Building and selling of kit aircraft

[NCL]

Good day folks

My name is Nick Lambrechts, I am from South Africa
This is my first time posting so please bear with me...

I’ve tried to make contact with Transport Canada, but no luck. With Covid, the whole world se seems to be slowed down

We are a family run aircraft maintenance facility specializing in the building and maintenance of kit aircraft. We specialize in the Van’s RV series as well as any other aircraft requested by the owner.
In South Africa, the regulations say if you build a kit aircraft through a licensed maintenance facility(AMO), you are allowed to build the kit and sell the aircraft afterwards. As far as I know, this is not allowed in the US except for “builder assistance”?

What does the regs say about this in Canada? Are you allowed to build a kit aircraft for someone else as a business?
I’ve been thinking of expanding our business internationally since we get quite a lot of interest from overseas. Canada was one of my target markets, since Canada is part of the top GA countries in the world and the fact that I have a lot of family members and friends residing there

Another question for those who might know - since I can’t get hold of TC, what will the procedure entail to convert my South African AME licence to a Canadian AME licence?
I know if someone wish to convert their AME licence to a South African AME licence, you need to provide your experience as well as writing a general exam. Will this be the same in Canada?

Stay safe!
Nick

[ahramin]

Well I know of several RVs flying around that were built by professional builders so what you are suggesting is definitely being done in Canada. I have a business doing avionics work for builders, there are a few AMEs out there building airframes, and I know of at least two businesses in Canada doing turnkey services for the entire aircraft.

However ... there is no legal mechanism for this.

549.5 Construction

(a) Aircraft, including those supplied in kit form, will be designated as amateur-built aircraft, where the major portion of the aircraft (more than 50%) is fabricated from raw material and assembled by an individual or a group of individuals on a non-commercial, non-production basis for educational or recreational purposes

So that doesn't really permit a business to start up and sell assembled kits. You can sell your time to the builder, and it's up to them to figure out how to claim that they built it, but you'd be taking a big risk assembling amateur built kits on a commercial production basis and selling the completed aircraft. But if someone buys a kit, pays you to build it, and then represents themselves as the builder of record, MD-RA isn't going to have a problem with it since all the paperwork is correct.

Until ...

Transport Canada gets a bee in their bonnet about this sort of thing and shuts it all down. Might never happen, but that's the risk when you do something illegal where everyone is happy to look the other way. In any case, at no point in the life of a Canadian amateur built aircraft does any sort of maintenance licence come into play if the owner will sign the maintenance release, so you can skip the complexities of converting a South African licence to a Canadian one.

[NCL]

Thanks Ahramin. Do you mind sending me the details of those companies supplying the turnkey aircraft?

Thanks

[AirFrame]

Better yet, please post the names of the companies supplying turnkey aircraft in Canada. I'd like to know which ones are openly flaunting the regulations that prohibit such activity... That being, the assembly for sale of Amateur-Built Aircraft. Not ultralight or advanced ultralight.

[Heliian]

Better yet, please post the names of the companies supplying turnkey aircraft in Canada. I'd like to know which ones are openly flaunting the regulations that prohibit such activity... That being, the assembly for sale of Amateur-Built Aircraft. Not ultralight or advanced ultralight.

A person could build it and then sell it. It's a little grey on what a "commercial" builder is, does that mean manufacturer? I don't see why they'd be opposed to it if you were giving professional help to builders either.

I don't think there's really a market for it anyways, GA is definitely not as big here anymore and you'd have to do a lot of builds to make it sustainable.

[Tailwind W10]

I don't know what the reg number is. Essentially the "builder" is allowed to contract out the construction as long as the "builder" is in "control" of the construction. What this means in practice is the owner of the project has to decide on all the options, avionics, engine selection etc. It is indeed 100% legal, I know a fellow out of Calgary that makes his living this way. He doesn't advertise because he's far too busy just by word-of-mouth.

[Redneck_pilot86]

if this were illegal you would never see kit aircraft for sale. Obviously not the case.

[goingnowherefast]

I'd be surprised if you could turn a profit at this in Canada. The value of the completed aircraft is roughly equivilant to the value of the combined parts. Really no profit margin, or compensation for assembly time. 40 grand on the airframe, 40 grand on engine, 10 grand prop, 10 grand avionics, 5 grand paint, 105 grand airplane. It takes roughly 2000hrs for an amature to assemble, maybe 1000hrs for a pro. At $15/hr minimum wage, you'd need to charge 120 grand. And that's at minimum wage and no profit margin. A bare bones RV that can be assembled for 100 grand won't sell for 120+ profit margin.

Also not sure what sort of professional assembler you'd get for minimum wage...

[ahramin]

You are sort of correct goingnowherefast. The completed aircraft is about the value of the parts so there is no profit margin in building the aircraft to sell it on the market. There are however many homebuilders who want a Lancair, RV10, Glastar, or Rocket built to their specifications who will pay to have someone else do the work for them. I've even seen a few Murphy Rebels done this way. The owner obviously will not be able to sell it for anything close to what it cost them to build it but that is true to a greater or lesser degree for any homebuilt. These owners don't care, they just want their aircraft done.

[co-joe]

I'd be surprised if you could turn a profit at this in Canada. The value of the completed aircraft is roughly equivilant to the value of the combined parts. Really no profit margin, or compensation for assembly time. 40 grand on the airframe, 40 grand on engine, 10 grand prop, 10 grand avionics, 5 grand paint, 105 grand airplane. It takes roughly 2000hrs for an amature to assemble, maybe 1000hrs for a pro. At $15/hr minimum wage, you'd need to charge 120 grand. And that's at minimum wage and no profit margin. A bare bones RV that can be assembled for 100 grand won't sell for 120+ profit margin.

Also not sure what sort of professional assembler you'd get for minimum wage...

Remember though, his minimum wage is 20 Rand per hour, equivalent to about a buck fifty an hour here. Unless I misunderstood, I didn't think he was looking to move here.

[AirFrame]

A person could build it and then sell it. It's a little grey on what a "commercial" builder is, does that mean manufacturer? I don't see why they'd be opposed to it if you were giving professional help to builders either.

Commercial is indeed defined and known. The regs permit the construction of amateur-built aircraft for personal use, and the later sale of that aircraft to another. Nothing stops an individual from making aircraft one at a time and selling them, but I know from one builder who broke through some magic number of aircraft built that Transport starts breathing down your neck after a certain point.

I know a fellow out of Calgary that makes his living this way. He doesn't advertise because he's far too busy just by word-of-mouth.

That's one reason he doesn't advertise. The other is that it's not legal to offer amateur-built aircraft on a production-line basis. Try putting an ad in a flying magazine offering professionally built RV's on a turnkey basis. You'll have a call or letter from Transport pretty quick.

Professional assistance is permitted, yes. That's assistance, not "complete construction." The intent of the regulations in all of this is quite clear.

[Tailwind W10]

I know a fellow out of Calgary that makes his living this way. He doesn't advertise because he's far too busy just by word-of-mouth.

That's one reason he doesn't advertise. The other is that it's not legal to offer amateur-built aircraft on a production-line basis. Try putting an ad in a flying magazine offering professionally built RV's on a turnkey basis. You'll have a call or letter from Transport pretty quick.

Professional assistance is permitted, yes. That's assistance, not "complete construction." The intent of the regulations in all of this is quite clear.

EXEMPTION FROM SECTION 549.01 OF THE CANADIAN AVIATION REGULATIONS AND CHAPTER 549 OF THE AIRWORTHINESS MANUAL – AIRWORTHINESS STANDARDS - AMATEUR-BUILT AIRCRAFT
(In part)
Purpose
The purpose of this exemption is to permit persons who apply for a special certificate of airworthiness in the amateur-built classification:
to contract for professional assistance in the construction or assembly of parts of the aircraft, provided the work is subject to the builder’s overall control;

Appendix A
Standards of Design and Construction for Amateur-Built Aircraft
PART I - Procedures
Interpretation
(1) In this appendix: (in part)
“builder” means the individual or group of individuals who constructs or assembles an amateur-built aircraft, or who oversees the construction or assembly by other persons, of an amateur-built aircraft.



This portion of the reg certainly has to be used with care. Without question the "builder" does not have to touch one part of the aircraft during construction. Also it's in the contracted assembler's best interest to document all conversations and correspondence with "The Builder" to prove "The Builder" is making all the decisions and actively "overseeing" the project.

This is not grey-area, it's clearly allowed within 541.01.

Gerry

[ahramin]

Well there you go, perfectly legal.

Thanks W10.

[jakeandelwood]

" may or may not be built by an amateur" is what they really should be called then. No wonder the big 3 from the '60s and '70s don't make much in the way of small planes anymore, why would they try and compete with people like this Loophole Larry guy who started this thread?

[PilotDAR]

Professional assistance is permitted, yes. That's assistance, not "complete construction." The intent of the regulations in all of this is quite clear.

This.

If you, the person who intends to own and fly the completed amateur built plane, aren't planning to do 51% of the work required to build it, you should be planning to justify what will be done, should TC inquire. Ultimately, you will be asking for TC to issue a flight authority for it....

[AirFrame]

(1) In this appendix: (in part)
“builder” means the individual or group of individuals who constructs or assembles an amateur-built aircraft, or who oversees the construction or assembly by other persons, of an amateur-built aircraft.

100% Correct. But if someone is overseeing it then they are part of the build process. In theory (and intent of the regs), that person would be aware of what's happening during construction and learning something from it. They can't construct aircraft *and then* offer them for sale to the public, or there is no "overseeing" of the construction by the "builder."

[DonutHole]

You are sort of correct goingnowherefast. The completed aircraft is about the value of the parts so there is no profit margin in building the aircraft to sell it on the market. There are however many homebuilders who want a Lancair, RV10, Glastar, or Rocket built to their specifications who will pay to have someone else do the work for them. I've even seen a few Murphy Rebels done this way. The owner obviously will not be able to sell it for anything close to what it cost them to build it but that is true to a greater or lesser degree for any homebuilt. These owners don't care, they just want their aircraft done.

it is true for production aircraft too. if you upgrade your panel and sell the aircraft you can expect a 50% loss on the upgrade.

[Jungle Jim]

The gentleman did not say where these planes would be built. If they are built in South Africa there will be the MDRA inspections that will be required and if not, they will have to have at least 100 hours on them before they can be imported.

Regards,

Jim

[L39Guy]

MD-RA Inspection Service https://www.md-ra.com/en/ has been delegated by Transport Canada to administer and inspect home built aircraft in Canada. They would be the best resource.

[photofly]

If you, the person who intends to own and fly the completed amateur built plane...

I don't think many builders actually fly the planes they're building. I'm not sure there's much overlap between people who enjoy flying and people who enjoy building.

[AirFrame]

I don't think many builders actually fly the planes they're building. I'm not sure there's much overlap between people who enjoy flying and people who enjoy building.

Based on the number of people i've known who have built their own planes and are still flying them, i'd say there's a large overlap. I agree it's not 100%, but it's nowhere near zero.

[thyfish]

You can have anybody build your amateur built aircraft in Canada and there are many companies that do it. Its not illegal, you arent bending the rules, it is 100% allowed. The owner just has to make all of the overall decisions regarding the build.

Chapter 549 of the Airworthiness Manual - Airworthiness Standards - Amateur-built Aircraft sets out the design and construction standards, which an applicant shall meet to satisfy the Minister that the aircraft is amateur-built, and the requirements for inspections, equipment and instruments, and operating information necessary to obtain a Special Certificate of Airworthiness - Amateur-built.

Purpose

The purpose of this exemption is to permit persons who apply for a special certificate of airworthiness in the amateur-built classification: to contract for professional assistance in the construction or assembly of parts of the aircraft, provided the work is subject to the builder’s overall control;

[thyfish]

"I'd be surprised if you could turn a profit at this in Canada. The value of the completed aircraft is roughly equivilant to the value of the combined parts. Really no profit margin, or compensation for assembly time. 40 grand on the airframe, 40 grand on engine, 10 grand prop, 10 grand avionics, 5 grand paint, 105 grand airplane. It takes roughly 2000hrs for an amature to assemble, maybe 1000hrs for a pro. At $15/hr minimum wage, you'd need to charge 120 grand. And that's at minimum wage and no profit margin. A bare bones RV that can be assembled for 100 grand won't sell for 120+ profit margin."

Please tell me where you can fund an RV for anywhere near that price so i can go buy them and resell them? RV9s are going for 100-140 USD, RV 10 going for 300k-350k USD. You can get everything for a 10 for between 200k-250k depending in what you get. Big market in my opinion, you could charge between 60-120k USD and a good builder can probably get one done in 6 months. That's pretty good money if you ask me.

[AirFrame]

"I'd be surprised if you could turn a profit at this in Canada. The value of the completed aircraft is roughly equivilant to the value of the combined parts. Really no profit margin, or compensation for assembly time. 40 grand on the airframe, 40 grand on engine, 10 grand prop, 10 grand avionics, 5 grand paint, 105 grand airplane. It takes roughly 2000hrs for an amature to assemble, maybe 1000hrs for a pro. At $15/hr minimum wage, you'd need to charge 120 grand. And that's at minimum wage and no profit margin. A bare bones RV that can be assembled for 100 grand won't sell for 120+ profit margin."

Please tell me where you can fund an RV for anywhere near that price so i can go buy them and resell them? RV9s are going for 100-140 USD, RV 10 going for 300k-350k USD. You can get everything for a 10 for between 200k-250k depending in what you get. Big market in my opinion, you could charge between 60-120k USD and a good builder can probably get one done in 6 months. That's pretty good money if you ask me.

They were talking about a two-place RV, not an RV-10. And the post was two years old, before the stupidity in the market thanks to COVID.