How to buy a jet plane

Jet Buyer’s Guide– First time buyers

 The decision to purchase a jet for the first time or to upgrade is like any other business decision. It requires careful analysis of your needs, market knowledge, process and strategy.  Aviation can provide your company many positive financial benefits although they may be difficult to quantify.  Buying the wrong solution can often be easily recognized and results in less than favorable results.

The purchase is only a portion of the overall process.  You need to understand the operational costs and you need to have an exit strategy. All three of these will provide you the lowest total ownership costs and they need to be considered as part of the purchase strategy.

  • Budget
  • New versus Used
  • Tax implications
  • Ownership and use structure, managed or your own crew, some charter, or no charter
  • Assemble a team of aviation accountants, legal advisors, consultants and pilot/management company personnel to develop a sound business strategy to set up the aircraft and purchase.
  • The only person that has a fiduciary responsibility to you is the one you pay. A broker who gets paid from the seller is not your representative but the sellers. To have a broker or buyer’s agent work for you they need to be paid and under contract by you, simple but often overlooked.
  • Hire a dedicated buyer’s agent that is knowledgeable to assist you in selecting best aircraft, pricing and life cycle cost analysis.
  • Analyze your needs and requirements for performance and cabin comfort
  • Understand your future missions and how future regulations could affect them
  • Select Aircraft model that is best fit
  • Hangar, insurance, other operational issues
  • Market analysis of selected aircraft
  • Narrow choices to best few
  • Financing in place or pre approved prior to making offers
  • Make offers and go to contract
  • Should have crew defined, ready for training, operational requirements like RVSM in process
  • Pre-purchase inspection if used, if new completion oversight
  • Final acceptance and delivery

Hawkeye Aircraft Acquisitions is a boutique aircraft acquisition and consulting company.  We challenge convention by viewing the world differently.  Our clients experience great success and satisfaction with our different approach.  See the difference Hawkeye can make for your aircraft purchase analysis.

 

Fake news or has the Pre-owned market turned the corner?

Has the pre-owned jet market really turned the corner?  Recently there have been several articles and the press quoting brokers about how strong the market is right now.  Is this fake news or is it real?

For light jets up and through ultra long range jets, the transactions for the first quarter of 2017 and the first quarter of 2018 are within 1 percentage point.  That is much different than what we are hearing in terms of how active the market is.

On the flip side of the coin, the number of aircraft for sale is continuing to decline so with a similar number of transactions, it appears the pace is faster.  In my opinion this does not equate to demand as much as it does that buyers know they must move quicker as there are less choices if they miss this aircraft.

The question always comes back to supply/demand.  Supply has been reduced, however how much more demand is there?  Similar transaction volumes would indicate that demand is relatively stable.

The next question is as inventory of good pedigree planes continue to get smaller, will buyers pay higher prices, or settle for a lower quality aircraft, or buy new or just keep what they have?  OEM’s certainly are banking on buyers deciding to buy new.

This leads us back to the question in the title of this article.  Theory #1 says if demand stays relatively constant, the number of transactions are going to continue to be very similar.  We feel the pace of sales will be quicker thus making the market feel more robust than it actually is.

Theory #2 says there could be a dip in transactions as there are less suitable aircraft to purchase.   This should raise prices on good aircraft.  The question will become, if your current aircraft isn’t in the category of all boats rising on a full tide of a price increase, will you pay a premium for the model that the tide has risen?

We feel the market has made a nice gentle bend in the road.  We do not see any sharp corner upticks.  I hope I am wrong and the uptick is a wicked hairpin.

Mike McCracken

President

Hawkeye Aircraft Acquisitions

As published in BusinessAir Issue #7 2018