The International Aircraft Buyer's Guide

One of the most common mistakes in aircraft acquisition is choosing an aircraft first and then attempting to make the owner's requirements fit it.

Start with the mission instead.

Ask:

Where will I normally fly?

List your most frequent expected routes.

How many passengers will normally travel?

Do not buy permanently for the largest group you might carry once a year.

How much baggage will they have?

Golf equipment, skis, business equipment and substantial international luggage can materially change aircraft requirements.

Which airports do I want to use?

Runway length, elevation, temperature, operating restrictions and available facilities can affect aircraft suitability.

How often will I fly?

Annual utilisation is important when comparing outright ownership with alternatives.

Will the aircraft primarily operate domestically or internationally?

International operation can influence range, avionics, crew, connectivity, regulatory requirements and support.

Will it be used privately, for business, or commercially?

This can fundamentally affect how the aircraft should be owned and operated.

Define the mission before looking at aircraft.

Before purchasing, compare whole ownership with the alternatives.

Depending upon location and travel requirements, these may include:

• on-demand charter;
• jet cards;
• block charter programmes;
• fractional ownership;
• shared ownership;
• leasing; and
• whole aircraft ownership.

Whole ownership offers a high level of control.

You can determine, subject to regulatory and operational requirements:

• aircraft specification;
• base;
• crew;
• management;
• cabin configuration;
• maintenance standards; and
• availability.

But that control brings fixed costs and responsibility even when the aircraft is not flying.

There is no universal number of annual flying hours at which everybody should buy an aircraft.

The economics depend upon aircraft type, charter availability, positioning costs, financing, taxation, utilisation and how much value you place on having an aircraft available to your schedule.

The correct question is not simply:

“Can I afford to buy this aircraft?”

It is:

“Does owning this aircraft make sense for the missions I need to fly?”

Aircraft categories overlap, but understanding the broad differences can help narrow your search.

Piston Aircraft

Piston aircraft can provide an accessible route into private aircraft ownership and are widely used for shorter journeys, private flying and training.

They can make sense where passenger numbers and distances are relatively modest and turbine performance is unnecessary.

Turboprops

Turboprops combine turbine engines with propellers.

Depending upon model, they can provide:

• excellent short-field performance;
• substantial cabins;
• useful payload;
• good range; and
• efficient operation on shorter sectors.

A turboprop can sometimes be a better tool for the mission than a jet, particularly where runway performance and operating economics matter.

Very Light and Light Jets

Smaller business jets provide jet speed and performance without the acquisition and operating costs of larger aircraft.

They can suit individuals, families and businesses normally travelling with relatively small passenger groups.

Midsize Jets

Midsize aircraft generally provide more cabin space, baggage capability and range.

They can be particularly suitable for longer regional and international missions.

Super-Midsize Jets

Super-midsize aircraft combine substantial range with larger cabins and high cruise performance.

They can suit owners regularly undertaking longer international missions without requiring a full large-cabin aircraft.

Large-Cabin and Long-Range Jets

Large business jets can offer:

• multiple cabin zones;
• sleeping arrangements;
• extensive baggage capacity;
• sophisticated connectivity;
• long-range capability; and
• high levels of passenger comfort.

Their capabilities can be exceptional.

So can their operating costs.

Buy long-range capability because you need it, not simply because you can afford the acquisition price.

Both routes can be appropriate.

Buying New

A new aircraft can offer:

• latest-generation technology;
• manufacturer warranty;
• known history;
• current avionics;
• current cabin systems;
• greater specification choice; and
• predictable initial maintenance condition.

However, new aircraft can involve substantial acquisition cost and potentially long delivery lead times.

Buying Pre-Owned

A pre-owned aircraft can offer considerably more capability for a given acquisition budget and may be available immediately.

But two aircraft of identical model and year can represent very different purchases.

Factors include:

• total hours;
• cycles;
• maintenance history;
• engine status;
• maintenance programme coverage;
• damage history;
• records;
• avionics;
• cabin condition;
• paint;
• upgrades; and
• previous operating environment.

Never assess a pre-owned aircraft solely from its age and asking price.

Maximum published range is useful for comparing aircraft.

It should not be treated as a guarantee.

Actual mission capability can be affected by:

• passengers;
• baggage;
• fuel;
• winds;
• weather;
• temperature;
• airport elevation;
• runway length;
• required reserves;
• routing; and
• operating restrictions.

Give an aircraft acquisition specialist actual missions.

For example:

“I regularly need to carry six passengers and their luggage between Dubai and London.”

That is considerably more useful than:

“I want a jet with 3,500 nautical miles of range.”

The aircraft needs to perform your mission under realistic conditions.

Aircraft performance involves trade-offs.

Filling every passenger seat does not necessarily mean you can also fill the fuel tanks and baggage compartments while remaining within permitted weight limits.

A buyer should therefore understand:

• maximum take-off weight;
• useful load;
• fuel capacity;
• passenger payload;
• baggage;
• runway requirements; and
• payload-range trade-offs.

This becomes especially important for buyers intending to operate long missions with full cabins.

An aircraft with sufficient range may still be unsuitable if it cannot conveniently use the airports you need.

Consider:

• runway length;
• runway elevation;
• temperature;
• runway surface;
• surrounding terrain;
• approach requirements;
• airport operating hours;
• noise restrictions; and
• local operating limitations.

Hot and high airports can be particularly demanding.

An aircraft regularly operating from Dubai, the Alps, Mexico City or other challenging environments may face very different performance considerations.

Analyse the actual airports you intend to use.

Passenger capacity alone tells you relatively little about comfort.

Consider:

• cabin height;
• cabin width;
• cabin length;
• seating arrangement;
• seat comfort;
• lavatory;
• galley;
• natural light;
• noise;
• temperature control;
• cabin altitude;
• connectivity; and
• power supplies.

For long-distance flying, seemingly small differences become important.

Physically inspect the aircraft type wherever possible.

Sit in the seats.

Walk through the cabin.

Imagine spending eight or ten hours there rather than eight or ten minutes at an aircraft show.

Baggage capacity is easily overlooked.

Establish:

• volume;
• weight limits;
• location;
• accessibility during flight;
• loading arrangements; and
• ability to carry unusually shaped items.

A business group travelling overnight may have very different requirements from a family travelling internationally for several weeks.

Consider real usage.

Aircraft ownership involves fixed and variable expenditure.

Fixed Costs Can Include

• insurance;
• hangar;
• crew salaries;
• crew training;
• aircraft management;
• subscriptions;
• navigation services;
• regulatory administration;
• scheduled calendar maintenance; and
• financing.

Variable Costs Can Include

• fuel;
• maintenance;
• engine reserves;
• landing fees;
• handling;
• navigation charges;
• crew expenses;
• consumables;
• de-icing; and
• maintenance arising from utilisation.

Prepare an annual operating budget based upon realistic usage.

Generic “cost per hour” figures can be useful for comparison but do not represent the entire ownership cost.

Fuel consumption can represent a substantial part of variable operating expenditure.

But comparing aircraft simply by hourly fuel burn can be misleading.

A faster aircraft may consume more fuel per hour while completing the journey in less time.

Fuel pricing also varies considerably internationally.

Consider:

• fuel burn;
• mission duration;
• fuel availability;
• destination fuel prices;
• fuel programmes; and
• technical-stop requirements.

Analyse the complete mission rather than one isolated figure.

Many turbine aircraft have engines, auxiliary power units or other components enrolled on maintenance programmes.

If an aircraft is described as “on programme”, establish:

• what is covered;
• level of coverage;
• whether payments are current;
• whether coverage transfers;
• exclusions;
• outstanding balances; and
• what happens at major maintenance events.

Programme status can materially influence both ownership costs and resale value.

Aircraft advertisements commonly quote total flight hours.

Hours are important, but they are not the complete story.

Cycles are also relevant because certain aircraft and engine components have cycle-based limitations.

An aircraft operating numerous short sectors may accumulate significantly more cycles than another aircraft with similar hours operating predominantly long-distance flights.

Review:

• aircraft hours;
• aircraft cycles;
• engine hours;
• engine cycles;
• component status; and
• previous utilisation.

High time does not automatically mean poor condition.

Low time does not automatically mean excellent condition.

Engines can represent one of the largest financial exposures in a business aircraft.

Establish:

• hours;
• cycles;
• maintenance history;
• inspection status;
• programme coverage;
• repair history;
• upcoming maintenance; and
• life-limited component status where applicable.

A low aircraft purchase price can become extremely expensive if major engine expenditure is approaching.

Use technical specialists familiar with the particular engine and aircraft type.

Aircraft operating internationally need avionics appropriate to the airspace in which they will fly.

Consider:

• navigation capability;
• communications;
• surveillance;
• weather systems;
• cockpit displays;
• regulatory requirements;
• data communications;
• future supportability; and
• likely upgrades.

An aircraft that is perfectly adequate for one region may require additional equipment or upgrades for another operating environment.

Understand both current capability and future upgrade exposure.

For business aircraft, internet connectivity can be almost as important as the cabin.

Different systems provide different levels of:

• geographical coverage;
• speed;
• reliability;
• bandwidth;
• equipment cost; and
• subscription cost.

If passengers expect to conduct video calls, transfer large files or work continuously during long international flights, establish whether the installed system can realistically provide that service.

“Wi-Fi equipped” tells you very little on its own.

Aircraft records are fundamental to value and airworthiness.

Review the relevant:

• aircraft logs;
• engine records;
• maintenance history;
• component records;
• modifications;
• repairs;
• airworthiness information;
• inspection status; and
• supporting documentation.

Incomplete or missing records can create regulatory, technical and resale difficulties.

The records review should be undertaken by professionals familiar with the aircraft type and applicable regulatory system.

Previous damage does not automatically make an aircraft unsuitable.

Establish:

• what happened;
• extent of damage;
• how it was repaired;
• who performed the repair;
• whether it was properly approved;
• whether records are complete; and
• how it affects future value.

A properly repaired and documented aircraft can remain an appropriate purchase.

Undisclosed or poorly documented damage is a different matter.

A comprehensive pre-purchase inspection is one of the most important stages of buying a pre-owned aircraft.

The scope should be agreed before inspection begins.

Depending upon aircraft type, it can include:

• airframe;
• engines;
• systems;
• avionics;
• corrosion;
• damage;
• maintenance status;
• records;
• component status; and
• upcoming maintenance.

Where practical, use an independent facility experienced with the particular aircraft.

The purchase agreement should also specify how discrepancies discovered during the inspection will be dealt with.

Aircraft transactions bring together several specialist disciplines.

Depending upon transaction size and complexity, your team might include:

• aircraft acquisition specialist or broker;
• aviation lawyer;
• technical representative;
• maintenance specialist;
• tax adviser;
• accountant;
• finance specialist;
• insurance broker;
• aircraft manager; and
• flight operations personnel.

This is particularly important with international transactions.

Aircraft acquisition guidance from the business-aviation industry similarly treats regulatory, tax, financial, title, contract, pre-purchase and closing issues as interconnected parts of the transaction.

Under the international aviation framework, an aircraft has the nationality of the state in which it is registered.

An aircraft cannot normally be validly registered in more than one state simultaneously.

However, the actual registration and transfer requirements are determined by the laws and regulations of the relevant state.

That means there is no single worldwide aircraft registration procedure.

Depending upon the registry, requirements can concern:

• owner citizenship;
• company incorporation;
• residence;
• beneficial ownership;
• aircraft eligibility;
• documentation;
• airworthiness;
• deregistration from the previous state; and
• financing.

Choose the intended registry early in the acquisition process.

There is no universally “best” aircraft registry.

The appropriate choice depends upon factors including:

• owner eligibility;
• aircraft type;
• intended use;
• operating region;
• financing;
• leasing;
• commercial operation;
• tax;
• lender requirements;
• management; and
• resale strategy.

For internationally operated business aircraft, registry selection should be considered alongside the ownership and operating structure.

Do not select a registry simply because another aircraft owner uses it.

Your circumstances may be entirely different.

Registration and legal title are related but distinct concepts.

The legal effect of an aircraft register differs between jurisdictions.

A buyer therefore needs to establish that the seller actually has the right to transfer the aircraft.

Appropriate title and lien searches should be conducted according to the jurisdictions and registries involved.

For significant international transactions, aviation legal specialists should coordinate this work.

Aircraft are valuable mobile assets and are frequently financed.

Before completion, establish whether the aircraft is subject to:

• mortgage;
• lien;
• security interest;
• finance arrangement; or
• other registered or unregistered claim.

The process for searching and releasing interests varies between jurisdictions.

International transactions can also involve the Cape Town Convention framework where applicable.

The objective at closing is normally to ensure that the buyer receives the title and interests agreed in the purchase contract.

Do not assume that paying the seller automatically removes existing financial interests.

Buying an aircraft located in another country can introduce additional requirements.

These may include:

• deregistration;
• export documentation;
• export certificate of airworthiness;
• import certification;
• customs declarations;
• tax;
• ferry permits;
• insurance;
• physical inspection; and
• modifications required by the new registry.

Requirements vary according to the countries and aircraft involved.

Import/export planning should therefore begin before closing, not after you own the aircraft.

Moving an aircraft from one national register to another can require an airworthiness review.

The new authority may need to establish that the aircraft complies with requirements applicable to that registry.

Differences can exist in:

• approved modifications;
• maintenance programmes;
• equipment;
• documentation;
• mandatory inspections; and
• configuration.

An aircraft that is fully airworthy under one registry does not necessarily transfer to another registry without administrative or technical work.

Investigate this before agreeing the purchase price.

Aircraft taxation is highly jurisdiction-specific.

Depending upon the transaction, potential taxes can include:

• VAT;
• GST;
• sales tax;
• use tax;
• import VAT;
• customs duty;
• transfer taxes;
• registration fees; and
• other local taxes.

Tax consequences can depend upon:

• buyer residence;
• owner structure;
• place of delivery;
• aircraft location;
• place of importation;
• intended use;
• business/private use;
• leasing arrangements; and
• subsequent movements.

Never assume the tax treatment of an aircraft purchase from the location of the seller alone.

International aircraft transactions frequently require careful consideration of where legal delivery occurs.

The delivery location can potentially affect:

• taxes;
• customs;
• registration;
• title transfer;
• insurance;
• export arrangements; and
• other transaction requirements.

For high-value aircraft, seemingly minor changes to transaction structure can have substantial consequences.

Tax and legal advice should therefore be obtained before signing a purchase agreement or fixing the closing structure.

Aircraft can be owned in different ways.

Depending upon jurisdiction and circumstances, ownership might involve:

• an individual;
• operating company;
• special-purpose company;
• trust;
• leasing company;
• partnership; or
• other structure.

The appropriate structure can affect:

• registration eligibility;
• taxation;
• financing;
• liability;
• operational control;
• commercial operation; and
• administration.

Creating a company simply to own the aircraft is not automatically the best solution.

Ownership and operation need to be considered together.

Aircraft can be purchased outright or financed.

Finance providers may consider:

• aircraft age;
• aircraft type;
• market liquidity;
• borrower strength;
• jurisdiction;
• registry;
• loan-to-value;
• intended operation; and
• maintenance status.

Lenders may also impose requirements concerning:

• insurance;
• maintenance;
• registration;
• operator;
• location; and
• disposal.

If financing is required, investigate it early.

Do not assume every lender will finance every aircraft in every jurisdiction.

Aircraft insurance should be investigated before committing to the purchase.

Factors can include:

• aircraft type;
• value;
• intended operation;
• operating region;
• pilot experience;
• crew qualifications;
• annual utilisation;
• management;
• hangar location; and
• commercial use.

An insurer may impose crew-training or experience requirements.

This can influence whether you can operate the aircraft as originally intended.

Obtain indicative insurance terms during the acquisition process.

Crew requirements depend upon aircraft certification, operation and jurisdiction.

Some aircraft are approved for single-pilot operation.

Others require two pilots.

Even where single-pilot operation is permitted, insurers or owners may prefer two pilots.

For professionally crewed aircraft consider:

• salaries;
• qualifications;
• type ratings;
• recurrent training;
• medical requirements;
• visas;
• work permits;
• positioning;
• accommodation;
• leave;
• relief crew; and
• retention.

For globally operated aircraft, crew logistics can become a significant management function.

The home base affects convenience and operating economics.

Consider:

• distance from home or business;
• hangar availability;
• runway;
• airport operating hours;
• customs and immigration;
• fuel;
• maintenance;
• handling;
• security;
• crew availability;
• weather;
• parking; and
• airport charges.

A slightly more distant airport with better facilities and fewer restrictions can sometimes be a better base.

Owners who do not want to operate their own flight department can appoint an aircraft management company.

Services can include:

• crew recruitment;
• payroll;
• maintenance coordination;
• flight planning;
• scheduling;
• regulatory administration;
• hangar arrangements;
• fuel purchasing;
• insurance coordination;
• accounting; and
• operational support.

Management companies vary significantly.

Compare:

• fees;
• services;
• purchasing arrangements;
• transparency;
• operational experience;
• geographic coverage; and
• aircraft-type expertise.

The cheapest management fee does not necessarily produce the lowest overall operating cost.

Potentially.

Some owners place aircraft with appropriately authorised commercial operators so that the aircraft can generate charter revenue when not required by the owner.

This can contribute towards:

• fixed operating costs;
• crew;
• hangar;
• management;
• maintenance; and
• other expenses.

But the structure must comply with the applicable aviation regulations.

Commercial operation is not simply a matter of finding somebody willing to pay to use your aircraft.

Rules vary internationally, but commercial air transport generally involves a substantially different regulatory environment from purely private operation.

Commercial operation can affect:

• operator certification;
• maintenance;
• crew qualifications;
• training;
• insurance;
• operational control;
• safety management;
• aircraft equipment;
• record keeping; and
• regulatory oversight.

If you intend to generate charter income, discuss this before purchasing the aircraft.

Not every aircraft, ownership structure or management arrangement is equally suitable for commercial operation.

Charter revenue can offset some ownership expenditure.

It should not automatically be assumed to make aircraft ownership profitable or cost-free.

Gross charter revenue may be reduced by:

• operator commissions;
• management fees;
• fuel;
• maintenance;
• crew;
• insurance;
• cleaning;
• catering;
• positioning;
• increased engine hours;
• component usage; and
• depreciation associated with higher utilisation.

There is another cost:

availability.

The aircraft cannot simultaneously be earning charter revenue and waiting exclusively for you.

If charter revenue is central to the purchase economics, prepare a realistic commercial forecast before acquiring the aircraft.

More utilisation means more:

• flight hours;
• cycles;
• engine usage;
• scheduled maintenance;
• cabin wear;
• landing events; and
• component consumption.

This can bring maintenance events forward.

The correct calculation is therefore not simply:

Charter revenue received

but:

Net charter contribution after the additional costs and asset utilisation created by charter activity.

A competent aircraft manager or operator should be able to help model this.

If charter income is genuinely part of your ownership plan, market demand matters.

Charter customers may place particular value on:

• cabin size;
• aircraft age;
• passenger capacity;
• baggage;
• range;
• Wi-Fi;
• cabin condition;
• lavatory;
• brand/model recognition; and
• operating location.

The aircraft that perfectly meets your private requirements may not necessarily be the aircraft with the strongest charter demand.

Balance the two objectives.

Operating commercially across borders can be particularly complex.

An aircraft's registration does not automatically give an operator the right to sell charter flights in every country.

Commercial traffic rights, operating permits and cabotage restrictions can apply.

For example, an operator may be permitted to bring passengers into a country but not necessarily sell domestic flights between two points within that country.

Commercial operating rights should therefore be assessed separately from the aircraft's technical ability to perform the flight.

An aircraft management company and a commercial charter operator may be the same organisation — but not necessarily.

Understand who is responsible for:

• operational control;
• crew;
• maintenance;
• charter sales;
• pricing;
• scheduling;
• revenue collection;
• customer service; and
• regulatory compliance.

If the aircraft will be chartered, understand exactly how owner trips receive priority and how charter revenue is calculated.

The aircraft purchase agreement is a critical transaction document.

Depending upon the transaction, it can address:

• aircraft identification;
• purchase price;
• deposit;
• delivery condition;
• records;
• pre-purchase inspection;
• discrepancy rectification;
• title;
• liens;
• taxes;
• delivery location;
• closing;
• risk of loss;
• representations;
• default; and
• governing law.

International transactions can introduce additional complexity because buyer, seller, aircraft, registry and closing location may all involve different jurisdictions.

Obtain specialist aviation legal advice where appropriate.

Aircraft transactions frequently involve a deposit placed with an escrow agent or other agreed stakeholder.

The purchase agreement should establish:

• amount;
• when it becomes refundable or non-refundable;
• circumstances in which it is returned;
• inspection rights;
• rejection rights; and
• closing procedure.

Do not transfer substantial funds simply on the basis of informal correspondence.

Professional aircraft transactions often use specialist escrow and closing services.

Depending upon jurisdiction and transaction, they can assist with:

• holding funds;
• transaction documents;
• title searches;
• lien releases;
• registration documents;
• closing coordination; and
• evidence of transfer.

International transactions require particularly careful coordination so that money, title, deregistration and registration documents move in the intended sequence.

International aircraft transactions can involve substantial currency exposure.

An aircraft might be priced in US dollars while the buyer's assets or income are denominated in:

• euros;
• pounds;
• dirhams;
• yen;
• Swiss francs; or
• another currency.

Even a relatively small exchange-rate movement can materially alter the effective acquisition cost of a multi-million-dollar aircraft.

Consider currency exposure when negotiating deposits, stage payments or delayed closings.

Aircraft support is global — but not equally available everywhere.

Before purchasing, investigate:

• authorised service centres;
• engine support;
• parts availability;
• mobile repair capability;
• maintenance programme support;
• avionics support; and
• aircraft-on-ground response.

An aircraft with excellent support in North America may present different challenges when permanently based in another region.

The reverse can also be true.

Support network should form part of aircraft selection.

Where an aircraft will live matters.

Extreme heat, cold, humidity, sand, salt air and other environmental conditions can affect operation and maintenance.

For aircraft regularly operating in environments such as the Gulf, tropical Asia, northern Canada or other demanding regions, discuss local operating experience with maintenance specialists.

Hangar availability can also become particularly valuable.

Eventually your requirements will change.

Consider future marketability at acquisition.

Factors affecting resale can include:

• model popularity;
• aircraft age;
• hours;
• cycles;
• maintenance;
• engine status;
• programmes;
• records;
• damage history;
• avionics;
• connectivity;
• cabin condition;
• paint;
• registration history; and
• overall specification.

A highly unusual configuration may suit you perfectly while appealing to fewer buyers later.

Maintain accurate records throughout ownership.

A well-maintained aircraft with poor documentation can become much harder to sell.

Keep:

• maintenance documentation;
• programme records;
• modification records;
• repair documentation;
• ownership records;
• tax/customs documents where relevant; and
• supporting technical information.

Good record keeping protects both operation and asset value.

Buying Too Much Aircraft

Paying continuously for range, cabin and capability rarely used.

Buying Too Little Aircraft

Discovering the aircraft cannot perform regular missions with realistic passenger and baggage loads.

Looking Only at Purchase Price

Ignoring upcoming maintenance and annual operating expenditure.

Trusting Headline Range

Without analysing actual missions.

Ignoring Engine Status

Potentially exposing the owner to substantial early expenditure.

Ignoring Records

A polished aircraft can still have documentation problems.

Choosing the Ownership Structure Too Late

Ownership, registration, tax and operation are interconnected.

Assuming Registration Solves Tax

Registration and taxation are separate issues.

Importing Without Planning

Potentially creating unexpected certification, tax or customs problems.

Assuming Charter Will Pay for Everything

Gross charter revenue is not net owner income.

Choosing Emotionally

An aircraft can be beautiful and completely wrong for the mission.