How do you get the best deal on your company aircraft? Dave Higdon suggests you work with an expert who will save you money and provide valuable advice.
Let's start our discussion at the outset: the decision to buy a jet or other business aircraft followed by the first encounter with an area enriched with professionals standing-by to help.
“When it comes to buying a business jet or turboprop, work with an expert who will save you money and the grief of learning afterwards just how much you didn't know.”
A qualified dealer or an experienced broker may or may not be knowledgeable in the details of your company, but they generally know how businesses use their aircraft and why. They also know where and how to acquire any other expertise – whether airframe-, powerplant-, cockpit-, or cabin system-related – that is needed to help you along.
The wrong aircraft for a company's needs seldom works out to be the best deal, price tag aside. It is the professional’s first job to help make sure your company's mission matches up with an aircraft and its capabilities, right down to the ongoing costs of operation.
The gentleman quoted above served as the in-house expert to help his employer buy the company's first business aircraft. He was a pilot with several hundred hours but no ownership experience with the target type. “We knew enough to get a pre-purchase inspection,” he explained. “We didn't know enough to have an expert in the aircraft type do the inspection.”
Eventually the buyer and his pilot found the inspector missed things likely to have jumped out at an inspector familiar with the type.
Over the ensuing 18 months the airplane spent less time mission-ready than it did in the shop. It was almost a good deal; it mostly fit the mission, “but it was a mistake.”
A knowledgeable broker was retained to sell the airplane and find a better solution – one that went on to average more than 200 hours per year for the next decade.
A dealer in the Southeast offered this insight: “Be a smart shopper, picking someone to help you...ask for references, consider the aircraft they usually handle, and their latest success story. The broker who sells pressurized piston twins and twin turboprops may not be the one you need when you're looking at a Citation or Learjet. Knowledge becomes more of an issue as you move up through the jets for sale categories.
“Never forget this,” he concluded. “You must be willing to walk away from the deal.”
About the same time that you start looking for that aircraft expert to help you, you should pay a visit to your financial home (i.e. before you start negotiating with anyone for anything). A seller may be a bank, trust, another business, or an individual. In the end, what matters most is negotiating a transaction that's as much to your liking (and needs) as possible. Knowing your financial options is a definite advantage.
More than money, however, is on the table. If the aircraft’s inspection revealed the need for any maintenance or mandatory downtime in the future, the expert you hire should be qualified to help steer the negotiations toward an accommodation that takes into account those needs.
A seller may offer certain work premised on a higher asking price than you want to pay– because it will save you later, the seller may say. Your expert can quickly assess the offer or the work needed and advise you on what best suits your needs. That may be letting the seller take care of items in question, or the best deal may be a lower price that lets you schedule the work yourself.
“Where offers of paint or interior come in, we always advise our client of options that put the buyer in control of the outcome,” our Southeastern broker explained. “It's all part of the package.”
Knowing finances are available can give the buyer a sense of confidence that translates across the negotiating table… presuming, that is, your representative wants you in the room… “To the greatest extent possible the only contact I want my client to have is when we get a tour of the jet for sale, and then I want the potential buyer out of there pronto,” a West Coast dealer/broker elaborated.
“Never let the seller see how much the buyer wants the aircraft.”
Emotions, the West Coast Dealer/Broker explained, can handicap a buyer's negotiating position. In fact, this expert advised, the more nonchalant, the better. “Now if you're a good poker player and can sit there emitting a 'don't really care' attitude, then we'll slay them!”
Otherwise…? “The instant they see how badly you want the aircraft, they add plenty to how much they're willing to take.”
Professionals in negotiations counsel their clients that a cool attitude matched with a relaxed demeanor saps the energy out of the seller's hope that you want the airplane badly enough to compromise.
“It goes against the grain of some business people to be absent during the negotiations for such a significant investment,” a Northeast broker added. “It's often their company, and they feel they must be in the room for every big deal and major decision. I let clients know up front that they can have me or someone who is foolish enough to let the client be present – but not both. All too often a client was within a few thousand of the deal he wanted when he blinked. He got his jet – but it cost a quarter-million more than it should have...”
More than Money
The answers expected for this story were of basic advice on negotiating a good price. That expectation dissolved when one broker reminded this writer that where aircraft are concerned the “best deal” involves so much more than purchase price.
“You must approach the deal not as 'We're buying a jet!' but as 'We're investing in business equipment'. That always requires a look at all the factors – not merely the costs,” explained the New England broker. “Long-term ownership, utilization, capitalization, operation, maintenance - everything goes into a smart decision.
“A 'best deal' is usually the smartest decision based on all those inter-connected factors. Typically, not even experienced pilots can cover it all.”
The Art of the Deal
So how does one find the best expert? Several avenues exist to picking a broker or other representative to help you navigate through the sundry steps of buying or selling a valuable asset such as a jet for sale.
• Check references.
• Talk to past clients – the most-reputable dealers and brokers often offer references preemptively.
• NBAA's associate membership includes numerous professionals in aircraft buying and selling.
• More specific is the membership of the National Aircraft Resale Association (NARA).
• The National Aircraft Finance Association (NAFA) membership includes institutions unified by their own aviation practices and portfolios.
If that doesn't help, ask other operators you know and go from there…
Read More About: Buying Jets