Basic guide to buying a jet
Oliver Stone, Managing Director of London-based Colibri Aircraft Brokerage and Asset Advisory offers top tips for potential owners.
So, you have made up your mind to purchase a private jet for personal or corporate use. In a buyer’s market it seems the ideal solution to all of your travel needs, but the practicalities of how to go from looking to owning need to be carefully considered before the purchase. Choosing and buying an aircraft should be an enjoyable and exciting process, but there are details that can make it complicated and time consuming. Thinking through some or all of the below can make the transaction much smoother and allow you to enjoy the process, and the aircraft you finally choose, that much more.
Charter as many different types of aircraft as you can
It is much cheaper to charter a business jet and realise you don’t really like it; than it is to purchase an aircraft and realise you don’t really like it. Much like buying a house, sometimes the things you think are most important, turn out not to be. Chartering will show you which of your personal preferences take precedence in regards to your cabin experience. Do you want more natural light from bigger windows, or more accessible cargo space? Do you need a separate bedroom, or more meeting combinations?
Charter in a variety of circumstances: travelling different distances and with different numbers of passengers. This will inform you more than almost anything else as to which aircraft will suit your desires best.
Chartering is the perfect opportunity to understand what the inflight experience is like. Actually going up in the air is the only way to comprehend the sounds levels in cruise flight, how comfortable the cabin is on long journeys or when it is full of people, the number and type of meals the galley is capable of serving, how passengers interact with one another in the space, and how user friendly (or otherwise) things like the lavatory may be.
We suggest to charter and not to ask for a demonstration flight. Demonstration flights are typically short and are quite rare to agree with a seller. Importantly, you will not get the full user experience on a demonstration flight, and most sellers will regard any request for a demonstration flight with well-earned scepticism. However, a charter flight allows the user a true experience in a day-to-day operational flight. It is much more enlightening and useful.
Think about how you will own your aircraft
How will you maintain, staff and operate it? It is tempting to buy an aircraft solely based on a low price, but you need to think about its actual ownership. Are there maintenance facilities near where you are based at which the aircraft can be serviced? Are there any mechanical parts availability issues for this aircraft model? Are there available pilots, and will they need special training? Does your management company have a system in place to operate this aircraft model? These are all scenarios that need to be considered before purchasing your aircraft if you want to avoid unexpected costs and delays during your ownership.
We sometimes see people get so excited about the purchase of an aircraft that they overlook how they will put it into service once closing day happens. It is easy to get so caught up in the details and process of a transaction that the focus ends on closing day. As a buyer, your experience with the aircraft really starts the day you close and arranging how the logistics of day-to-day use will occur is a vital part of the process.
Consider how you will actually use your aircraft
Examine the flights you flew the previous year and determine what the majority of those flights entailed. Perhaps you usually flew with four passengers at an average range of 1,200 nautical miles, so you would want to highly consider a mid-size jet such as the Cessna Citation XLS or Embraer Phenom 300. If your most common journeys include seven colleagues with a range of over 2,800 nautical miles, you will want to look at a large cabin jet such as the Bombardier Challenger 605 or the Gulfstream G280. Once you look at the composition of the majority of your flights you can narrow your search to the aircraft that will best satisfy your needs.
It is tempting to look at the longest-range flights and choose an aircraft based upon the most challenging conditions. However, if that challenging mission is only done once or twice per year, you will end up paying a significant amount to own and operate an aircraft for utility that you rarely use. We typically advise clients to target their search to the plane that will capably do 80% of their missions. This gives the most cost effective solution to fit your needs. Your aircraft manager may well be able to supply a suitable aircraft for those unusual journeys.
That being said, emotional desire and enjoyment is also an important part of any use and ownership experience, so definitely include this into your decision making.
Start the conversation about financing as early as possible
If you are obtaining financing for your purchase, the sooner you begin discussions with your bank the better off you will be during the transaction process. Finance approval can take anywhere from a few weeks to a few months. Your bank will have its own set of requirements for a transaction in order to provide funding, and this can take much longer than expected to complete. Transactions subject to finance approval will rarely be accepted. Your financing needs to already be approved at the point of making an offer.
The extent of the finance available will also help you to know which aircraft are within your scope.
Be prepared to act quickly
The aircraft markets have been through a significant change in the last three months. Some markets have the majority of the aircraft for sale under contract with pending sales, leaving only a small portion actually available for active buyers. While factors instigating this change are unknown, as of this writing, the aircraft markets are witnessing a dynamic where suitable aircraft options can be hard to find and where quality aircraft are selling quickly. We have seen circumstances where multiple bidders are pursuing the same aircraft and in some cases out bidding each other. This may be temporary, but it may not be.
This is not to say that suddenly we are in a seller’s market. However be aware that the dynamics of the last nine years have seen a sudden shift and delays can often result in lost opportunities. To counter this, have all your financing, ownership structure, and operating scheme requirements arranged before making an offer on an aircraft, so you can move quickly when the right opportunity arises.
Keep an eye on each party’s incentives
The aviation sales business is unregulated. By and large, the sales industry is run by honest and capable professionals who work hard to provide transparent and high quality service for their clients, but there are those who approach it with unprofessional standards and questionable ethics. If you have not hired someone to work on your behalf and protect your interests, try to understand the motivations of those involved in your transaction. How are each of those people being compensated and how could that alter their actions.
Aircraft are complicated and involve many details and rules that are significantly different from non-aviation businesses. As a buyer, no one expects you to be an expert in aviation. As a result – ask as many questions as you can; there is no such thing as a silly question. Your broker, operator and lawyer are experts, so ask them anything that comes to mind. Your aircraft broker particularly should be able to assist you with each of these items and answer your questions regarding them. Use their experience and expertise to your advantage to help the process go smoothly. The more you know about the transaction process and ownership the happier you will be with your aircraft.
Oliver Stone is the managing director for Colibri Aircraft Ltd., a private aircraft brokerage and advisory firm headquartered in London, with offices in Bratislava, Frankfurt, and the Isle of Man. His focus is the international arena, selling and purchasing aircraft for clients as well as advising lenders on asset value protection and repossessions.