Acquiring or selling any aircraft is an incredibly intricate process that requires sound decision making that ultimately keeps safety and efficiency at the forefront. We’ve learned a lot about buying and selling aircraft in 20 + years of aviation consulting and have developed an 11 point system that will at the very least set potential buyers and sellers up for success in making the right decisions for their corporate or commercial needs.
Our list is not the end, but the beginning of a process designed to help buyers and sellers focus on all the right information first, prior to finalizing any decisions. Whether you’re a first time buyer/seller or an experienced organization, we hope it will help you plan and organize the information you need to secure a sale or make a purchase.
So here is a short summary of the 11 points we have learned to focus on when our aviation consulting skills are called upon:
- Determine current market and future depreciation.
This may seem so obvious to some that it is sometimes given too cursory a look instead of detailed research. Sometimes buyers or sellers think they know the market and choose to go forward based on that knowledge. Our advice is to take personal opinion out of the mix and have a third party (perhaps from an aviation consulting firm) conduct a global search and price comparison, detailing similarities and differences between available inventory. Where there is minimal inventory available, research the last 2 years of market activity to help draw conclusions. - Understand price from more than one angle.
Go into any deal knowing what you can afford to buy or sell for and be honest with yourself about the value of the intended product. This will be easier if you’ve done an exhaustive search like that described in point 1. Make sure you understand exactly what is included in the price and, more importantly, what is excluded. Determine the excluded costs that must be covered and add them into your equation. If you’re a buyer, use this as a negotiation tool. If you’re a seller, use it to demonstrate transparency. - Clearly understand the intended role of the aircraft.
Prepare a detailed list of performance requirements that describe exactly how the aircraft will be used. Things like short haul, long haul, intended routes, frequency, geography and environmental implications, housing and storage for example. Ultimately, is the aircraft under consideration proven to perform under the intended conditions? This can prove to be an expensive lesson if an inappropriate purchase is made. - Know the current aircraft maintenance status.
What does the paperwork say about this aircraft? What is the current condition and performance rating and is that compatible with the intended role of the aircraft? Insist on speaking to the maintenance director responsible for the aircraft. - Understand the aircraft maintenance records status.
It’s one thing to understand current maintenance status but what does its flight history tell you and are there “back to birth” records confirming status of time/cycle controlled components? Look for anything that would not be considered part of the regular maintenance upkeep of the aircraft. Find out what the maintenance was for and why it was necessary. Determine if this is a design flaw that could recur and if so if it has been or can be rectified to your satisfaction. Ensure that you clearly understand any modifications or STC’s that have been made. - Research all Accident/Incident status issues.
Ensure that there is complete and full transparency on the accident/incident history of the aircraft. Determine the past role of human error versus mechanical issues in judging the safety of the aircraft. - Understand the previous use of the aircraft.
This point builds on item 3. Make sure the aircraft’s past use supports what is intended for its future use. Look carefully at past use to determine the level of wear and tear on the aircraft. Know whether it has had specialized usage or modifications based on things like government or military service and how those records were kept. Know as much as you can about how heavy or light its service requirements have been, including how and where it was housed. - Ensure the aircraft is clear of liens or encumbrances.
If you’ve gotten this far on our checklist, hopefully you have a financial and legal team in place who can ensure the absence of leans or encumbrances. If you need such a team, talk to an aviation consulting firm to have the proper work done. - Know the tax implications.
Understand the corporate responsibilities as well as opportunities that can be taken advantage of based on what you are buying or selling and in what geography. Again, an aviation consulting firm may be of help here. - Determine mutual representations and warranties.
At this point you’re getting down to some serious negotiation between buyer and seller. This is a good place for the seller to add value or for the buyer to gain concessions depending on the type of negotiation. Either way, leave no stone unturned here. Know exactly what is being promised and what isn’t. - Abide by laws and jurisdictions.
This is definitely the domain of your legal team or that of an aviation consulting firm who can take on the task. Ensure that you have people on the ground in the geographies you will operate in. Put together a comprehensive manual so that applies to this aircraft and where and how it will be used.