Once considered an endeavor reserved for the ultra-wealthy, buying an aircraft is actually a fairly common event. Whether you are interested in a Piper J3 Cub, a Gulfstream G650, or something in between, there are a many justifications for purchasing an aircraft, particularly in this economy.
Many purchasers cite a motivation to reinvest in their business, while proving an asset to depreciate. Others worry about growing inflation as a reason to lock in ownership in a tangible asset. Some point to the desire to travel privately in the age of COVID. Still other buyers see how travel by private aircraft saves significant time as compared to traditional travel on the airlines. Whatever the reasons might be, aircraft ownership is probably more accessible than you might imagine. Still, there are a lot of moving parts to work your way through before bringing that plane to its new home base.
Starting your search for the right aircraft likely begins with identifying your intended use. Is the aircraft going to be used for fly-ins and the ocasional $100 hamburger? Or will this be a method for you and/or your company to become more efficient while improving quality of life? Regardless of the reasons, there are some things you should know before making an offer on an aircraft.
In helping to identify the right plane for you or your company, you’ll need to know what the true cost of ownership is for any given candidate. Of course, this goes beyond the purchase price. There are fixed and variable costs to consider. These will include the actual cost of operation, usually calculated per flight hour. Will the costs of insurance for the aircraft and the flight crew be within reason? Is there a hangar available at the preferred airport? Will the costs of ownership be borne by an individual, a company or an owner group? What are the sales and use taxes that need to be considered? Will the aircraft be depreciated? Will financing be required? These are only a few of the factors a buyer should be considering.
After the intended use and potential costs have been evaluated, the next task is to identify an aircraft that can fit the buyer’s needs and within the estimated budget. With the very tight aircraft market we’re seeing at this time, it could be that you’ve found your chosen plane through an aircraft broker. Perhaps the candidate for acquisition was identified by word or mouth. Or, maybe, you found the aircraft on one of the many websites, advertising planes for sale. However you found the right aircraft, you’ll want to demonstrate some level of commitment to the seller, either through a letter of intent, a deposit with an escrow company, or both. Next comes the purchase agreement, followed by a test flight, and a pre-purchase inspection of the aircraft. Finally, if the aircraft is airworthy or brought up to specs during the inspection process, closing will be scheduled. In aircraft transactions, this can usually take place very soon after the inspections. For this reason, financing should already be in place so as not to hold things up.
While purchasing an aircraft can involve a lot of activity in a compressed period of time, the right team can make the transaction go smoothly. Selecting the right legal counsel to oversee that team, can take the pressure off of an otherwise involved transaction. If aircraft ownership is something you’ve dreamed of, give us a call and let’s see if we can get you airborne. Even if full ownership seems intimidating, we can discuss alternatives that might satisfy your goals without the same level of commitment.