars, are often lost, degraded, subject to fire and water damage, and held hostage. An uninsured item, they stand a second position to the airplane itself in terms of value, but they live in gun safes and safety deposit boxes, office storage bins. All of the critical information inaccessible by everybody except for the person that knows exactly where those records are to give them time and date.

Tony Kioussis (02:40):
Can you identify the types of costs associated with paper records and is there a dollar figure they can be applied to these costs?

Mark Leeper (02:49):
Yeah, we’ve done extensive research and a study on this issue. The cost per airplane, if you summed it all up, it’s approximately $7,000. Per aircraft is what the expenses are because we continue to try to manage our aviation fleet with our Keck system. Paper logbooks cost the business aviation community about $175 million. There’s several different areas that these expenses are born by. We see lost logbooks and records every year. We just had a 727 recently during a run-up, jump the chocks, run into the hanger, start the fire suppression system, all the logbooks in the hanger were completely laid out, and so it drowned all of the records until the airplane was completely totaled. In addition to that, missing information from logbooks, critical to aircraft value and air worthiness, doesn’t take more than a couple of pieces of paper that are AWOL, that have to be replaced or found, you end up having to bolt on new parts to airplanes.

Mark Leeper (03:51):
So, the impact of lost records is just extraordinary. We tagged out at about $2 million for the business aviation fleet. And then the biggest thing is the research time and maintenance personnel that people expend to find information and audit logbooks and records for aircraft and air worthiness for evaluation purposes. We’ve got 13,000 plus business jets that reside on a FAR part 135 operating certificates. Each aircraft require approximately 45 hours of records research each year. It’s not at all unusual for me to be addressing this issue and a flight operation to find out that about 50% of the time that the maintenance organization spends is just in looking for logbook records, spot, trying to organize logbook records and hooking up this critical information and seeing on the same page with your maintenance tracking system companies, with MROs, with the banks, the insurance companies, et cetera, again, being still based on paper.

Mark Leeper (04:48):
All of this information is hidden from the people that have to have it when they need it, and so those expenses are great. We have to ship records, which interestingly enough, these records are not insured. Federal Express has recently said, “we’re not going to insure any type of aircraft maintenance records insurance wise.” So if you load up a million dollars of the records in a box, and put them in Federal Express, wave goodbye, and hope they get there, because if they don’t get there, you’ve got a huge problem with the aircraft’s value. Typically, up to 40%, if you lose a set of logbooks. So the massive inefficiencies of paper continue to rear its head.

Mark Leeper (05:25):
In the COVID-19 issue that we’ve run into here, we had several companies that had critical records that were sequestered. They’re isolated. They were locked down. People couldn’t get to them. If you can’t get to your maintenance records, if you can’t prove that that airplane is airworthy, it’s grounded, it becomes a paperweight. When you have quarantine records, it really emphasizes the need for the whole industry to continue to move to digitization. Digital data is what we’ve got to do.

Tony Kioussis (05:51):
Okay. We’ve dealt with the cost of paper records. What do you see as the benefits to electronic record keeping?

Mark Leeper (05:58):
We’ve covered the problems. The benefits are many and extraordinary, and it continues to amaze many of the people in aviation, that the industry has not moved faster into digital data. There’s really three major areas of benefits, and the first is what we always strive for, number one in aviation, that’s safety. When your information is hidden, when it’s not shareable, when you are not on the same page with maintenance tracking your MRO’s, there’s no blockchain of information to ensure that the one true source of those maintenance records is shareable and transparent to the people that find it critical to keep that aircraft airworthy. We’ve had a major company, one of our customers, because the information that the maintenance tracking system company was inaccurate, the suggested maintenance intervals was not correct. They just overflew or started to overfly major C checks on several airplanes. This is just one example. And the problem is, is we have so many people that need this critical information or access to it, we just don’t. So safety and airworthiness would be the number one that we always strive for.

Mark Leeper (07:06):
And then the second major area would be in, value of the aircraft. If you have orderly records, then you have an airplane that has a value. So there’re several areas that support value. It expedites the transactions in the sales, the disposition and acquisition of aircraft. It expedites the sales transactions. You don’t have to get on an airplane and fly across the pond to spend a week in a hotel leafing through logbooks, to do pre buys. It’s simple enough to review this information, because this electronic logbook that is provided is a mirror image, and it is a FAA compatible compliant logbook. So it’s not just a backup, it’s actually the logbook.

Mark Leeper (07:49):
It is the one true source of information and it can be managed. It can be shared and is transparent to everybody. The return on investment, you have the value aspect of an airplane. Third would be the return on investment and the ability to reduce the cost of managing the airplane.

Mark Leeper (08:05):
A return on investment, operational efficiency. You’re in the air, Part 135, airplane breaks in the air, you have to divert to a maintenance facility, you land, well, where’s the logbook? Well, the logbook is back in the hanger lockdown. Does the maintenance tracking system company have the update information? Well, maintenance tracking system is not a logbook. So you’ve got to access the data that’s back on the other side of the United States, to go in and fix an airplane correctly. With digital data, you just log in and find that information. So the operational efficiency that this can deliver to management companies, operators, owners of airplanes is extraordinary.

Mark Leeper (08:41):
And then the reduced maintenance costs, things personnel spend so much time trying to find records in paper records. Well, they can access digital data on an iPhone, iPad, computer, wherever they want to in just seconds to ensure that information is up to date. The airplane can be fixed properly. The other thing that this really plays well with is the ability to secure collateral with financing institutions. If you have an airplane that, the airframe is insured, but if you have a $10 million airplane and the logbooks are worth several million dollars, that’s an uninsured asset. So we have several financial institutions that utilize our service to ensure the part of the aircraft’s value that is currently not insured just with whole insurance. So those would be the key benefits of our product: safety, air-worthiness, value of the airplane, and then return on investment, reduce costs.

Tony Kioussis (09:35):
What are the barriers to transitioning to a paperless environment? I have to assume that technology is not one of the barriers, correct?

Mark Leeper (09:44):
From an IT development technology standpoint, we’ve had that in place for many years. In 2016, the FAA were able to lay out the parameters and the accessibility of the systems that can become a backup for your maintenance logbooks, and also provide a management capability so that the actual data can originate electronically. If, you want to keep paper, you can still print that back to your paper logbooks. So at this point, we’re not recommending anybody to throw their logbooks out. But in 2016, we got the okay, through information 120-78A. That was the catalyst that enabled us to take the current technology and build systems that are used today with our customers. The next thing that we have to look at in terms of barrier is bringing legacy records into the system, and that requires physically taking scans of current paper logbooks.

Mark Leeper (10:41):
Well, paper logbooks are everywhere throughout the world, and we’ve had to develop a system, a process, and we’re setting up network of scanning centers to bring the legacy records, they’re everywhere, into the system. And in terms of taking these pictures or scanning records, you just can’t let anybody do it, it’s got to be done in an FAA compliant record scanning system, which we have. FAR 43.12 lays out the procedures for aviation professionals to take the paper records, transform them into digital data, and then they’re immediately forwarded to the compliant. Lockbox is what it is. It’s the safety deposit box for your aviation records, and the chain of command in this process ensures that the data that comes from paper, is accurate, and then it’s deposited into the digital data system.

Mark Leeper (11:36):
The next thing too is that aviation is extremely conservative. It primarily is managed by people with lots of experience. The nature of aviation based on safety and conservative-ism I would say, things don’t change quickly. Interestingly enough, when the jet age was coming into play for transportation, it took Boeing several years to convince the airlines to bolt jet engines on aircraft. They’ve got all types of reservations from people that owned the major airlines back there. One of which says that nobody wants to look out on the wing and not have propellers going around circles. Nobody’s going to fly. I believe it was Mr. Trippe, Pan Am, that made the first huge commitment to Boeing to bring in the 707 to the airline fleet, which gave him a huge jump on the whole industry for many years. But things change very slowly in aviation, and so there’s always a resistance to doing things differently that have been done since the first airplane flew.

Mark Leeper (12:33):
We can find a lot of examples of great technology that has been held off, and once the snowball gets over the top of the Hill, of course, it will and people make changes rapidly. We’re approaching that now.

Tony Kioussis (12:44):
From an appraiser’s perspective, the loss of an aircraft records will result in a significant loss of value for the asset. What are some of the common industry misconceptions related to paper records?

Mark Leeper (12:57):
The number one thing we run into is, we don’t need a backup. The maintenance tracking system companies that we deal with have these records. Well, they do, but it’s very plain and it’s spelled out precisely by the FAA, that you are required to keep a maintenance logbook. The FAA is simply stating, aircraft operators are responsible to record and manage airframe, engine and avionics insulation inspections and maintenance records in a complete and orderly fashion in a logbook. So maintenance tracking is not a logbook, and it’s not a backup to a logbook. It is a record of transactions. The analogy would be your accounting system. You have one accounting system, one system that is the one true source of your financial records. Everything else talks to it and gives it information, but your checking account, ledger, your credit card statement, all of those things, that’s not the accounting system. The one true source of information for an aircraft is its logbook, and so maintenance tracking is not a backup to that.

Mark Leeper (13:58):
And then the next thing that we run into too, is that people are still misled in terms of, well, if I lose my logbook, it’s insured. Well, you may lose the logbook, which is worth several million dollars and the insurance company is going to buy you a new $20 binder to put paper into, they will not replace lost paper records. So that’s two of the misconceptions that we run into all the time.

Tony Kioussis (14:20):
How much work is involved for the operator to convert their aircraft’s paper records into electronic format, and is that an area where they can enlist Vision Logbooks’ assistance?

Mark Leeper (14:31):
You bet. The work is all in scanning the existing legacy records. So we can usually accomplish that in a day. We have run into older aircraft that literally have a 10 by 10 room full of records that take a week, but most current airplanes, those legacy records can be scanned through our process in a day or two. We have the ability to assist these people remotely with scanners themselves that are built to do our job. There’s many maintenance departments that can be trained really quickly to do it themselves, and they like that, because they can scan records on an ongoing basis. We don’t have the whole world jumping out of paper yet. We’re still getting many paper documents from our repair facilities and et cetera. So the ability to scan onsite, if you’re a large management company is good. The next thing that we do is we’ve set up scanning centers located in Florida and Texas, Arizona, California, and Van Nuys, and also in Seattle, Washington.

Mark Leeper (15:33):
So we have locations there that we can do onsite scanning of records, if the airplane and records are at the facility, primarily their records. And then we can also come on site. We will travel to any destination that a logbook resides, to scan for the facility or for the owner operator and put them in the system. Once the digital records are produced, it’s about a half a day of actual data import to build up a fully 120-78A compatible, compliant logbook. Aircraft Digital Logbook, ADL, is what we call it.

Tony Kioussis (16:08):
Is there anything else that you would want people to know about your company’s plans and capabilities, as they pertain to the business in general aviation sectors of the industry?

Mark Leeper (16:18):
We’ve got tremendous growth on the horizon. I think our biggest hope and desire is that through influencers in our industry, not just the maintenance people, but this issue transcends the maintenance department, record keeping affects every aspect of aviation from sales to maintenance. CEO’s obviously interested in how these records are available. Our company is poised with its electronic system, what we call SMART technology, which is Secured Managed Aircraft Record Technology, to address one of the largest challenges in aviation in that to move over a 100 years of paper maintenance records into digital data. So we’re poised to tackle that and address that and move forward.

Tony Kioussis (17:07):
This has been another Asset Insight podcast covering the aircraft ownership life cycle. Please visit our ever-growing podcast library at assetinsightpodcast.com and select from any number of topics discussed with business aviation industry experts. This is Tony Kioussis, and as always, thank you for listening.