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                                                                   EXHIBIT 10.31

                          FIRST AVIATION SERVICES INC.
                                 One Omega Drive
                           Stamford, Connecticut 06907


                                January 31, 1997


Gentlemen:

             This letter, when countersigned by you in the space indicated
below, will evidence the agreement of FAS Inc., ("FAI") and First Aviation
Services Inc. ("FASI") regarding the exchange by FAI of the shares of Series A
Preferred Stock of FASI (the "Series A Preferred") owned by FAI for shares of
common stock, par value $.01, of FASI (the "Common Stock"). For good and
valuable consideration, the receipt and sufficiency of which hereby are
acknowledged, the parties agree as follows:

             Concurrently with and contingent upon the closing of the initial
public offering (the "Closing") of FASI's Common Stock, FAI will exchange 33,000
shares of Series A Preferred (aggregate face value $1,650,000) for shares of
Common Stock at an exchange rate (based on the face value of the Series A
Preferred Stock) equal to the public offering price per share of Common Stock.
The shares of Common Stock of FASI will not be registered with the Securities
and Exchange Commission and accordingly will be restricted securities with the
meaning of Rule 144. All dividends accrued as of the Closing Date on the Series
A Preferred held by FAI shall be paid in cash to FAI at the Closing. This letter
agreement shall expire and be of no further force and effect if the Closing does
not occur on or before March 31, 1997.

             This letter agreement shall be construed, interpreted and enforced
in accordance with the laws of the State of Connecticut.

             If the foregoing correctly sets forth your understanding of our
agreement, please so indicate by signing in the place provided for below.

                                    Very truly yours,

                                    FIRST AVIATION SERVICES INC.



                                    By: /s/ Michael C. Culver


ACCEPTED AND AGREED TO:

FAS INC.



By: /s/ Aaron Hollander