Plane Conversations

There is an MU-2 outside my window right now and those Garrett engines are so loud that, in the words of my first grade teacher Sister Paula, I can’t hear myself think. 

Airplanes are noisy.  No kidding, right?  That’s hardly news and it’s certainly no surprise.  Since airplanes are noisy, it follows then, that places they frequent – airports – are noisy, as well.  Again, no surprise there.  What continues to be a surprise to me are noise complaints made by people who live near airports.

What would you say if I told you that I bought a terrific little house next to a railroad track and that I got it at a steal?  You’d probably question my sanity since there are sure to be really noisy trains barreling along the tracks at all hours, right?  Now what would you say if I told you that I was planning on petitioning or even suing the railroad company to make their trains quieter and to run them only during daylight hours?  Does that even make sense?  I bought a house next to a pre-existing railroad track, the existence of which I unquestionably knew, and now I demand that the railroad operate according to my preferences?  I would be laughed out of the courtroom.  Or would I?

This situation happens every day with airports all over the United States and Europe.

Developers buy undesirable land near noisy airports, build houses all over the land, and sell the houses at attractive prices.  The new homeowners, forgetting the reason they got such a good deal on the house, then demand that the airport conform to their preferences – and the city councils and courts support the homeowners.

Airports don’t exist in a vacuum - I know that - and we all need to “go along to get along.”  However, there must be some consideration for the airports which were in existence prior to development and the economic contributions of those airports.  For instance, Atlanta’s DeKalb-Peachtree airport started it’s life in 1941, operated as a Naval Air Station as well as a general aviation airport and is currently the second busiest airport in the state of Georgia with 246,002 operations recorded in 2009.  Housing development in the area saw massive increases in the 1950s, after the airport was established.  At this time, the airport has a “voluntary” curfew between the hours of 11:00 PM and 6:00 AM.  I emphasize voluntary because it is clear from the airport’s own literature that the county would make the curfew mandatory if only the FAA would let them.  Exemptions are made for medical flights but, any other flight operating at the airport during curfew hours will receive a letter inviting the operator “without compromising safety.. [to] review its operating practices and perhaps modify its procedures to keep this from happening again.”  Basically, they invite the operator not to come back during curfew, reserving the right to invite the the operator not to come back at all.

Perhaps the most aggressive noise abatement policies are in Santa Monica, California, and in Naples, Florida, which were among the first (if not the first) to prohibit certain types of aircraft from operating into their fields at any time of day.  Naples, which is a public airport operated by the City of Naples Airport Authority, has its hands full these days dealing with an anti-airport group.  The situation has become emotionally charged and really contentious there.  The airport receives federal funding, yet the neighbors want to dictate how and when the facilities may be used.   Try doing that with an interstate or railroad. 

The Mu-2 is gone, but my ears are still buzzing; so, I sympathize with people who live with the noise.  However, because I know that airplanes are  noisy, I didn’t buy a house right next to an airport.  And I don’t have sympathy for the people who did, then proceeded to complain about a situation they entered into voluntarily.

As I said yesterday, both the Phenom 100 and the 300 are single pilot certified and are designed to be flown by professional pilots, as well as owner pilots. The latter present a challenge as they are generally a group with little or no pure turbojet time.  Many have flown complex turbo prop aircraft but most owner pilots have spent little time in “fast movers” and lack a complete understanding of their roles and responsibilities in the ATC system. The solution lies in training and competent mentoring.  Embraer includes two “entitlement” training slots for pilots with the purchase of an Executive Jet. The training at ECTS is a thorough introduction into the Phenom and an accurate assessment of acquired skills and knowledge.   The problem is that training ends with the check-ride and subsequent type rating.   And, in any sphere, knowledge without wisdom is incomplete.

A typical type-rating oral exam consists of knowing aircraft systems and limitations along with the immediate action items associated with specific emergency procedures.  A more thorough oral drills deeper with questions involving the working relationships of systems and an understanding of why things work the way they do. The rating-ride is a carefully choreographed series of events that test specific learned procedures such as the loss of an engine on takeoff, the“V-1 Cut”, as well as single-engine approaches and landings.  The entire check ride is given within the confines of a single airport and is an accurate assessment of skills and accomplishment. The FAA oral and rating-ride are excellent tests of pilot preparedness for the unexpected problems that seldom (thankfully) occur in real life.  What a rating-ride can’t do is impart experience and judgment to a first-time jet pilot.  With experience comes wisdom and the safest way for the first-time jet pilot to get that wisdom is with the assistance of a mentor.

Slow down, you move too fast.
You got to make the morning last.
Just kicking down the cobble stones.
Looking for fun and feelin’ groovy.

 (59th St. Bridge Song by Simon and Garfunkel)

Up until recently, Air Traffic Controllers could logically assume that everyone in a jet “kicking down the cobble stones” was a pro-pilot or at least performed like one.  The advent of the personal jet has changed that.  Now anyone with a million dollars, or even less with financing, can buy a jet to look for fun and feel groovy hanging out with the big boys.  Herein lies the problem. The old instructor adage of “slow down and make yourself time for the approach” only works at the cabbage patch, but these personal jet aircraft aren’t staying in the cabbage patch.

A gap has developed between those who understand ATC and fly accordingly and those who feel as if ATC will accommodate their lack of skills and judgment. The saner parties have been the insurance companies who have insisted upon some level of supervision for low time aviators. Insurance companies, at a loss for how gauge skills and judgment, have resorted to insisting on a certain number of hours (usually 25) of supervised flying.  Typically those hours are flown in the course of business for the newly minted personal jet aviator.

Perhaps a better way to ensure the safety and success of the owner-flown community would be to adopt the commercial aviation technique of mentor flying for newly type-rated jet pilots by creating a private IOE (initial operating experience) process. Airlines have long recognized that meaningful mentor programs consist of more than the supervised “drilling of holes” in the sky.  A truly effective mentor program imparts a higher level understanding and competence to the new pilot.

With training fresh in the mind of the newly typed pilot, the mentor reinforces good technique and emphasizes the “real world” application the newly learned skills.  And it takes both training and experience to protect your Phenom investment.

After 23,000 flight hours, I’ve just added my 7th type rating. 300 of those hours are in the Phenom 100.

The math reflects my propensity to stick  to an airplane when I find a good one and the Phenom 100 is a great airplane that does everything asked of it. My affinity hasn’t waned; so, what, then, would lure me away?  The siren song of the Phenom 300; Embraer’s latest Executive Jet offering.

I mentally questioned the ability of Embraer to improve upon the value proposition of the 100, and I was somewhat skeptical that the engineers from Brazil could score two home runs in a row. Duh!  Now I wonder what the gang in Wichita must be thinking. (Option 1: Look for a new job, or Option 2: add more sand to bury their heads deeper?)  I intend to keep flying the 100: but, to anyone out there with a 300 – you go guys!

Flight training is evolutionary. 

You go the first time to initial training and then you go back every year for recurrent training.  You don’t expect to add much because they are just getting you through the paces; but, maybe you learn something new in year two because there is something going on with the development of the aircraft. 

Last summer, I attended Phenom 100 initial training at Embraer CAE Training Services (ECTS), a joint venture between Embraer, a world-class aircraft manufacturer and CAE, a world-leading provider of aviation training.  In spite of the impressive pedigree, the venture experienced quite a few teething problems with the rollout of the first Phenom and I experienced them first-hand.  When I returned to the facility, my expectation was that my second experience would be much the same as my first one.
I was totally surprised when I arrived at CAE Simuflite in Dallas for Phenom 300 transition training.  Arriving on a Monday morning, my colleagues and I were greeted in the front lobby by no fewer than nine bright-eyed and effusively cheery CAE employees. Just after checking in, one of the greeters asked me if I needed directions to my classroom.  Since the schedule handed to me had been printed on a handy, pocket-sized card that wouldn’t get lost in the paperwork shuffle, I replied that I couldn’t miss it. I introduced myself to one of the greeters, Walter Slazyk, and in the course of conversation found that Walter was the CAE Center Leader. 

Different?   I’ll Show You Different! 
Aircraft transition courses typically focus on differences between the “old” airplane and the “new” one. The object of the training program is to prepare you for your check ride, rather than to just impart knowledge to you.  After all, this is a business.  My course was scheduled for one day of ground school followed by three days of simulator instruction and a check ride. I expected a mundane recitation of facts and figures, which I would have to regurgitate during my Friday oral exam. Instead, I was met by Steve Ford and Steve Simpson who both plowed into the whys and wherefores of aircraft systems and flight characteristics – so much more useful than the dry facts and figures.
During my Phenom 100 training process, delays in the certification of the simulator necessitated that my training be accomplished in the airplane.  Times have changed, though.  The new Phenom 300 sim has excellent fidelity and clearly mimics the feel and performance of the airplane. (Turning on the radar and taxiing over runway centerline lights are two great examples.)  On the whole, my expectations were exceeded, by a long-shot.
Both the Phenom 100 and the 300 are single pilot certified and are designed to be flown by professional pilots, as well as owner pilots. The latter present a challenge as they are generally a group with little or no pure turbojet time.  All of these pilots go through ECTS and get the best training the company has to offer.  The training is great, but how do these pilots get the experience they need to form sound judgment?  Join us tomorrow as we discuss the importance of good mentoring programs.

In any family dynamic, each member has a role to play.  Until the invention of Trivial Pursuit, my role was to lose at every single board game we played.  It didn’t matter which game it was, I stunk equally badly at them all; but, I was okay with that.  It’s just how it was.  When I went to college, my liberal arts studies did not include Game Theory; so, in spite of its 50 year history, this business decision making tool is new to me.

In a July 24, 2010, article in Financial Post, Michell Osak highlights both the strengths and the weaknesses of using Game Theory in the strategy development process.  The theory is ideal, he says, in “strategic situations where competitive or individual behaviors can be modeled.”  However, the theory’s flaws are that it assumes that “the players act rationally and in their self-interest” and that they “act strategically and consider the competitive responses of their actions.”  Osak goes on to quote The Economist magazine which said, “Managers have much to learn from game theory provided they use it to clarify their thinking, not as a substitute for business experience.”

It seems to me that wholesale flight department liquidations were an example of a time when Game Theory was substituted for business experience – to the detriment of an entire industry.

Studies have shown that companies which either own or use private aircraft tend to pay larger dividends to their shareholders.  Yet, some of those very same companies dissolved their flight departments.  Those decisions were not based on months of study, but, rather were a knee-jerk reaction to negative press reports.  Game Theory said that a company using a business aircraft would look wasteful when compared to a similar company that didn’t.  Game Theory predicted a negative public relations issue.  Game Theory dictated that companies jettison one of their most useful business tools.

It’s time to start making decisions based on business experience again and leave the board games for family night.

Yesterday I spent time with clients considering the upgrade of their turboprop aircraft, a King Air 200, to a business jet. Their travel needs are growing and the trips they do are reaching farther out from their home base, so a jet is in consideration.

As we talked a few questions were asked: Have the values of used aircraft hit bottom? Is it a good time to buy, and if we decide to buy what would be the best investment? These questions sound much like the questions Jim Cramer might hear on Mad Money about which stock to buy.

I have also had conversations this week with two representatives from manufacturers of business jet aircraft.

Discussions centered on the current state of the market for new and used business aircraft. One of the problems the manufacturers of new aircraft are facing is the competition with their own late model used aircraft on the open market.

Starting in late 2008, and throughout all of 2009, the prices of used business jet aircraft fell in some cases as much as 50-60%. In an uncertain economy no one was buying and sellers could not get an established value without buyers.  

A four-year-old low time jet in like new condition today may be selling for half of its new price when delivered in 2006. Compare this to 2007, and the ten years prior, when a four-year-old aircraft could sell for 85% to 105% of its new price, depending on the manufacturers backlog of orders in production for the same model.

The brokers in our industry would probably confirm that the market of used aircraft has started to move, and the first aircraft to sell are those late model low time aircraft that took a huge hit in a “no buyer” market. As worldwide buyers absorb this inventory the prices have and will continue to firm up. 

Aircraft older than ten years, although still in excellent condition, may be slow to recover their value of two years ago, if ever. The supply of older used aircraft for sale is still greater than demand and will stay that way for a few more years. Prices may not go down much more, but will most likely not recover anytime soon.

Back to the original question:  Is it a good time to buy? If you have established the need and defined the mission of business aviation for your company, then it is a good time to buy. If you are ready to upgrade to an aircraft that better fits the mission, or a newer aircraft that will provide more capability, lower maintenance costs, and better reliability, then it is a great time to buy. 

Talk to people in our industry including manufacturer sales reps and reputable brokers of used aircraft. Wheels Up contributor Jeremy Cox  is one of those guys.  

Talk to other business jet operators, flight department managers, and aircraft management companies for insight. Do the analysis that determines what aircraft best suits the mission. Look at new versus used and the pros and cons of each.

There is a lot of knowledge in our industry and most everyone I know is willing to talk to you to share what they know.

If you have the need to travel to grow your business there has never been a better time to buy. It is a buyers market and there is good value in both new and used business jets.

Airlines versus the Private Aircraft

Comparing travel by airlines to travel on private aircraft is like comparing travel by train or bus to travel by automobile.

One mode of travel can not meet all the needs in this country.

Travel by train and metro rail systems works great in and between major cities in densely populated areas of the country.  However, for the majority of the United States landmass, it is non-existent since population  density and the geographical distances between cities make it impractical to build and operate.

So we have the personal automobile and we always will. It may be in a different form one day – all electric or a hybrid of different energy sources – but we will still have it. Even in the cities with mass transit, the personal automobile or the communal automobile (taxi) still serves an important function of on-demand point-to point-travel.  

What is so different about the use of private aircraft for business or personal travel and using the airlines? The airlines seem to be migrating towards a form of mass transit system that primarily serves the travel demand between dense population centers domestically and internationally. Today, there are fewer, not more, cities served by airlines than just a few years ago.  

As airlines have shown no desire to fly in small market cities in this country, the void of scheduled air service to and between small cities grows.

We all fly because it gains us time that we can use on one end of the trip or the other. In the absence of air mass transit between cities, the air travel solution for small markets is private and business aviation. There are currently no other solutions.  

Will we ever give up the automobile totally in favor of the train? Probably not anytime soon, if ever. We will, however, get more efficient versions of the automobile.

And so it should be with private aircraft. Let’s make them more efficient and use them more efficiently.

Those in this country who see the private aircraft as a luxury mode of travel need to understand that, just like the automobile, the private aircraft, in all its variants, is an efficient mode of transportation in this economy – especially for those of us who have chosen not to live in the big city. Because we don’t have access to the metro rail and the 500 scheduled flights a day at an airport nearby, we need our cars and small planes to connect both locally and globally.

 (Part 5 of 5)

What to Expect in the Purchase Process

Here is a step-by-step general outline of what you can expect in the acquisition of an aircraft.  The order sometimes changes depending on the situation.

1. Ask yourself questions: What do you want?  What do you want to spend? What is your mission? etc.
2. Interview buyer’s agents to represent you, then make a decision and hire one.
3. Expect to sign an agency agreement giving the agent the exclusive right to represent you for a period of time and establishing the fee you will pay as well as any expenses that will be your responsibility.  In the agreement, agents should also list their responsibilities and capabilities.
4. Ask your agent what to expect and when the process will begin to move forward.  Give your agent time to do the job but insist on receiving progress updates.
5. Place a refundable deposit into escrow.  This gives your agent the power to negotiate on your behalf and conveys the seriousness of your intent.
6. Refer anyone who calls you directly to your agent for the duration of the purchase process. You could easily and unknowingly undermine the groundwork your agent has laid.
7. Allow your agent to contact sellers.  Don’t call any aircraft seller during the process but discuss available aircraft with your agent and which sellers your agent should call.  I’ve seen feeding frenzies over a single buyer who got all of the sellers stirred up.  Often the sellers see this as a sign of increased market strength, so they will hold firm on the price your agent is trying to bring down for your benefit.  Your agent should treat you as a partner in the process and should not hesitate to make recommendations to you on aircraft, negotiation tactics, and offers.
8. Look for comparison reports.  Your agent will research the worldwide market and narrow the options to the very best three or four aircraft, usually putting a description of the aircraft on a spreadsheet.
9. Prioritize your preferences.  Based on your individual requirements and discussions with your agent, you will decide which aircraft to pursue first, second, etc., and come up with an offer. 
10. Make an offer.  An offer letter or letter of intent (LOI) will be prepared and submitted to the seller.
11. Expect negotiations.  A counteroffer or other response should be expected within the period outlined in your offer.  Negotiations will lead to an agreement or a decision to move on to another aircraft.
12. Be prepared for one to get away.  Don’t be surprised if an aircraft or two on your top three-or-four list sells.  Often the aircraft you are most interested in is going to be sold quickly … and you may not be the buyer. 
13. Title research.  Once an agreement is reached or looks favorable, your agent will order a title search, chain of title, and an IR and 337 search.  A 337 is a required FAA form for any major repair or alteration of an aircraft. The IR requirements can cause a delay in closing; so, the search should be performed early in the process.
14. Initial inspection.  Prior to the execution of the formal sale and purchase agreement, your agent may send a technical representative to visually inspect the aircraft and conduct a cursory logbook review.  Doing this is much less expensive than putting the aircraft into pre-purchase and then rejecting the aircraft for a reason that could have been easily identified beforehand.
15. Formal agreement.  A formal sale and purchase agreement is executed if the technical rep does not find any major issues and the title search, chain of title, and the IR and 337 searches lead to a positive assessment.
16. Demonstation flight.  A demonstration flight may be in order if you’ve never flown in the aircraft make and model.  The flight would be at the buyer’s expense.
17. Expect a test flight.  A test flight, including a check of the avionics, is performed in-flight prior to the pre-purchase inspection.
18. Prepurchase inspection performance.  While there is more than one way to handle “squawks” – the aircraft items in need of repair or adjustment - typically the seller will pay to remedy the “airworthiness, major systems, and safety of flight” items.  Anything falling outside that definition is the buyer’s responsibility.  Again, each deal is different; so, work with your agent.
19. Post maintenance test flight.  After the repair of the maintenance items, a post-maintenance test flight is performed for the benefit of the buyer and at the buyer’s expense.  This flight will verify that the aircraft is in proper working order prior to your acceptance of and payment for the aircraft.
20. Aircraft acceptance.  You will accept the aircraft upon in-flight verification of operation and confirmation that the logbooks properly reflect the agreed upon inspections.
21. Insurance bonding.  Insurance should be bound on the aircraft at this point or sooner but certainly should be arranged and activated with a call to your agent.
22. Initiate closing.  Both parties must give authorization to the escrow agent to initiate closing (filing of the documents and disbursement of the funds).
23. Aircraft delivery.  Delivery will often occur after closing.  This is a very important tax issue and both parties typically are sensitive to it during the initial negotiations.

Are there any other considerations?  Absolutely.  They include Certificate of Airworthiness (C of A) issues, import/export matters, holdbacks, documentation, engine/parts/avionics programs, aircraft rejection, deposit disposition, and on and on.  Each deal requires flexibility and experience to smoothly navigate through the aircraft purchase process and calmly handle any surprises that may occur.

Buying an aircraft should be an enjoyable experience.  By getting the help of a great agent and by knowing what to expect, it can be.

(Part 4 of 5)

Pitfalls of Acquiring an Aircraft

You’re chosen your broker, set up your team and chosen an aircraft.  You’re well on your way, but you’re not out of the woods, yet.  Certainly there are many pitfalls in acquiring an aircraft, but these are some of the most common:

Pre-purchase inspection
Just having a pre-purchase inspection performed is not enough.  You need to be certain that the inspection facility understands the make and model of the aircraft that you are buying and is on the cutting edge of current and pending airworthiness directives (ADs) and maintenance issues.  How would you like to buy the only aircraft in your category without an engine program?  Once you’ve bought the aircraft, keep it well-maintained by a first-rate maintenance facility. 

Pending equipment mandates
You purchase an aircraft only to find out that the Federal Aviation Administration (FAA) has mandated additional avionics that will cost a significant percentage of what you just paid for your aircraft, which has happened to aircraft buyers. For instance, there have been FAA mandates on the reduced vertical separation minimum (RVSM), terrain awareness and warning system (TAWS), traffic collision avoidance system (TCAS), and emergency locator transmitter (ELT).  It’s important to learn about pending equipment mandates before you close the deal on your aircraft purchase.

Title issues
More than once I’ve heard buyers or sellers state that they really don’t want to mess with that “IR thing.”  If the FAA reports no liens or encumbrances on your aircraft and engines, but the International Registry (IR) does show an encumbrance, the good ole USA wins the day right?  Wrong!  Not all aircraft require an IR filing, but if your aircraft qualifies, you need to ensure filings are done for the aircraft and engines.  Trust an experience escrow company and agent, like Insured Aircraft Title Service, Inc.

Damage history
If two people sit down and read a log book entry, one might say, “Seems OK to me,” while the other might say, “Something is not right about this.”  The difference?   Experience!  Many sellers have sold their aircraft after representing it as “no damage” or “no known damage” (notice the litigation safeguard difference in the wording…we use it too!) and honestly believed they were telling the truth.  Damage is not always as easy to find as a log entry stating, “Aircraft rolled into a ball.  Repaired in compliance with factory maintenance manual.”   After a first reading of damage entries and several subsequent readings, I’ve sometimes asked myself, “So, was it damaged or …”  Damage can affect the value of an aircraft substantially (10 to 25 percent), so it’s important to determine the aircraft’s damage history.

Possibly the biggest mistake of all
I believe it is absolutely appropriate to aggressively negotiate the price of your aircraft. Pennies add up to dollars if you can save enough of them.  And you can save enough of them on your purchase price; however, if you take this approach in hiring your pilot, you are making a mistake.  You should be prepared to pay top dollar for a first-rate pilot. Aircraft occasionally break, systems fail, and the weather sometimes closes in, but none of these should be life-threatening when you are in the hands of a professional pilot.

Ask your insurance agent what underwriters require as far as a pilot’s minimum qualifications and training.  Then ask what your agent personally recommends.  The answer may be the same, but it may not be; so, ask.  Train your pilot(s) well.  It will cost you more to send your pilot to simulator training twice a year rather than once a year; but, if all hell breaks loose in the aircraft, who do you want in the cockpit?  A pilot who meets your underwriter’s “minimum standard?” Or one who may be over-trained? 

Some pilots are more interested in being able to occasionally use an aircraft than in receiving more pay.  Explore with them what keeps them happy and loyal.  I’ve met many pilots over the years, and the ones who are the most pleasant on the ground and in the air are typically the ones I like the best.  But even the most pleasant pilots may lose their calm if you try to convince them to do something outside of their best judgment.  You may be the boss on the ground; but, you should accept that when it comes to safety in the air, pilots are the boss.

(Part 3 of 5)

Questions to Consider Before Purchasing an Aircraft
You’ve made the decision to buy and aircraft and you’ve found a great buyer’s agent / broker to help you.  Now, it’s time to ask yourself some questions; so, here’s a list to help you get started.  If you are a first-time aircraft buyer, you may not know the answers to some of these questions.  That’s okay, just use your best judgment.  Of course, these questions and your answers are just the start of the aircraft purchase process, but they will point you in the right direction, assisting you in your decision making and helping guide your agent toward the right aircraft. 

1. What is the primary purpose for the aircraft?
2. Do you have an aircraft in mind?
3. What is your mission (How many passengers will typically be on board? How far are you going? To which cities/airports are you flying? How long will you stay? How often will you fly? etc.) ?
4. Is the aircraft you’re considering suitable for 80 to 90 percent of your missions?
5. What is your budget?
6. Will you be the pilot or the passenger?
7. Will you hire your own crew and manage your own aircraft or hire a professional management firm to manage the aircraft for you?
8. If the aircraft will be used for both business and pleasure, what is the percentage for each use?
9. Are you trading an aircraft?
10. When would you like your new aircraft to be in service?

If you will typically need to carry eight to ten passengers with their bags, you can begin to narrow your purchase choices because you will require a larger aircraft.  Maybe you will need to visit three to four cities a day but stay in each for only one to two hours. In order to do that, you may require a faster aircraft.  If you plan to land at high-altitude or short runway airports, that will help narrow the field for you, as well.

It is not uncommon to get mentally stuck on the few trips per year that an aircraft cannot accommodate for one reason or another, which is why it’s important to remember that the aircraft you buy should be suitable for 80 to 90 percent of your trips.  Unless you have an unlimited budget, buying an aircraft is a trade-off between dollars and capability.

Out of the Box Thinking
Don’t get caught in the all or nothing mode of thinking.  Maybe two smaller aircraft make more sense for you than one large aircraft.  Maybe whole ownership along with fractional ownership of an aircraft is more appropriate.  Chartering the right aircraft for those few trips for which your aircraft isn’t suited may be just the ticket to a smooth-running flight operation.  Even the largest companies find that using an alternative aircraft for supplemental lift is more cost-effective than purchasing a big aircraft or expanding their fleets just to handle a few trips.  Booking flights on a scheduled air carrier should be considered in your decision making, as well.  Your buyer’s agent can help you determine the best options for you.

Assemble Your Team
While your agent can guide you in assembling a team to facilitate the purchase of your aircraft, you need to make sure this “mastermind alliance” is in place and working for your benefit: besides your agent, your team should include a certified public accountant (CPA) or skilled tax specialist, an attorney for limited liability company (LLC) formation and asset protection issues, an insurance professional, an escrow agent, a banker or lender, an inspection facility to conduct the pre-purchase, and possibly a pilot or pilots who can perform a thorough evaluation of the aircraft when it is in flight.

The Biggest Question of all
If you are purchasing a pre-owned plane, don’t expect it to be in the same condition as a new plane.  There will be squawks.  Just ensure your broker negotiates strongly on your behalf and guides you through the process.  However, if you discover that the plane’s condition is not as it was represented or that the costs to put it into quality condition are too high, are you willing to walk away from the deal?  Professional brokers and buyer’s agents rarely have deals fall apart after pre-purchase.  Trust them to guide you through the solutions but be willing to walk away if it is the best course of action for you.

(Part 2 of 5)

The Key to Success
Before we get into some specific questions to ask yourself, and the steps to making an aircraft purchase, let me tell you the real key to a successful transaction…hire a competent and experienced broker with an excellent reputation.  You’ll most likely refer to the broker as your “agent” or “buyer’s agent,” but “broker” and “acquisition specialist” are also common monikers.  When hiring a broker, it’s important to do your homework.  Get referrals, check out the broker’s website, and interview them.  Ask why you should hire that particular broker instead of another.  The selection process is more difficult than it may seem.  Although most brokers tell you the same things, there are stark differences.
 
A Little Background on the Aircraft Sales and Brokerage Business
There are vast differences in experience, business practices, and ethics among brokers.  Why?   It’s because our industry is completely unregulated.  Anyone can claim to be an aircraft broker, acquisition specialist, mandate wizard, or all-around, good-guy aircraft salesperson.  Even though I know how to fly, I don’t claim to be competent to represent you as pilot-in-command of your aircraft.  Pilots, mechanics, real estate agents, or business people may claim to be competent to represent you because they once bought, sold or were involved in an aircraft transaction; but, they may not truly have the knowledge or skills needed to take you through the aircraft purchase process successfully.

Like all professions, the aircraft brokerage business has people who do their jobs well, those who do their jobs poorly, and others in between.  Some of the most reputable brokers I know do not own aircraft inventory themselves.  However, if a broker (someone selling somebone else’s aircraft) is also a dealer (someone who buys aircraft for his own inventory), then it stands to reason that they know a little something about purchasing an aircraft.  So, find out whether your buyer’s agent/broker is also a dealer. 

A quality broker may recommend tax-saving strategies like a 1031 exchange, putting an aircraft into a charter fleet, or capitalizing on recent tax laws or incentives.  State sales tax is a fact of life, but there are tax-saving strategies you should consider prior to your aircraft purchase.  Besides your broker, also consult with your tax professional to help you discover all of the applicable strategies.

I believe one of the most powerful functions of a buyer’s agent is to remove the emotion from an aircraft purchase decision.  I recently had a somewhat anxious client get upset with me because I rejected two aircraft on his behalf (one before the pre-buy inspection and one duringthe process), even though I had his permission to reject the aircraft.  Later, after I found the right aircraft for him, he thanked me for staying cool, standing up to him respectfully, and watching out for his best interests.  To me, the long-term relationship is what mattered.  To him, getting the aircraft is what mattered.  Since I was acting as a buffer, I helped him buy an aircraft he wouldn’t regret later, keeping both our priorities intact.   

One Last Thought on Brokers
There’s another reason you should be careful that you hire the right person as your broker.  If you get involved with a disreputable or incompetent broker, they could get you involved in a lawsuit that might drag on for years.  And that would certainly would spoil all the fun of buying an aircraft.

A reputable broker should be able to provide you with a list of satisfied clients and will probably urge you to research his reputation by calling people within the industry.  You may find that the broker you’re researching has one of the highest fees among the people you call; however, it’s important to remember that the fee is probably high for a reason.  Professionals will not sell their services to the lowest bidder.  And, you’ll find that hiring the right buyer’s agent/broker to represent you in the purchase of an aircraft will pay for itself in the long run. 

My pointers may not make it a certainty that you’re dealing with the right person, they’re a good road map for finding the right professional to represent you.