5 Extra Things to Know Before Buying Your Jet

There are several basic things to know before buying an aircraft, and some less obvious areas too. Having asked the experts to highlight some of these in his previous article, Chris Kjelgaard continues with another five...

Chris Kjelgaard  |  23rd April 2024
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    Chris Kjelgaard
    Chris Kjelgaard

    Chris Kjelgaard has been an aviation journalist for more than 40 years and has written on multiple topics...

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    What to know before buying a private jet

    After establishing the need for aircraft buyers to pick the right broker, add the right experts to the acquisition team, set and maintain an adequate transaction timeline and meet the financier’s documentation needs, there are other things that should be known before proceeding to buy a business jet.

    Did you miss Part 1 of this article? Find it here.

    Duncan Aviation’s Sales and Acquisition Specialists Tim Barber and Leah Alexander, and OGARAJETS’ Head of Global Sales, Dustin Cordier share some more things buyers should be clear about...

    1. Insist on a PPI and a Full Aircraft Logbook Review

    During the height of the post-Covid sales boom, many first-time business aircraft buyers accepted sale terms which did not allow for any pre-purchase inspection of the aircraft and its maintenance records to be performed.

    However, every responsible broker and aircraft technical inspector would never recommend that a buyer allow a seller to dictate this. If allowed, it effectively means the buyer is agreeing to buy an aircraft sight unseen without any knowledge of the aircraft’s condition.

    At the very least, the buyer should insist that the technical inspector representing them in the purchase negotiations be given full access to the aircraft’s logbook, says Cordier.

    The logbook contains the aircraft’s full maintenance history because it should contain full details of each fault found, repair performed and overhaul conducted on the aircraft, including – for US-registered aircraft – a copy of every FAA Form 337 recording major damage and repair.

    For the seller to offer the buyer access only to the maintenance tracking software record for the aircraft is not sufficient. “Using maintenance tracking software for that review is like watching a movie version of the book,” Cordier says.

    2. Be Aware of Airworthiness Regulatory Quirks

    Anyone who hasn’t previously purchased a used aircraft registered in another country is unlikely to be aware of the forest of airworthiness customs and taxation regulations that will apply to the purchase of the aircraft, along with registering it in the registry of its new nation of domicile, or the nation in which it will be based.

    Having an expert representation team which contains an aviation-savvy lawyer and accountant will insulate the new owner from personally having to know many of the regulations pertaining to the international purchase.

    However, such transactions have some regulatory quirks of which the buyer would be well-advised to be fully aware before entering and completing the deal. Otherwise they might be in for some unpleasant surprises.

    One regulatory quirk that inexperienced owners often come across when importing aircraft to the US, for example, is that a Supplementary Type Certificate (STC) issued by the airworthiness authority of one country for a given branded piece of equipment for a particular aircraft type is not always recognized by the airworthiness authority of another country.

    As a result, an aircraft with that equipment STC in its previous country of domicile might not be allowed to fly in another domicile to which it has been exported.

    Cautionary tales of such predicaments exist – and are occasionally related to AvBuyer by industry sources. One which reached this writer’s ears concerned an aircraft with an STC for a given piece of cabin furniture – possibly a couch – which was exported from Canada to the USA.

    That particular STC for that piece of furniture reportedly had not been recognized by the FAA and so the aircraft remained grounded for many months until the new owner paid a considerable sum to have it certificated in the US and awarded an STC by the FAA.

    3. Airworthiness and Customs Regulations for Aircraft Importation May Differ

    Even if the owner is aware that one or more STCs granted by the previous country of domicile for equipment in the aircraft they’re buying was originally not valid in the US, and before importation they’ve obtained all the FAA STCs the aircraft needs for intra-US operations, it may still not be importable to the US for another reason...

    According to Cordier, one basic and important regulatory quirk which affects any aircraft being deregistered from another country and brought into the US to be put on the FAA registry is that the Customs regulations affecting the aircraft are not the same as the airworthiness regulations.

    Even if an aircraft is fully airworthy for intra-US operation as far as the FAA is concerned, that is irrelevant as far as the US Customs and Border Patrol (CBP) is concerned.

    The aircraft in question won’t be allowed to be operated in the US until the owner has met all US Customs regulations applicable to the aircraft, says Cordier – and that might mean having to pay a substantial additional chunk of money to have the aircraft meet those Customs regulations.

    “You have to satisfy both” sets of regulations to import a business jet into the USA, he adds, advising owners planning to import aircraft to use the services of a customs brokerage company such as Vimar Transportation Consultants or TVPX which specialize in ensuring aircraft for US importation meet all the required CBP regulations.

    According to Cordier, it’s just as important for buyers of aircraft which previously were imported into the US and are already on the FAA register to know if those aircraft originally met all applicable CBP regulations when they were imported. If they did not, then it becomes each new owner’s responsibility – at their own cost – to ensure full US Customs regulatory compliance. 

    4. Other Regulatory Matters You Should Know About

    There are other regulations governing aircraft purchases which involve international exportation and importation.

    One such regulatory matter can easily catch out any buyer purchasing an aircraft which is registered on one of the specialist national registries primarily used for their speed of service.

    Such registries often are the national registries of nations or territories which have little occasion for registering aircraft which are actually operationally based in those jurisdictions. 

    Most of the aircraft in such registries are operationally based elsewhere and may not even fly often into the jurisdictions in which they’re registered.

    However, those registries still must ensure that their airworthiness regulatory standards meet the approval of ICAO, so their airworthiness regulations have to be as exacting and as stringent as those of any major national or multinational globally accepted airworthiness regulator, such as the FAA, EASA or the CAAs of the UK, Australia or New Zealand.

    In many cases, to ensure their airworthiness regulatory standards are deemed acceptable by ICAO, national “registries of convenience” adopt fully the standards of one of the major regulators. And while those registries have their own aircraft inspectors, they often rely on the assistance of inspectors working for the major regulator whose standards and regulations they have adopted.

    As a result, Cordier says, “You may need an EASA or an FAA inspector, for instance, to sign off” on the airworthiness-compliance documents accompanying an aircraft a new owner has bought, then deregistered from another jurisdiction for import to a different aircraft registry.

    Customs regulations can also affect buyers of used aircraft which they are planning to relocate from North American or European registries to various jurisdictions and registries in Africa and Asia. If a buyer is unaware of such regulations they can come as an unpleasant shock.

    Until recent years, sellers of hard-used and often inadequately maintained Business Aircraft always felt they could find homes for the aircraft in less-developed African, Asian or South American nations – even if the aircraft were very old, in poor general condition, had incomplete maintenance records, and were banned (from importation) by the major registries.

    However, says Alexander, the situation has changed substantially in the past decade or so – almost reversing the primary directions of exportation and importation of business aircraft in some cases.

    Increasingly aware that they were being perceived as last-resort homes for aircraft which were not necessarily fully airworthy in regulatory terms, many African, Asian and South American nations have enacted Customs legislation in recent years that bans importation to their registries of any aircraft older than a certain age.

    The aircraft age at which banning of importation becomes mandatory varies by country, but the cut-off age almost invariably begins for aircraft which have reached 15 to 20 years of age.

    It is worthwhile noting, however, that many business aircraft of such ages remain active and are operated frequently in those countries regarded as major jurisdictions and registry domiciles – and can still be imported to those countries.

    5. Take Your Broker’s Advice

    No matter how keen you are to buy a business jet, particularly if a given aircraft type or even a specific aircraft has taken your fancy, it’s always worth paying very careful heed to the advice of your well-chosen broker – even if the advice is that you shouldn’t buy an aircraft at all!

    Reputable, high-quality aircraft brokers always want what’s best for their customers, even if in some cases it means them missing out on transaction fees and commissions. Long-established brokers win their reputations for fair dealing by applying and maintaining high ethical standards – and they stake their reputations on good advice.

    A good broker will always ask many questions to find out what the customer’s financial circumstances and actual flying needs are, helping them determine what the customer’s typical flight mission is and how often they will use any aircraft they buy.

    This then tells the broker which aircraft type best suits the customer’s needs, if any.

    “I’m quite happy to recommend to a client that they buy a jet card or book ad hoc charters,” if the client indicates he or she is unlikely to fly for more than 150 hours annually, says Barber. Even making the jet available for third-party charter for the remainder of its annual flying time is unlikely to bring in enough revenue to make the purchase a breakeven proposition for such clients.

    Another rule of thumb Duncan Aviation applies when advising its clients on which business jet they should consider buying relies on finding out from each customer what their typical flight distances are, and how often that pattern varies.

    Alexander says that, if a given customer’s flights for 90% of the time are of 1,000 miles or less, but once or twice a year the customer needs to make a long transoceanic flight of 4,000 miles or more, than Duncan Aviation will advise that customer to buy an aircraft which is optimized for relatively short sectors of (say) three hours’ duration.

    In this scenario there is no need for the customer to buy a 4,000nm business jet, which would be vastly more expensive than purchasing a much cheaper shorter-range jet and acquiring a jet card for the longer flights which are occasionally needed. 

    Did you miss Part 1 of this article? Find it here on AvBuyer.com.

    More Information From:
    Duncan Aviation: www.duncanaviation.aero
    OGARAJETS: www.ogarajets.com

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