A Checklist for Aircraft Buyers
Aviation is fond of checklists. Checklists force attention to a least-risk procedure focused on the steps that matter in proper sequence. Having a checklist is an important first step whenever an aircraft is being considered. A few points that should be included follow:
1. Who is assessing the utility of owning an aircraft?
2. Are the available aircraft choices being fully reviewed by a qualified independent advisor?
3. Is the aircraft market being thoroughly explored and are expected aircraft residual values being considered?
4.What is the exit plan? What is the aircraft’s projected value and will it be financeable in five or ten years?
5. Is a broker (or brokers) involved, and are the broker’s recommendations being independently verified by your advisors?
6. Are the purchase negotiations controlled by a fiduciary contractually bound in trust to you, or is it being done directly by a broker who, no matter how helpful, is by definition in conflict?
7. What steps have you taken to ensure full disclosure in advance of all commissions or other benefits and splits between brokers and/or aircraft management company?
8. Is the Purchase Agreement subject to the results of an unrestricted right of inspection of the aircraft?
9. Will this inspection be accomplished by a qualified, independent third party at an independent facility reporting directly to you?
10. Does the Purchase Agreement ensure rectifications are at the seller’s cost and executed before delivery?
11. Does the Purchase Agreement oblige the seller to deliver the aircraft eligible for certification in the buyer’s jurisdiction?
12. If the aircraft to be financed, what steps have you taken to ensure full disclosure in advance of all finance finder’s fees?
13. Is the delta between aircraft’s forecast value and the balloon payment in the financing term sheet reasonable?
14. Does the financing agreement restrict you from flying into certain jurisdictions or lock you into using a specific aircraft management company?
15. Is the aircraft being acquired from an Original Equipment Manufacturer?
16. Are the warranty terms being negotiated, and by whom?
17. Does the Purchase Agreement stipulate or prohibit undisclosed commission payments or credits being paid in connection with the transaction?
18. Are further expenditures to refurbish, paint or modify the aircraft being planned?
19. Are the arrangements with the modification center or interior-paint facility being conducted by a representative of the buyer?
20. Are there further commissions being paid or rebates received in cash or credit form by anyone involved with the manufacturer, modification shop or any third party entity involved in the transaction?
Buying an airplane is a complex business transaction similar to buying an office complex or building development. There are many players who make a living from these transactions and who can add real value. We can help you clearly determine the value they add and how much they are being paid – all information that you must have