- 12 Oct 2023
- René Armas Maes
- Aircraft Ownership
What are the most common mistakes, leading to regrets for private jet buyers after they’ve completed their purchases? Chris Kjelgaard finds out, learning how to avoid any such regrets becoming part of your experience...Back to Articles
Are there any common mistakes that the industry's leading aircraft brokers see buyers of private jets making? If so, what are they, and how can they be avoided?
According to the experts, there are fewer first-time buyers likely to be looking to buy a private jet in 2023 and 2024 than in 2021 and 2022. When the market is in its normal long-term state, first-time buyers represent about 5-7% of all purchasers – but “in the bull market” of 2022 they accounted for 35%, according to Dustin Cordier, Head of Global Sales for OGARAJETS. No wonder the market become so frenzied at that point, as hundreds, if not thousands of new buyers emerged to distort the picture.
Some of those peak-market first-time buyers have expressed regrets over their purchases, with some quickly deciding that being the owner of a business aircraft – particularly a business jet – was not for them, Cordier says.
Some aircraft bought by first-time buyers in 2021/2022 have already been re-sold. But why has that been the case?
While there are several reasons, probably the most common is that the buyers failed to perform the necessary due diligence, not digging deeply enough in their research to sensibly purchase an expensive asset that requires lots of subsequent expenditure to maintain and operate.
What many first-time buyers of business aircraft often don’t understand is that becoming the owner of a business jet “is more like adding a business unit to your home [or business] than it is like buying a car,” Cordier highlights.
Ownership of a business aircraft requires continual attention, both to the aircraft itself and to the logistical and personnel arrangements (financial and otherwise) needed to keep operating it.
Buying jets requires full awareness of what the purchase requires, knowledge of the market itself, of the chosen aircraft type’s operating capabilities, and the specific example’s history and condition, says Chad Anderson, CEO of Jetcraft.
“A lack of expert advice is a major factor when it comes to post-purchase regret, which is why it's essential for buyers to have a comprehensive understanding of market conditions and the suitability of their selected aircraft prior to committing to the purchase,” he adds.
“As Jetcraft puts it, ‘a great deal on the wrong aircraft is a really bad deal for any buyer’,” Anderson highlights. “The result of not knowing your aircraft properly is often unforeseen operational costs, operating limitations or technical downtime. [These are] all things that can have a once-good thing leaving a bitter aftertaste.”
What, then, should a buyer do before deciding to purchase a given business aircraft? What aircraft buying tip do the experts offer?
First and foremost, suggests Lee Thomas, President and CEO of Columbia, South Carolina-based Eagle Aviation, for anyone planning to buy a business aircraft, “having a good broker is very important”.
That the broker has a strong reputation for honesty and fairness is vital – not all brokers are created equal, and a broker unscrupulously or even accidentally “can sell an aircraft for the wrong reasons,” he warns.
“The value of a good buyer’s agent shouldn’t be underestimated – with the return on investment easily proven through a lack of surprises, combined with better options and advice overall.
“This will include detailed discussions to determine [the buyer’s] true needs, including the typical range and number of passengers their missions will need to accommodate,” Thomas continues. “If they aren’t being asked these questions at the outset by the broker, then they should look elsewhere.
“Likewise, buyers must ensure technical experts conduct in-person reviews on the aircraft and its records.”
In practical terms, the requirement to start the purchase process by selecting a high-quality aircraft broker in turn leads to the would-be owner then hiring a team of expert independent consultants, each of whom is expert in one or more different areas of the aircraft evaluation, purchase-negotiation and financial-planning process, Thomas notes.
That team should contain a good aviation lawyer (preferably experienced and showing a good track-record in deal-making); an accountant or tax planner (with specific experience in handling tax matters associated with Business Aircraft purchases); and a technical advisor experienced in conducting aircraft pre-purchase inspections and reviewing aircraft maintenance records – particularly the aircraft’s logbooks.
If a buyer decides to use the services of a reputable aircraft broker, that broker usually has close contacts with suitable independent experts and can quickly help assemble a strong advisory team for the buyer.
The same goes for many independent experts themselves. If approached by buyers to help them purchase a business aircraft, such experts can review their own wide contact bases to recommend and assemble a solid team of all the advisors necessary to complete a purchase successfully, drastically reducing the chance of buyer’s regret occurring.
The right team of experts will be especially important when the aircraft is to be imported from another country, Thomas highlights. The legal, taxation and airworthiness rules and regulations involved in deregistering an aircraft from one jurisdiction and registering it in another demand the specialist knowledge, attention and advice of experts.
At the very least you will need a good aviation lawyer, an experienced technical inspector, and a canny accountant. When it comes to buying an aircraft which needs to be imported or exported, “I would not even think about it without using an expert,” Thomas warns.
Using a good aircraft broker is also important for these and related reasons. With solid contacts throughout the world they can obtain a lot of information about local market conditions and relevant regulations which might affect a purchase. They often also get advance insider knowledge of the potential availability of aircraft for sale before the aircraft are publicly listed.
“Buyers need to collaborate closely with businesses that are committed to fully understanding their specific requirements and can provide total visibility of the market, alongside access to the widest possible inventory,” Anderson emphasizes.
“By drawing on the right knowledge, buyers can invest confidently in new or pre-owned jets – while gaining insight into how ongoing costs could be a factor in deciding between the two,” Anderson adds. “This understanding and broad view of the market also helps buyers ensure the aircraft is a perfect fit for their requirements.”
Continue reading to discover other common aircraft buyer mistakes and regrets and how to avoid them in the November AvBuyer digital edition. Click the button below…