Seller Questions: Tips for Negotiating Aircraft Price

What can business aircraft sellers do to ensure they’re in a strong negotiating position over their asset's sale price? René Armas Maes offers tips…

René Armas Maes  |  29th September 2022
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    René Armas Maes
    René Armas Maes

    René Armas Maes, Vice President, Commercial, Jet Link International LLC, is an international...

    Smart business aircraft sellers in private jet cabin

    The better prepared a business airplane seller is, the better their chance of achieving an acceptable price for their aircraft. This includes a liberal dose of market realism, combined with being prepared to do the groundwork before the aircraft even comes to market.

    Having previously considered the key elements of a successful marketing strategy when selling business aircraft, we established that a big part of getting the marketing right is to understand where your aircraft stands within the marketplace compared to other aircraft available for sale.

    This could be in terms of total time on the airframe and engines, the aircraft’s year of manufacture, or upgrades installed, and the hourly maintenance programs that the aircraft is enrolled on.

    When it comes to aircraft value, it’s essential for owners to step back from any emotional attachment they may have to their aircraft, and try to view it as a buyer would see it. In this respect, the aircraft should be priced according to what it has to offer, and in alignment with market realities.

    Too many times aircraft owners have a selling price in mind which does not align with market realities, nor reflect the condition of the aircraft. The result is a prolonged period on the market that ultimately ends up costing the seller money, and an unnecessarily protracted period of price negotiation with greater possibility of a deal unwinding due to fundamental differences in valuation.

    Conversely, a well thought-out marketing strategy and on-point ask price will expedite a closing at a price both the buyer and seller can be happy with, based on actual market conditions.

    Negotiation strategies need to be aligned with the goal of achieving a successful close to the transaction and aircraft delivery – but how can aircraft sellers optimize the value of their asset while simultaneously achieving their goal? The following tips should provide a sound basis for negotiating an aircraft’s sale price with buyers…

    Tip 1. Undertake an Aircraft Inspection

    Execute an inspection of your aircraft before you place it on the market. This inspection will provide the basis on which you can build a solid asking price, and offer you insights into the condition of the aircraft. You will also have the opportunity to amend any squawks and issues that could become a major bone of contention after a pre-purchase inspection.

    While having an extra inspection may seem excessive to some, especially at a time when finding maintenance slots can be difficult, it will ultimately put the seller in a stronger negotiating position, and may well save on cost and time later.

    Related Tip: Make sure the inspection is thorough enough to cover any areas susceptible to corrosion.

    Tip 2. Pay for an Aircraft Appraisal

    Have an appraisal done by an accredited aircraft appraiser. In the Business Aviation industry, several experienced appraisers are available to provide accurate, impartial, and credible evaluations of your aircraft’s worth.

    Having an appraisal done on your aircraft before you make it available for sale will, again, act to give you a solid idea of the price you should be asking, and provide you a fixed goal in terms of the price you’d like to achieve following negotiations.

    Special attention should be given to the aircraft’s records, previous inspections, and the thoroughness of all documentation of repairs, modifications, airworthiness compliance, service bulletins, engines, airframe, APUs (if applicable), and damage history, among others.

    Tip 3. Cost-up Possible Regulatory Compliance

    Aircraft sellers should assess any upcoming regulatory compliance, based on the aircraft’s existing systems and technology. Understand what the upcoming regulatory mandates are. Do they require an avionics upgrade on your aircraft to comply? What’s the cost of compliance?

    The likelihood is that a buyer will either expect the aircraft to be equipped for compliance, or they’ll expect a discount to the value of the necessary upgrade. Ultimately, old, outdated equipage equals lower market desirability.

    Even if sellers choose not to upgrade themselves, though, a good understanding of the upcoming regulatory requirements and costs will ensure any discounts that are negotiated with the buyer reflect the realities of the cost to upgrade, and the associated downtime.

    Tip 4. Rank the Pre-Purchase Inspection Findings

    Finally, it is important to note that following the pre-purchase inspection the report will list all discrepancies found – even down to paint damage or tears in the interior. By their nature, pre-buy inspections are more detailed than regular and scheduled maintenance events.

    Though it is hoped a preliminary inspection (see Tip 1) will flush out the major faults, giving the seller to correct them before they become an expensive surprise from the Pre-Purchase inspection, sellers should keep open minds to the additional findings at this stage of the transaction.

    Work through the list, costing the findings out and ranking them from the highest to lowest. The buyer will undoubtedly do the same.

    Having a list established in order of cost and importance will enable a structured approach to sale from which buyers and sellers can work through the most important and expensive items, and negotiate which of the less important items are necessary to address.

    Next Time…

    It is hoped that the four tips offered here will give sellers the basis for negotiating a fair market price for their aircraft; one that both they and their buyer can be happy with. However, the negotiation process doesn’t just concern the sale price of the aircraft.

    Legal documents must be drafted and negotiated – and that will be a focus for the next article, along with discussing who pays for the flight test, the flights to and from an aircraft inspection facility, and the delivery location. Stay tuned!

    Following this article series? Read Part 1, Part 3 & Part 4 of this Seller Questions series:

    Seller Questions Part 1: How to Market an Aircraft

    Seller Questions Part 3: Agreeing Aircraft Sale Contracts

    Seller Questions Part 4: Concluding a Jet Sale

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    René Armas Maes

    René Armas Maes

    Editor, Buyer Strategy & Finance

    René Armas Maes, Vice President, Commercial, Jet Link International LLC, is an international aviation consultant and experienced C-Level professional. He has built a successful track record for developing and delivering Business Aviation strategies for Fortune 500 companies, Venture Capital firms, and HNWIs.

    René is a regular columnist for Bloomberg (financial), America Economia (business) and a speaker at aviation conferences worldwide.



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