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The Duncan Download Blog: Business Aviation Advice & Observations

A Look at the 2018 Pre-Owned Aircraft Market

Posted by Tim Barber on Tue, May 22, 2018 @ 01:00 AM

Everyone is talking about the pre-owned market being stronger at the start of 2018 than it was last year. However, I’m going to venture a guess that most of us have heard this story a good number of times year after year. In fact, the number of green shoots stories that were published throughout the period of the Global Financial Crisis really did wear thin with most of us in the sector. What actually happened was that we all started to ignore the spin and looked at such media with some considerable cynicism.

So, what’s different this year?

ac-sales3The start of 2018 was a real whirlwind with a significant increase in deals, reducing inventory, and just about every broker attending Corporate Jet Investor London at the end of January was talking of a real market shift. At long last we were starting to see that buyers had choices. So did sellers. There was even bullish talk of it being a buyer’s market. In reality, then, as it is now, there are sectors of the market that are performing extremely well while a few are still lagging behind.

According to AMSTAT, sales in January increased by more than 12% followed by sales reductions in February and March, bringing the end of the first quarter of 2018 to a disappointing 5% reduction in retail transactions. However, there’s a buzz in the market more so than we have seen in recent years.

A few sectors really have come alive and whilst overall inventory for sale is now around 9.5%, there are many aircraft where the percentage is just 2% or 3%. Unfortunately, the overall market is hugely skewed by far too many older aircraft remaining for sale for far too long. The reality is that many will never sell and serve no real purpose other than to unfairly inflate the for-sale statistics.

Looking at this in greater detail according to the latest AMSTAT data, 27% of the aircraft for sale are more than 30 years old. This statistic rises to 46% when considering those over 20 years. Just 21% are 10 years old or less. If we remove the aircraft that are probably never going to sell, the market statistics look a lot better. For now we are stuck with the skewed history. Even so, there’s a clear trend of reducing inventory over recent years and more importantly over recent months, as well as plateauing values so there are real signs of improvements.

Tim-Barber--300x300At Duncan Aviation we have had a promising start to the year and have seen a good number of sales and acquisitions complete during the first quarter. As a result of this, we are busy looking for new opportunities to sell aircraft. If you feel that Duncan Aviation can assist you in the sale or purchase of an aircraft for you, please don’t hesitate to get in touch.

Please phone me at +44 7836 352 676 or email at Tim.Barber@DuncanAviation.com. You may also reach out to me via my LinkedIn or Twitter (@Tim_Bizav) accounts.

If you are going to EBACE, please stop by our booth – #E89 – to find out more.

Oh, and the hot sectors I mentioned earlier? I’m afraid you’ll have to speak to us to find that out!


EBACE 2018  Duncan Aviation Attendees & Show Announcementsshow announcements.

 

Tags: Conventions & Exhibitions, International Considerations, Aircraft Sales

Duncan Aviation Releases April Duncan Intelligence

Posted by Diane Heiserman on Thu, Apr 12, 2018 @ 08:00 AM

Duncan Aviation

April 2018 Duncan Intelligence


Aircraft Battery Storage
Aircraft batteries have a shelf life and maintenance requirements while in storage. The maintenance intervals and level of maintenance are directly related to the temperature at which the batteries are stored.


KFC 400 Autopilot: Common System Squawks
As an authorized BendixKing service center, we have seen this system in our avionics repair shop many times.


Hawker: Troubleshooting Inefficient Cabin Cooling
Have you ever experienced poor cabin cooling on the ground while the APU was in operation? Keep reading...


ADS-B And Non-Performing Emitters
According to the most recent data from the FAA, slightly less than 10% of all U.S. registered ADS-B-equipped aircraft are NPE, or non-performing emitters.


Aircraft For Sale: New Offering 1Q 2018
Duncan Aviation has a large selection of business aircraft for sale. View the latest offerings for 2018 and see what is coming soon.


In The News


After A Little April Fool’s Joke, FAA Reiterates ADS-B Deadline Firm
Read more.

 

 


Duncan Aviation’s Parts Search & myDuncan Translate to Several Languages
Read more

 

Tags: Announcements, Parts & Accessories, Hawker, Avionics & Instruments, ADS-B, Aircraft Sales

No Aircraft Wi-Fi Service, No Sale

Posted by Kate Dolan on Wed, Dec 13, 2017 @ 12:35 PM

Duncan Aviation Aircraft Sales Representative Doug Roth has seen a great many changes in his 42 years in the aviation business. Aircraft have grown in size and sophistication, and Doug has seen changes in tastes and preferences, too.

8866286-business-travel-on-a-laptop.jpgToday, buyers who are in the market for a new aircraft echo the sentiments of their terrestrial home-buyers in that they want a move-in-ready, or take-to-the-skies-ready, aircraft.

Buyers don’t want to immediately put down an aircraft for several weeks for costly upgrades after buying it. They want an aircraft equipped with state-of-the-art avionics, including Wi-Fi.

An aircraft with Wi-Fi lets cabin passengers stay connected in-flight, meaning they can access the internet, send and receive email, and more.

That means owners who are planning to see their aircraft won’t escape the connectivity issue by selling their aircraft.

“If you’re selling your aircraft to a buyer who will put it on a 135 or charter certificate, the buyer definitely wants an internet connection, and that affects the value of the airplane,” says Duncan Aviation’s Aircraft Sales Representative Doug Roth. “The lack of internet drops the sale price by the cost of the installation. Because the aircraft will have to be removed from service for the duration of the installation, factor in the cost of the downtime, as well.”

Roth goes on to say that roughly 75-80% of the buyers of private aircraft want an internet connection, so again, an internet connection adds to the value of the aircraft; conversely, the sale price of an aircraft without a connection will drop by the cost of the equipment and installation, including the downtime.

Wi-Fi.jpg“Even with the small number of buyers who see zero value for themselves in having a connected aircraft, we point out that installing internet adds at least 50% of the installation cost to the aircraft resale value,” says Roth. “The majority of buyers looking for aircraft today want an internet connection.”

If you are planning to buy or sell an aircraft and have questions about the often complicated process, give the members of our Aircraft Sales & Acquisitions team a call.

Tags: Wi-Fi, Aircraft Sales, Avionics Installation

Duncan Aviation Straight Talk About Aircraft Certifications

Posted by Kate Dolan on Thu, Sep 07, 2017 @ 02:02 PM

Straight_Talk-Certifications-1.gifFeelings about aircraft certification vary depending on whether you own and operate the aircraft or you’re a passenger on it. Passengers want to know that the metal object in which they’re encased as they fly through the air is demonstrably and certifiably safe. Owners and operators, on the other hand, sometimes feel stymied by the reams of paperwork and data necessary to make sure the aircraft they operate is safe.

In spite of that frustration, however, owners and operators share the goals of the regulators to promote safety throughout the lifecycle of their aircraft, from the design and production of the aircraft to its entry into service and continued safe operation. Additionally, owners and operators must keep their aircraft airworthy (meaning it meets its type design and is in a condition for safe operation) by maintaining and operating it according to its airworthiness type certification and operating limitations.

Click here to download the Duncan Aviation Straight Talk About Certifications. 

What Is Airworthiness Certification?

Airworthiness Certification is basically the FAA—the United States’ civil aviation authority—certifying that an aircraft is safe to fly. There’s a great deal more to it, of course, but without an FAA-issued Airworthiness Certificate, an aircraft cannot taxi onto a runway much less take flight.

The most common Airworthiness Certificate granted by the FAA, the Standard Airworthiness Certificate (FAA Form 8100-2), references three things: In order to have a valid airworthiness certificate, the aircraft must be certified under part 21, must operate under part 91, and must be maintained under part 43.

That means that a Type-Certificated aircraft is able to operate as long as the aircraft conforms to its approved type design, is in safe-operating condition, and has had all of its preventative maintenance and any alterations performed according to the applicable US Code of Federal Regulations. The Standard Airworthiness Certificate must be displayed in the aircraft.  

To secure this authorization, an owner (or an owner’s legal agent) must apply to the FAA. Before doing so, however, the aircraft must have a TCDS (Type Certificate Data Sheet). Think of a TCDS as a kind of birth certificate for the airplane. This document defines the aircraft’s configuration, powerplant, equipment, intended use, and other characteristics.

When an airplane first enters into service, it must be in compliance with the Type Certificate of the stated design (make/model). Issued by the FAA, the Type Certificate determines an airplane’s operating limitations and shows that the aircraft’s design meets the FAA’s airworthiness requirements. This means that the aircraft has met the standards for safe handling, structural integrity, system reliability, and other characteristics.

Airworthiness means that this aircraft has been shown to conform to its type design and has been documented as safe. Airworthiness means, for instance, that owners, operators, and passengers can get in and fly 600 mph at 35,000 feet and feel that they are in a safe machine.

We go into greater detail more explanation about type design, airworthiness, and operating limitations in our Straight Talk About Certification. Here’s what you’ll find.

TABLE OF CONTENTS

  • WHAT IS CERTIFICATION?
  • WHAT DOES THIS MEAN FOR AN AIRCRAFT OWNER?
  • HOW TO OBTAIN AN STC
  • HARMONIZATION
  • IMPORT/EXPORT
  • RESPONSIBILITY OF THE AVIATION INDUSTRY
  • GLOSSARY OF TERMS WITH ACRONYMS
  • CIVIL AIR AUTHORITIES AROUND THE WORLD

Duncan Aviation continuously strives to be the voice of clarity in the acronym-happy aviation industry. Our free Straight Talk books are an aircraft operator's source for information about important topics in business aviation, and are written in clear, concise, no-nonsense language.

Tags: International Considerations, Aircraft Sales

Why Did I Choose Duncan Aviation?

Posted by Dave Coleman on Thu, Apr 20, 2017 @ 11:37 AM

Arguably, business aviation has seen more rapid change in aircraft technology and transaction complexity in the last five years than the previous 25. The ramification of making an error during the transaction process is more costly and time consuming today than ever. Clients are demanding an advantage from their aircraft broker and successful brokers like Duncan Aviation must deliver.

When I first entered the industry in the late 1980s timely access to information was the key to being a successful broker.  I joined my father’s firm near Pal-Waukee Airport at age 13 where we had a phone, a fax, and a telex machine. Our knowledge of the Beech King Air and two gigantic binders of aircraft data was our competitive advantage. This information was so critical, we couriered it next-day air from New Jersey. I had the privilege of updating the binders upon arrival. As an early subscriber, our information advantage lasted several years. One year, we sold almost 20 King Airs with the help of this resource.

Today, email has replaced the telex and the internet has replaced the binders (thankfully!). Some aircraft brokers have moved from a professional office to the dining room table or the local internet coffee house to lower costs. The barrier to entry is low and the competition, fierce. All the while, the technological advancements in aircraft have accelerated and transaction complexity continues to increase.  Frankly, most aircraft brokers agree that the sales environment is more demanding, the deals take longer, and there are more moving pieces in each deal today than ever before.

ac-sales3.jpgClient’s requirements for greater technical, transactional and support resources during the transaction process and beyond increases each day. After all, the ramifications of a costly error are too great, and the client relationship is too important to lose if something goes amiss. At the defense of the brokerage community however, few brokers offer these capabilities in-house because clients have not demanded it…yet.

For the last few days many have asked me, “Why did you join Duncan Aviation?” Simply put, I believe that in today’s business environment, our clients require more, deserve more, and should expect more resources from their aircraft broker. I also, believe they will come to the same conclusion as I did about Duncan Aviation.

Duncan Aviation Aircraft Sales, Did You Know? :

  • Did you know that Duncan Aviation has 2,150 aviation experts, each with an average of 12 years with theFalcon-Docking-stand-BTL.jpg company? Did you know that the aircraft sales team partners with these experts to provide technical support before, during and after the aircraft transaction? Do you know that Duncan Aviation can consider a combined brokerage and support services offering?
  • Did you know on any given day there are 125 aircraft in-house at Duncan Aviation locations, and 175 aviation experts in-the-field, making technical, sales and service visits, providing the aircraft sale team more exposure to service issues than other brokers in the business?Global engine BTL.jpg
  • Did you know that during the past four years alone, Duncan Aviation has performed more than 75 aircraft imports, 20 exports, and a multitude of Experimental and Supplemental Type Certifications? Did you know that our staff holds both Airworthiness and Manufacturing Unit Member authority and our in-house International Compliance Officer assists in eliminating costly “gotchas” that might arise during complex cross-border transactions?
  • Did you know that Duncan Aviation facilities in Battle Creek, Michigan; Lincoln, Nebraska; and Provo, Utah; have conducted more than 100 pre-purchase evaluations for aircraft transactions over the last two years and those experiences help our clients factor in potential pre-purchase and refurbishment costs?
  • Did you know that in the last 36 months, Duncan Aviation has conducted business with 79 of the 86 Fortune 100 companies that own aircraft?
  • Did you know that our technical team provides regular technical advice to other aircraft brokers and that we take great pride in collaborating with them to make transactions smooth and efficient? We also enjoy working with other brokers to uncover opportunities that suit clients’ requirements?
  • Did you know the majority of Duncan Aviation's Aircraft Sales customers return when it is time sell or purchase their next aircraft?
  • Did you know most first time aircraft sales customers are referred by existing satisfied Duncan Aviation Aircraft Sales customers?
  • Did you know that Duncan Aviation started as a business aircraft sales company, is a founding member of NARA (National Aircraft Resale Association), and has conducted over 3,500 transactions since 1956? Did you know that Duncan Aviation’s Aircraft Sales & Acquisitions team has an average of 28 years of experience?

Now you know why Duncan Aviation provides an Experience, Unlike Any Other. Call me to discuss how we can be of service. 

Meet The Team

Duncan Aviation Aircraft Sales Team

Tags: Aircraft Sales

ADS-B Adds Or Subtracts Value, Dollar For Dollar

Posted by Kate Dolan on Tue, Apr 11, 2017 @ 08:00 AM

In the last few months, Doug Roth, Aircraft Sales Representative for Duncan Aviation for 29 years, has been asked many times about the effect an ADS-B (Automatic Dependent Surveillance-Broadcast) upgrade has on the value of a business aircraft when it’s sold. The deadline for the FAA’s mandate is about 30 months away, and owners are weighing their options: Upgrade or sell.

Prospective buyers are weighing their options, as well. Time is money for flight departments, so an aircraft that’s already equipped with ADS-B is attractive, too, because it won’t require additional downtime for the installation.

Roth-for-blog.jpgDoug says unequivocally that the value of an aircraft right now is directly related to whether it has ADS-B.

“It’s dollar for dollar,” says Doug. “If you have upgraded your aircraft, you will get back every dollar you spent on the upgrade to make the aircraft ADS-B compliant. For instance, if you have a newer model aircraft and have gone with the high dollar upgrades, such as WAAS/LPV capability for the GPS so you can take advantage of the lower approaches, you will recoup every dollar you invested if you were to sell that aircraft in the current market.”

By the same token, if you have not yet brought your aircraft into compliance, the sale price will be set back dollar-for-dollar based on the amount the upgrade will cost the prospective buyer.

“It doesn’t matter if you have a newer model aircraft or one that’s nearing the end of its flight time, if you plan to sell your aircraft without the ADS-B upgrades, you will lose dollar-for-dollar the cost of the upgrade,” says Doug. 

There can be more than one path to upgrade, and which one you choose depends on a number of factors.  If you intend to fly your older model aircraft that has about 5 years of life left, you might want to opt for one of the least expensive solutions.

If you’d rather try to sell your older model aircraft now, you’ll need to deduct the cost of the ADS-B upgrade plus any related labor costs from the sale price of your aircraft.

This is true, too, for a newer aircraft that has many years of flight time remaining. Buyers who make a substantial investment to acquire a newer model aircraft will still need to turn around and spend more to get the aircraft in compliance with the ADS-B mandate.

Doug suggests that anyone who’s thinking of selling an aircraft without the ADS-B upgrade to remember how the market reacted to aircraft without RVSM (Reduced Vertical Separation Minimum) when that was mandated.

“When RVSM came out, the cost to install was a dollar-for-dollar direct value adjustment to the value of the aircraft. Before it was required and we knew it was coming, everyone was budgeting for the expense whether you owned the aircraft or were looking to buy one that did not have it installed,” says Doug. “I remember selling one aircraft right in that time period without RVSM because it was not yet required in the US. The sale price was less the cost of the upgrade, and after the prebuy, the buyer had us install it at their expense before delivery.”

The buyer would have paid more for the aircraft if RVSM had been installed, and he could have avoided the extra downtime necessary for the installation.

Tags: ADS-B, Aircraft Sales, NextGen

How To Have The Best Possible Experience When Selling Your Jet Aircraft

Posted by Tim Barber on Thu, Mar 23, 2017 @ 08:00 AM

It always amazes me just how many people are caught out when they make the decision to sell their business aircraft, but when you look at the array of specialists offering to support the sales process, it is hardly surprising.

It’s often said that in excess of 80%, as many as 85% perhaps, of all business jet sales transactions involve an appointed broker, so my primary focus here is to help guide you through this selection process.

A professional broker should be a trustworthy and knowledgeable individual or organisation with excellent industry relationships and history. Ideally, they should not have any ownership interest in the aircraft (unless they do actually own it) and should be willing and able to provide a wide range of support. The following list is by no means exhaustive but is a useful aide memoire when you are speaking with a prospective broker.

Firstly, are they a broker or an intermediary?

There are many individuals purporting to be brokers who are best termed as “intermediaries” and whilst these individuals fulfil a purpose, it’s important to realise that they are not the ones overseeing your transaction. In fact, they will then take your aircraft to their “partner,” a specialist aircraft broker, who will manage the sale for them. However, they will have been squeezed on their fee. Whilst such arrangements can work, you may possibly have been better off paying your entire fee to the broker to focus his attention even more.

Ensure the broker is actually selling aircraft they have inspected?

In fact, it’s actually the records that are perhaps more important, so make sure that they intend to review the facts rather than selling “blind.” When an aircraft is marketed without this thorough check being undertaken, the chance of the deal falling over is likely to be significantly higher. Equipment lists need to be verified, maintenance status fully understood, confirmation of no damage history or indeed understanding the repairs or replacements that were undertaken if there has been an incident, how good is the paint and interior, and so on. In my experience, just about every aircraft owner believes their aircraft is the best one available, so it’s a good idea to have this verified.GIVSP(2).jpg

1999 Gulfstream GIVSP currently available. Click on photo for more information. 

How much support is the broker going to give your aircraft in what is a very overcrowded market?

Make sure that the advertising commitment is sufficient. There are many advertising portals available, but are they hitting page one of Google? A presence on their own website simply won’t be enough; they need to commit to pay for display on the likes of Controller.com and AVBuyer.com throughout the marketing process. If not, your aircraft will be largely invisible to buyers.

Also check to see whether they are planning to run print media adverts in the leading aircraft sales journals. These are still an important source of leads as prospective buyers peruse such magazines in FBOs or on board their aircraft.

describe the image

1987 Cessna Citation III currently available. Click on the image for more information.

Are they innovative?

Increasingly, social media is an important tool in the sales process, so do ask what they are doing and then check it out by reviewing their online presence.

Also, take a look to understand what they have done for their clients’ aircraft through the use of creative press. Getting your aircraft placed into editorial media can be very rewarding and a major contributor to a swifter sale.

Are they proactive?

It is important that your aircraft is listed as being “for sale” on the trade databases AMSTAT and JetNet but you’ll be in the very lucky minority if this alone finds your buyer. Such tools, whilst vitally important for the trade, won’t get your aircraft exposed to the retail buyer. Any promise of “global databases of buyers” won’t be enough in isolation; you’ll need advertising, networking, telesales, social media and so on.

How many people/offices do they have to commit to the sales process?

Generally speaking, you will be better served by a team rather than an individual. And you’ll be even better served by a team that has vital connections to technical data like avionics upgrades, interior options and maintenance schedules. Sometimes, the slickest websites are run by a lone broker operating from a spare bedroom of a suburban semi, whilst purporting to offer a global network. Verify this by checking the facts; check out the other offices, the other individuals, look at their online and print advertising to see what other aircraft they are selling, and so on.

Don’t be afraid to ask for references from satisfied clients.

Check their core activity

One phenomenon that you may have encountered is the existence of the extended chain of brokers and intermediaries. One contributing factor here is that some brokers are unable to secure their own exclusive mandates and therefore focus their attention on assisting with another broker’s sale or purchase.

It is usually safe to assume that the longer the chain, the more brokers or intermediaries are involved and as a consequence there is more chance that the deal may fall over.

Brokers who have exclusive mandates have every reason to give your aircraft 100% focus because they know that when they are successful, they will be paid. A non-exclusive broker will sometimes lose interest in your aircraft once they realise that it’s not going to be a quick deal or that there are too many other brokers punting it around the market.

Pay them only when they have performed.

Very occasionally you may find a broker seeking an element of upfront payment, but this is not the norm in the industry. Typically the agreed commission is settled from escrow, upon completion of the sale. However, if you have driven a particularly tight deal, then the broker may seek a compromise of payment for their travel to inspect the aircraft, usually with this sum discounted from the final commission.

With purchase mandates, it is normal for an element of the commission to be advanced.

Who is overseeing the sale process in your office?

From time to time, we come across situations where the appointed representative for the sale of an aircraft is feeling vulnerable and therefore doesn’t provide all of the support and cooperation the principal assumes is being offered. The sale of an aircraft can often unnerve the individuals closest to it – pilots/crew, management companies, maintenance technicians, and so on – particularly when there is no clarity about a replacement. So, make sure that you don’t create such a conflict.

How many competing aircraft do they offer?

Much of my attention so far has been to ensure that you choose a credible partner but at the other end of the scale, where you are working with a known market leader, take a look to see how many similar aircraft they are currently offering. Ideally, you don’t want to be the oldest, highest hours or the most expensive of the 4 “identical” aircraft that they are selling at any point in time.

Exclusive or non-exclusive appointment?

Some owners believe that by giving their aircraft to multiple brokers they significantly increase the chance of it being sold or perhaps that they are getting better value for money, but this is rarely the case. The right broker exclusively mandated will give 100% to achieving a sale and protecting the online presence of your aircraft by preventing secondary, unauthorised marketing. With multiple agents working for you it is hard to retain control and before you know it, someone that you have never heard of is purporting to represent the aircraft but is offering it at a price well below what you would accept. This is not something that will ultimately benefit you or your aircraft.

As for the value for money, the actual commission paid out to either broker will broadly be the same, so you just as well focus your efforts on working with the right partner.

Follow these steps, make sure that you have a leading aviation lawyer, take good tax advice (as appropriate), be realistic in terms of pricing and disposal timetables and there is no reason that your aircraft sales experience won’t be a positive one.

Whether buying or selling, getting the right support is key to the success of your overall experience. 


Tim Barber.jpgTim Barber recently joined Duncan Aviation’s Aircraft Sales and Acquisitions team, representing clients in the European, Middle Eastern and African markets. You may reach him at +44 2032 8789 86, +44 7836 352 676 or on SKYPE tim.r.barber. On Twitter https://twitter.com/Tim_bizav and LinkedIn https://www.linkedin.com/in/timbarber2.

The Aircraft Sales & Acquisitions team is backed by a vast number of resources. Duncan Aviation touches every part of an aircraft and the company has first-hand knowledge of how corporate flight departments function to further business goals. Clients who work with the Duncan Aviation team have access to the entire spectrum of knowledge and experience that the company’s 2,200 team members located worldwide provide. Since inception, Duncan Aviation has undertaken more than 3,250 aircraft transactions. In addition, the company services more than 2,000 aircraft per year.

Tags: Aircraft Sales

How Your Aircraft's Interior Affects Business Aircraft Resale Values

Posted by Bob McCammon on Tue, Feb 21, 2017 @ 11:00 AM

Duncan Aviation Falcon 2000 Interior RefurbishmentPeople tend to judge how a business jet has been maintained by looking at the condition of the cabin. Prospective buyers and clients will hesitate if a jet appears to be in less than good repair. Yet, interior maintenance tends to be dismissed as a merely aesthetic or unnecessary expense.

The importance of an interior modification’s appearance varies by how an aircraft is used, and if it will be sold. Aircraft that are reserved for private or corporate use might postpone interior touchups until the next major refurbishment. By contrast, aircraft that are chartered tend to target the interior appearance as a much higher priority for passenger comfort and appeal.

The rationale for chartered aircraft is a well-maintained interior looks clean and feels more comfortable, and passengers feel more confident with how the aircraft has been handled and cared for. The same principle applies to selling an aircraft.

A worn or abused interior leads prospective buyers to question how the rest of the airplane has been maintained. When preparing to list an aircraft for sale, maintaining high-wear areas like armrests, entry door step treads and the galley help make a favorable impression with a buyer.

First impressions make a big difference in the sale. A well-maintained interior will help a business jet sell faster at a better price, and the broker or selling agent won’t have to make excuses for it.

Duncan Aviation’s aircraft acquisition and consignment representatives are among the most experienced in the industry, and are known for their dedication to the interests of their clients. For advice on how to keep your aircraft interior looking new without the expense and downtime of a complete interior refurbishment, request a phased interior maintenance schedule at www.DuncanAviation.aero/interior.

This article was contributed by Bob McCammon. Bob McCammon is a long-time Duncan Aviation team member, starting in the Line Department in 1968. He has since worked in a variety of areas and moved to Aircraft Sales & Acquisitions in 1992. He enjoys working with customers who are buying and selling aircraft, getting to know them and their companies. He loves that so many turn into repeat customers when they sell or upgrade.

Tags: Interior Refurbishment, Aircraft Sales

A Little Perspective on the Business Aircraft Purchase Agreement

Posted by Diane Heiserman on Tue, Feb 14, 2017 @ 09:00 AM

Contributed by Doug Kvassay, Aircraft Sales Representative

An aircraft purchase agreement provides the roadmap, defining processes and deadlines, through to the point of closing.

An aircraft purchase agreement provides the roadmap, defining processes and deadlines, through to the point of closing.

A couple of years ago, one of the larger banks in the business aviation industry called asking for my immediate assistance in locating the purchase agreement for an aircraft that we bought for a client a few years prior. The bank was undergoing an audit and had no record of it. Although I located the file on the transaction, it did not contain a purchase agreement. This transaction was for the acquisition of an aircraft that, at the time, was worth close to $20 million for a well-known individual. It didn't take long to remember the details of the events surrounding the deal.

There Was No Aircraft Purchase Agreement

The aviation attorney for our client negotiated with the bank (the aircraft owner) until the bank called and said they had had enough. We were told we had to close on the acquisition the following day or lose the aircraft. We wired funds, received an FAA Bill of Sale (BOS) from the bank and took delivery of the aircraft.

When I started in this business the process to buy a business aircraft was simple. You flew out to look at it, reviewed the records, did a quick test flight around the patch, handed the owner a cashier’s check, received a FAA BOS in return and flew home with the aircraft, all in the same day. No purchase agreements. No pre-purchase inspections. No escrows. Today, it is not uncommon to have two outside aviation attorneys spend the better part of two or more weeks negotiating a purchase agreement, usually at considerable expense to their clients.

Purpose of Aircraft Purchase Agreements

An aircraft purchase agreement provides the road map, defining processes and deadlines, through to the point of closing. However, in almost all cases, the purchase agreement is filed away once executed and never referred to again during the transaction. Even if a point of contention arises prior to closing, the buyer and seller usually work it out together without legal action, as the cost of litigating a dispute is never an economical option.

What many fail to realize is that an aircraft purchase agreement governs and spells out what both the buyer and seller are responsible for prior to closing. Typically, the only contractual promise in the purchase agreement that survives closing is the warranty of title, which is included on the standard one page FAA BOS. In the scenario above, since time was of the essence, we verbally agreed to move along with the deposit and pre-purchase inspection and were finished before we had a contract, at which point it didn't really matter. All we were receiving was warranty of title. And if you ever bought an aircraft from a bank, you know that warranty is limited to anything they specifically had to do with the aircraft.

Necessary Legal Advice

If you have special tax requirements or require setting up of an entity to hold the aircraft, legal advice from an aviation tax attorney can be indispensable. However, for a business aircraft transaction, where a straightforward purchase and sales agreement is sufficient, a competent broker working with your in-house or regular corporate attorney is a much more economical alternative to hiring a specialized aviation attorney.

Know the Details Before You Sign

Whether you are buying or selling a business aircraft, the Aircraft Purchase Agreement is a very important document to the transaction. Because it incorporates all terms and conditions of the sale, it is vital that you take the time know all the details of the contract before you sign.

Buying and selling an aircraft can be a stressful experience. You can lessen the stress by having a thorough understanding of the Aircraft Purchase Agreement.

Duncan Aviation’s Aircraft Sales & Acquisitions has been assisting operators buy and sell aircraft since 1991. Backed by in-house legal counsel, flight operations staff and over 2,000 airframe, engine and avionics technical representatives located around the world, gives Duncan Aviation first-hand access to, and knowledge of, the aircraft marketplace unmatched by any other broker or acquisition organization.

Visit www.DuncanAviation.aero/aircraftsales/listings.php for the latest aircraft for sale.

Doug Kvassay is a part of a team of four Aircraft Sales Representatives. He specializes in advanced aircraft aftermarket analysis and managing complex transactions. His aviation career began in 1980.

Tags: Aircraft Sales

Be Aware of Naked Brokerage Transactions with Business Aircraft

Posted by Diane Heiserman on Tue, Feb 07, 2017 @ 09:00 AM

Contributed by Doug Kvassay, Aircraft Sales Representative

Naked Broker

The primary focus of a Naked Broker is to maximize their personal income, not minimize the cost or risk to the buyer.

I first heard the term "Naked Brokerage" from a colleague who used it to describe an aircraft brokerage deal where the broker did not have a written agreement with either the buyer or seller of a business aircraft. Because, the broker has no protection or guarantee of payment from either side, they essentially are "naked."

Increased Aircraft Sale Price

In a Naked Brokerage situation, a business aircraft buyer is typically talking to many brokers offering different aircraft, some of which are represented by a second broker, who has the actual agreement to represent the seller. During the course of the transaction, the broker will contract with the seller of the business aircraft while at the same time write a duplicate contract between themselves and the buyer, increasing only the sales price. Surprisingly, many aircraft transactions are done this way due to ignorance or indifference on behalf of the aircraft buyer.

No Incentive to Represent Buyer Interests

Brokers in a Naked Brokerage transaction are not guaranteed to receive payment for their efforts. During every transaction they look out for their own interests and seek to maximize their profit; oftentimes collecting fees many times greater than paid under an acquisition agreement. In the Naked Brokerage arrangement, the interests of the broker in the middle are not aligned with the interests of the buyer. Their primary focus is to maximize their income, not minimize the cost or risk to the buyer.

Seek Out Predetermined Brokerage Fees

More and more aviation attorneys are refusing to consult on purchases set up as a Naked Brokerage transaction. They want to receive the warranty of title and any other representations, directly from the actual owner, not from a broker in the middle of the transaction.

Most business aviation brokers offer an acquisition service, where the fee is predetermined and the acquisition agreement clearly states that the broker is solely looking out for the interest of the buyer. This benefits both the buyer and the broker. The broker will receive the predetermined fee and the buyer will get 100% of the broker’s effort in the acquisition transaction.

The Bottom Line

Always take a second look at the Letter of Intent and make sure you understand exactly who you are buying the aircraft from.

Duncan Aviation offers business aircraft acquisition services where the fee is predetermined and the agreement clearly states we are working for the buyer. Our interests are to secure the aircraft that best fits their needs at a greatest value. View the latest aircraft for sale by Duncan Aviation’s Aircraft Sales & Acquisition.  

Doug Kvassay is a part of a team of four Aircraft Sales Representatives. He specializes in advanced aircraft aftermarket analysis and managing complex transactions. His aviation career began in 1980.

Tags: Aircraft Sales

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