Aircraft Sales or Acquisition Teams: The Broker’s Role

As we look at the individuals that should comprise the team of an aircraft buyer or seller, a good place to start would be the person who could be considered ‘team captain’ – the aircraft broker.

Aircraft buyers and sellers both utilize the services of a broker to represent their interests, with the ultimate goal being to optimize value on their side of the deal.

An experienced broker will be well connected within the marketplace networking closely with other brokers and will offer valuable insights into aircraft that are available for sale both on the open market and off.

They will be able to advise and direct a buyer on the most suitable makes/models of aircraft that meet their mission need and budget, and they will be comfortable offering insights into the values of the most suitable aircraft for sale, providing additional intelligence on how the ask prices of candidate aircraft compare with the recent sales of similar aircraft.

The chosen broker will also know whether the aircraft offers good value in terms of its equipage, total airframe/engine time, and the current market trends.

Such in-depth knowledge can work to a seller’s advantage, too, guiding them in how best to price their aircraft for the market, helping balance expectation with market reality, securing a quicker sale, and attracting a larger pool of suitors for their aircraft.

While some brokers will work for a larger, well-established aircraft brokerage firm, others will work as independent brokers.

Irrespective of the size of the organization they work for, though, experience is ‘king’ when it comes to choosing the right broker, and many independent brokers have amassed decades of experience in the market.

But what exactly makes an experienced aircraft broker worth their fee, and is there a tangible way to measure how they pay their way as part of your aircraft acquisition or sale team?

Cashing in on the Broker’s Market Expertise

As mentioned, a broker who is worth their salt must demonstrate a deep knowledge of the marketplace, including a jet for sale’s value in relation to other aircraft of the same make and model. That knowledge requires a firm grasp of both the pre-owned and new aircraft markets.

Brokers with their finger on the pulse of the market will be of great value for any successful transaction, both in hot and soft markets. Being aware of an aircraft make/model’s current inventory levels allows the broker to advise the seller on how to price an aircraft in line with what the market is willing to pay.

Similarly, they will be able to advise buyers on whether an aircraft represents good value, or, with several jets listed on the market inviting buyers to ‘Make Offer’ (as is currently the case), will give buyers an accurate idea of what that offer should be based on current market dynamics...

In this context, it quickly becomes clear the broker’s market expertise and comparatively modest fee could save buyers far more money in the overall transaction.

It is always worth asking aircraft brokers about their research techniques. They should draw from several intel data sources to inform them of the current market conditions and prices. And they should be able to demonstrate a degree of anticipation for factors that could impact current market values in the near-term.

As an example, with the charter and fractional markets seeing less demand (impacted by a softening of the economy and higher interest rates), some Part 91K and Part 135 operators may seek to reduce their fleets by placing some of their aircraft for sale on the pre-owned market. This, in turn, would add to the available inventory for sale, depressing aircraft values.

Brokers who are alert to the market would anticipate the change, advising the buyer or seller they represent on when is best to act.

Emotional Detachment from Specific Aircraft

Another area an aircraft broker can prove their worth is to help the buyer or seller take a step back and view the aircraft from a more detached perspective.

Aircraft sellers will often have an attachment to their aircraft, having maintained, upgraded and customized it to their own needs and tastes – and this can prevent them seeing a balanced list of pros and cons a prospective buyer sees. 

For example, if the aircraft is older, and has been out-of-production for a while, the aftermarket support and pool of spare parts may be more limited, which devalues the aircraft irrespective of how well maintained it is.

Similarly, the broker will help buyers take a step back from the sleek look or ‘ramp appeal’ of an impractical or overly expensive jet and instead focus on one that meets both mission and budget.

Essentially, the aircraft broker capable of captaining the team of a buyer or seller will lead their client to the market with their eyes wide open.

Upgrades and Return on Investment in Pre-Owned Jets

Specific to the seller of a pre-owned aircraft, the broker should be able to recommend how to realize the higher price of other, better-equipped aircraft of the same make/model on the market.

This could be a simple matter of making the jet more aesthetically pleasing or could include an upgrade to the aircraft’s cabin Wi-Fi/flight deck where it makes financial sense to do so. (The broker will help assess the associated costs of any suggested upgrades, the downtime required, and any likely Return on Investment, helping the client come to an informed decision.)

On the other side of the equation, a broker should be able to help a buyer understand any upgrades needed to help an older jet meet their mission need, the cost of those upgrades, and suggest an appropriate offer for the jet, based on the costs.

A Broker’s Negotiation Skills are Key!

Tactful negotiation skills are needed on both the buyer’s and seller’s side of the table to successfully conclude a transaction. In the ideal scenario, both parties should come away from the sale feeling as if they have a great deal!

If an aircraft deal does not favor a client, a skilled broker will be able to steer the negotiation back into neutral territory, ensuring the deal doesn’t become too one-sided.

And if middle-ground cannot be achieved, the broker should know when to advise their client to walk away from an unfair deal, and when they are within their legal rights to do so.

Ranking & Shortlisting Candidate Aircraft Brokers

It should be stated that many repeat aircraft owners find a broker with whom they are satisfied and enjoy many years working with that same broker in subsequent sales and acquisitions of aircraft.

For less experienced buyers and sellers, it is important to identify the right broker, and to do so requires an initial screening, with a shortlist drawn up and ranked based on qualifications and suitability using a weighted score. The score should be based on what – as a buyer or seller – you value the most, as illustrated in Figure 1 (above).

Proceed to score other areas you value, based on the candidates’ other attributes, before adding the numbers for each candidate to provide a final rank. Based on the candidates ranking highest on your weighted score card, proceed to interview the leading brokers.

In Summary

There are many aircraft brokers available in the Business Aviation industry and you should take the time to explore their experience, reputation, specialization (e.g., aircraft type/make/model), and quiz them on their market knowledge, research and analytical capabilities.

As we will discover in future articles within this series, the value of a solid network cannot be understated when it comes to selection of the right broker. Over several subsequent articles, we will continue to review your buying/selling team members, exploring the roles and expertise each member should bring. Stay tuned!

Read more articles in this series:

• Aircraft Acquisition Teams: The Financier