It’s easy to make million-dollar mistakes buying a private jet if you don’t know what you are doing and you don’ have the right team. Here’s what you need to know before you make an offer
A recent Town Hall by Corporate Jet Investor with private jet aircraft sales executives revealed a stunning data point. First-time buyers who rushed to buy private jets to escape COVID-19 are already putting them up for sale.
The pros say this is mostly because they didn’t know what do. The newbies didn’t know the game. In fact, they didn’t have a game plane. And, in some cases, they didn’t have a team.
That’s right, buying a private jet is something you shouldn’t try to do with a click of your mouse on the internet.
The process of finding the right jet and then making sure everything is in order can take up to a year. Many used aircraft that are on the market are still there for a reason.
Used private jets can cost from under $500,000 to over $50 million. What seems like a great purchase price might come with millions of dollars in necessary maintenance and upgrades behind the curtain.
Panelists at the Town Hall say management companies and flight crews often downplay the costs of owning.
More than that, first-time buyers often make mistakes by not putting together a team of pros, from aviation-experienced lawyers to tax specialists to title specialists and, of course, a trusted broker. Here’s a winning game plan to ensure you get things right – and avoid expensive surprises.
40 Steps To Buy A Private Jet
Below are 40 steps Corporate Jet Investor, as part of its masterclass series, has identified key steps that are part of buying a private jet:
1. Choose your broker/dealer/transaction adviser. They should easily save you more money than their fee, and the same is true for a specialist aviation lawyer
2. Select an aircraft to match your needs/view aircraft
Making an offer on your Private Jet
3. Make an offer/agree Letter of Intent (long-form vs short-form, standard versus bespoke)
4. Legal counsel review transaction structure and assess tax issues
5. Deposit placed in escrow (negotiate terms of release)
6. Buyer’s lawyer/buyer negotiates finance term sheet with financiers
7. Buyer’s lawyer conducts due diligence on title, searches for liens etc
8. Start negotiating the Aircraft Purchase Agreement and who pays what
9. Aircraft Purchase Agreement signed
Inspecting your Private Jet
10. Log book review by buyer’s technical team, check back-to-birth records
11. Appraisal for finance (if required)
12. Test flight/re-location flight – who is paying for this in Aircraft Purchase Agreement
13. Pre-purchase inspection
14. Finance documents reviewed
15. Sale document drafting starts
16. Tax advisers determine structure and importation route (if required)
Using a contractual model similar to fractional ownership, Partners in Aviation wants to be the Match.com of private jets
Seeking to bridge the gap between full ownership and fractional shares and jet cards, Partner’s in Aviation moves into its fourth year in the market seeking to be the Match.com of private jet owners. Most of all, its principal Mark Molloy, a former Beechcraft executive, says the PIA formula is structured to avoid the pitfalls of those multi-owner partnerships that often don’t end well.