Finding a Preowned Aircraft in Today’s Market: A Needle in a Haystack

rsz_needle-1419606_1280

The challenge of historically low aircraft inventory is affecting many of my clients.  First time buyers are beyond frustrated that each time they identify an aircraft to purchase it is already under contract or there are no aircraft listed for sale that meet their purchasing requirements. Current aircraft owners seeking to replace an existing aircraft are struggling with how to time the sale of their current aircraft and purchase a replacement because as soon as good quality aircraft are listed, there are several offers and if they sell too soon, they will be left without an aircraft.  The speed of selling an aircraft has increased significantly and acquiring an aircraft has become progressively difficult in this market.

Adding to the frustration of buyers, is the bold positions many sellers are taking in this unbalanced market, including limiting the amount of time and scope of a pre-purchase inspection, capping the amount sellers will pay to remedy discrepancies and, in some cases, requiring significant, non-refundable deposits before a visual inspection.

The key to navigating this difficult market is creativity, experience and, for a certain aircraft type, global reach. When searching for an aircraft in today’s market, a buyer needs to have someone on their buying team with comprehensive and real-time knowledge of the aircraft market for their target aircraft. As with any difficult market, it often becomes more about who you know and timing.

The buyer’s team must understand how to anticipate or obtain inside knowledge regarding aircraft that are going to be listed for sale and/or that are not listed (off market) but would be sold for the right price.  Finally, the buyer’s team may need global reach, most often for large cabin aircraft, as there may be more international availability.

Additionally, the buyer’s team needs to be prepared to act with urgency when an aircraft is identified.  This team should include an aviation attorney, broker/consultant, escrow agent, insurance provider, management company and lender, if applicable.  The buyer should have a letter of intent already in draft form, deposit in escrow or ready to go to escrow, financing approved, and ownership structure ready to implement.

Finally, and most importantly, the buyer needs to be flexible but not reckless.  Buyers may have to settle on a different aircraft to purchase in the short-term as they seek out their most desirable choice.  Furthermore, buyers may need to concede on certain deal points.

An important caveat in today’s market – a buyer should not give on any items that would compromise safety.  For example, if a seller is unwilling to authorize certain inspections to get a deal done, then the buyer may make a business decision to skip those inspections.  However, buyers may consider doing additional inspections after closing.  Completing inspections after closing exposes the buyer to financial risk but completing the inspections after closing would allow the buyer to have peace of mind knowing the aircraft is in a safe condition.

In today’s market, buyers may need to play by the rules set by the seller, but with creativity, planning, patience, team knowledge, and insider expertise, finding a needle, or an aircraft, is possible.