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The Plane Truth Pentastar

Before You Soar: Purchasing & Acquisition

So you’ve done your research and due diligence and made the life-changing decision to step into the private aviation world. You’re fully informed and prepared to take on the substantial investment of owning an aircraft. It’s time to talk about aircraft acquisition.

After your private aviation partner has identified a selection of aircraft that meet your needs and you have narrowed down your options and decided the exact right model for you, it’s time to hit the marketplace. This is where leading private aviation partners will suggest retaining the services of a broker: an expert in aircraft assessment and acquisition who can conduct the transaction and help buyers navigate a complex and sometimes challenging marketplace.

A word of caution here: the aircraft broker industry is surprisingly unregulated. Buying a boat in some states requires more rigorous licensing, testing, and registration oversight. Unfortunately, the reality is that virtually anyone with a laptop and a phone can present themselves as a broker. And because the consequences of misleading or incomplete information can be enormously significant when you are dealing with a purchase the size and expense of an aircraft, it’s even more important to have confidence in your broker. It’s also important to be sure that a broker is representing either the buyer or the seller in a transaction—never both.

At Pentastar, we partner with best-in-class brokers we know will leverage their knowledge and experience on behalf of our clients. Because an ethical and independent broker with demonstrated expertise is so important to the aircraft acquisition process, we recommend partnering with a broker who is accredited by the International Aircraft Dealer’s Association (IADA), a self-governing organization with an established code of conduct and test-based certification process.

A reputable broker will work on your behalf to provide or secure reliable legal counsel, manage ownership documentation and registration, help establish an LLC or other legal ownership entity (if necessary) to purchase the aircraft, and assist buyers with both financing and in mitigating the tax implications of their purchase. They will also help communicate with regulatory agencies like the FAA, secure letters of authorization, and generally help streamline a process that can otherwise be intimidating to most buyers.

The long list of elements needing to be addressed culminates with a critically important step that must be completed prior to finalizing the transaction: the aircraft pre-purchase inspection.

The buyer typically pays for the pre-purchase inspection, a sometimes lengthy and comprehensively detailed process that takes place at a qualified maintenance repair organization. Anything that is found during the inspection deemed to classify the aircraft as un-airworthy, the expense to address and correct the issue is typically borne by the seller. The broker also plays an important role during the inspection window, researching and verifying records to ascertain the maintenance history and proper documentation as far back as the production date of the aircraft and major sub-components. Any missing documentation must be addressed and re-verified.

While some initial outfitting work can be conducted during the inspection, this can potentially lead to issues if the sale falls through—an eventuality that can and does happen for a variety of reasons. When millions of dollars are at stake, even a seemingly small disagreement between buyer and seller can throw a wrench in the works of a transaction. Which is why brokers who understand how to negotiate and draft a proper letter of intent and a purchase agreement are so important. The way those documents are written might make the difference between whether the buyer gets their deposit back if the purchase falls through, as well as protecting the seller from unfair expenses during the process.

The final step in the acquisition process before closing is often an official acceptance flight. Like a ceremonial test drive before someone hands you the keys to your new car, the flight marks the end of a long and complicated process in fitting style. It’s not uncommon to officially close the sale shortly after landing.

Now that the aircraft has officially changed hands, the final step in the private aviation journey can begin: completing outfitting and entry into service.