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The Duncan Download Blog: Business Aviation Advice & Observations

DETAILS! DETAILS! DETAILS! RECOGNIZING A QUALITY AIRCRAFT PAINT FINISH

Posted by Duncan Download Blog on Wed, Jun 25, 2014 @ 10:29 AM

Aircraft paint can beautifully reflect hours of painstaking care and preparation—or it can cover a multitude of sins. The trouble is, you can’t always tell which applies to your aircraft until long after the job is finished.

Paint-Post-It-note

According to George Bajo, completions sales representative for Duncan Aviation, “Anyone can shoot a glossy coat of paint. But the value is in the details.”  

He goes on to suggest operators conduct a visual inspection for dirt specs in the paint finish as one identifier of a quality job. “While a few dirt specs should be expected, a large number is cause for concern.”

The attention to detail at the sealed windows and cleanliness of the painted landing gear are also evidence of a job done right. New stair treads, dressed boots, wiped down wheels and wheel wells, painting inside of gear doors, radome boots that don’t yellow and erosion tape are also extras that customers should expect.

“It’s all about the details,” George says. “That’s what you pay for.”

Duncan Aviation Field Guides

To help aircraft owners identify a quality paint job and decide when to take an aircraft in for a touchup or full repaint, Duncan Aviation industry experts answer questions about pressing paint maintenance issues in the recently updated “More Than Skin Deep: Paint Maintenance and Turbine Aircraft Value” field guide.

This field guide explores routine maintenance and turbine aircraft market value, paint processes, and criteria to consider when selecting an aircraft paint service provider.

Paint Maintenance Topics
  • Paint Maintenance Topics
  • How to Recognize A Quality Aircraft Paint Finish
  • How Long Does Aircraft Paint Last?
  • Routine Maintenance & Paint Integrity
  • Aircraft Paint Services

Duncan Aviation's field guides address topics of importance to business aircraft operators around the globe and are written by our very own technical experts.

These documents are available as free PDF downloads. 

 Download Now 

 

Tags: Aircraft Sales, Paint Refurbishment

Navigating A Business Aircraft Import While Overseas

Posted by Diane Heiserman on Fri, Dec 20, 2013 @ 10:43 AM

Dan Moody

No two business aircraft import and exports are exactly alike. That's when decades of experience come in handy while navigating the process. That’s where Dan Moody steps in.

Dan Moody, MRA project coordinator, spent four extra days overseas working diligently to complete the U.S. import and inspection of a Swiss aircraft as well as issue a Standard Airworthiness Certificate. 

Because the aircraft was registered in Switzerland and was required to be de-registered there, Dan had to inspect the Falcon 7X in country, so he flew overseas to Geneva to serve as the customer’s consultant.

After the aircraft was de-registered and placed on U.S. Registry, Dan needed to obtain a special flight authorization to get the aircraft within the United States to complete the import process.

“I contacted the nearest FAA office in Frankfurt, hoping to simply send the necessary paperwork their way, and they informed me I needed to hire a Designated Airworthiness Representative (DAR) to come inspect the Falcon and approve the authorization,” says Dan.

Facing an unknown delay based on the DAR’s availability, Dan approached the customer with two options: wait for the DAR to arrive and hopefully approve the flight authorization or Dan could stay a few extra days and complete the entire import process, negating the need for the authorization.

“Experience is the only thing that can prepare you for something like this,” says Dan.

Dan was able to complete the import on foreign soil and issue the Standard Airworthiness Certificate during the extra days he was in Switzerland.

“The customer was overjoyed. In fact, He asked Duncan Aviation to paint the aircraft at its Battle Creek, Michigan, location,” says Dan.

Crossing Borders: Importing and Exporting Aircraft

During the last several years, the business aircraft industry has seen increased numbers of new and preowned business aircraft being sold overseas. As a result, aircraft buyers, sellers and service facilities are increasingly involved in cross-border transactions. Read more about how Duncan Aviation navigates this complicated process in the 2013 Fall Issue of the Duncan Debrief.

Tags: Regulations, International Considerations, Aircraft Sales

Looking at Aircraft Interior Refurbishments as Investments

Posted by Diane Heiserman on Thu, Nov 21, 2013 @ 09:00 AM

Aircraft Interior Investments

Knowing that many potential aircraft buyers don’t want after-purchase downtime, sellers are looking at interior refurbishment and avionics upgrades that will provide them the greatest return on investment (ROI). Duncan Aviation addresses this by providing some guidelines for increasing aircraft interior ROI in the fall 2013 issue of its Duncan Debrief magazine.

Duncan Aviation’s knowledgeable interior specialists weigh in with ideas to update the interior of an aircraft in “Interior Investments” on page 7.  

For example, according to Doug Roth, Aircraft Acquisition and Consignment Representative at Duncan Aviation, “Today’s buyers are looking for a turn-key, ready-to-go, pedigreed aircraft with a current inspection status and a record of who performed the inspections. Although safety tends to trump cosmetics, buyers want an exterior that’s sharp looking and an interior that’s easy to personalize with very little downtime.”

Bob McCammon, an Aircraft Sales and Acquisitions expert, agrees. Just a few years ago, he says, the trend was for business jet buyers to completely refurbish the interior so it reflected their personal tastes. “Not so, today,” says Bob. “Business jet buyers are like current home buyers who want a house that is move-in ready.”

Senior Aircraft Interior Designer Mary Lee suggests that, ideally, an aircraft’s interior color schemes, veneers, and carpet should be less than six years old. She says that busy, patterned carpets in bold colors and light-colored veneers date the interior, so the aircraft won’t enjoy broad appeal on the open market.

Additionally, she says, if replacing or completely refurbishing the interior is not an option, make sure the carpet looks like new—at minimum, remove all spots and stains. As long as the leather on seats is relatively new and the colors are neutral, a thorough cleaning may be all the seats need, too.

Another critical component of an interior is its Cabin Management System (CMS). An aging CMS may detract from the ROI, as well. Steve Elofson, Senior Avionics/Installation Sales Representative, says that today’s business jet owners, and often their families, want the same functionality on their aircraft that they enjoy in their connected offices and homes.

For more information on how to carefully and critically assess an aircraft’s interior with an eye toward maximizing the ROI, read the entire article in the 2013 fall issue of the Duncan Debrief.

The Duncan Debrief is an award-winning business aviation magazine for aircraft owners and operators. Written and designed in-house at Duncan Aviation, each edition includes articles on topics and trends in business aviation. The Duncan Debrief is a free, semi-quarterly publication for aviation enthusiasts around the world.

The Duncan Debrief is available for iPads through Apple’s Newsstand. To install, search for the Duncan Debrief in Apple’s App Store and download by clicking the “Free” button. The app is placed in your Newsstand shelves. Once downloaded, you will receive push notifications each time a new Debrief magazine is published.

Tags: Avionics Installation, Interior Refurbishment, Aircraft Sales

Customer Letters: International Pre-Purchase Evaluation Done Right!

Posted by Diane Heiserman on Mon, Dec 31, 2012 @ 07:42 AM

International Pre-Purchase Evaluation

When purchasing a business aircraft with a foreign registration, select a pre-purchase facility that knows what they are doing.

Our customers have come to expect a higher standard of service from us when it comes to the maintenance and care of their business aircraft. And although we can say that we do it better than any other major repair and overhaul service (MRO) provider in business aviation, our customers say it best. Below is a customer letter written and sent to Monte Reeves, Duncan Aviation’s Manager of Customer Service located in Lincoln, Nebraska, explaining his recent international pre-purchase experience with Duncan Aviation. All customer information has been removed at their request.

Monte:

I wanted to write you to express my thanks, as well as appreciation, for the recent work Duncan Aviation and your team provided on the pre-purchase and paint of our Falcon 2000 EASy. In order to give you the proper perspective of our experience, here is a little background.

Previous Pre-Purchase Experience

Sixteen months ago, we purchased a German-based Citation Sovereign. Although we have purchased a number of business aircraft over the past 20 years, this was our first experience acquiring one registered in a foreign country. The experience was difficult, tedious and took much longer than we had expected. The process of de-registration and re-registration was cumbersome, as was the pre-purchase inspection that was accomplished in Germany, at the seller’s insistence.

Shortly after taking ownership, we made the decision to have extensive airframe and paint work accomplished and took the Sovereign to one of your competitors where we were told the paint work would take five to six weeks and in actuality took over seven. In the end, the quality of the work and new paint were fine, but the experience was much longer (over six months) and more difficult than we anticipated.

Our Duncan Aviation Experience

When we began the process of acquiring a Falcon 2000, we were very leery about purchasing another foreign-registered aircraft, due to the previous bad experience. However, we found the right aircraft for us based in Belgium and decided to proceed with the purchase. Our only stipulation was to accomplish the pre-purchase inspection in the United States. The seller agreed.

After consulting with several people in the industry, we contacted Duncan Aviation and brought the aircraft to Lincoln, NE. Even though we have been in the aviation business for some time, this would be our first experience with Duncan.

We, like every other operator purchasing a new aircraft, wanted to get it in right away. Our Director of Maintenance talked with Tim Klenke, Falcon Airframe Service Sales Rep, and explained our needs, including bringing the aircraft into the country under foreign registration, performing the pre-purchase inspection, de-registering, re-registering, etc. With this instruction, Tim coordinated everything with your production teams and Duncan Aviation was able to accommodate our tight schedule. I was able to talk with Dan Moody, MRA Project Coordinator, personally and got a good comfort level of how the registration process would happen.

When we arrived, we were met and greeted at our aircraft by our Project Manager Steve Ballard. The next morning we had a briefing with a representative from every department that would be involved in our project. I was impressed that there was not only airframe and engine representatives present, but also interior, documentation and engineering. We were able to review each of the items on the pre-purchase, as well as extra items that we wanted done at our request outside the scope of the pre -purchase. Each one in that meeting was not only knowledgeable, but professional and friendly.

As we took a tour of Duncan’s Lincoln facility, the first thing that surprised me was how busy everyone was. Over the next several weeks, we not only saw a great work ethic, but your people were genuinely friendly and extremely knowledgeable. If we had questions or concerns about the project or our aircraft, they responded quickly and followed up when necessary.

Half-way through the pre-purchase, we decided to add a new paint job to the workscope. Due to scheduling constraints of your very busy paint shop and registration issues, there was some doubt that our request could be accommodated. However, Steve, together with many production people, came together and worked out a plan that included a new paint and kept the project very close to the original schedule.

Exceeding Expectations

The paint process was split into two phases. Dan Moody assured me the new plan would have no impact on his process and the interior shop assured us they could get their work done around the schedule changes. At this point, I should also mention when I first talked to the people in Duncan's paint and design department, I was told the aircraft paint project would be completed in three weeks. Now if I hadn’t already known of Duncan Aviation's reputation for quality aircraft paint work, I would have been very suspicious since we just watched our Sovereign take seven weeks somewhere else.  

The end of the story is that our Falcon 2000 was delivered four days ahead of schedule. The work quality was excellent, including the paint and interior work. And the registration process was so smooth, it was almost a non-issue. All of the Duncan Aviation people on our project worked hard, but not at the expense of the customer relationship. We were always treated with respect and felt they understood how important our aircraft was to us, even though they must deal with the same relationship with every customer. They really did want to get it right.

As our Project Manager, Steve was on top of everything all the way. He and some of the department leaders handled a few difficult situations that arose early on in the project between the seller and buyer with courtesy, professionalism and knowledge; defusing some potentially rough spots in the process. On the occasions when we weren’t on-site at Duncan Aviation, myDuncan.aero kept us connected and made things understandable and easy.

Whatever You are Doing, Keep Doing It

I could try and list as many people by name as I could to say Thank You, but I know I would be leaving too many out. Whatever you are doing, keep doing it. Please make sure that everyone from Line Service to the Front Desk; Paint and Design  to Engineering, including Interior, Airframe, Engine, Detailing and any other department that touched our aircraft while at Duncan Aviation, knows what a great job they did and what an excellent experience we had.

You Get What You Pay For

Initially, I was concerned that your labor rate was high. However, it soon became obvious that for every hour of labor I bought, I actually got an hours worth of labor. The end cost was less than when you pay a lower hourly rate and only get part of an hour's work. Imagine that!

Pre-Purchase Services For Buyers & Sellers

Duncan Aviation's only focus during a pre-buy evaluation is to provide the most accurate assessment on the condition of an aircraft to the buyer and seller. Our comprehensive services allow us to correct most discrepancy repairs in-house.

New avionics systems, interiors and industry-leading paint can be updated during the process, providing buyers with a high-quality product with as little downtime as possible.

Business Aircraft Acquisition Services

Locating and purchasing a pre-owned business aircraft is incredibly complex and risky. The stakes are huge. A small oversight can cost hundreds of thousands of dollars. But a little insight can gain an equally large advantage. Talk to an experienced business aircraft acquisitions expert, to located the business aircraft that matches your needs. Duncan Aviation is the largest, family-owned maintenance, repair and overhaul (MRO) facility in the world providing complete acquisition sales and support services for business aircraft.

Tags: International Considerations, Aircraft Sales, Customer Service, Pre-Purchase Inspection

Business Aircraft Pre-Purchase Documentation Audit

Posted by Diane Heiserman on Fri, Nov 09, 2012 @ 11:15 AM

Contributed by Bob McCammon, Aircraft Sales Rep and David Linscomb, Records and Research Team Leader

Global Express

This Global Express is currently available for sale. For a complete listing, visit www.DuncanAviation.aero/
aircraftsales

Now that you’ve made the decision to sell your aircraft, don’t overlook a very important step – pre-purchase documentation. Well before the pre-purchase evaluation; make your first thorough inspection be of your aircraft’s logbooks. The more organized, complete and comprehensive, the easier the process and the more value they bring to the aircraft.

Organized, Complete and Up-to-Date

The airframe and engine log books should be complete, original and consecutive with all 8130s, 337s, etc. organized and accounted for. All Airworthy Directives and Mandatory Service Bulletins should be current; required maintenance, including life limited components, up to date.

The best way to verify all major components match what is recorded in the log books is to do a physical audit of your aircraft. Your aircraft should be on some type of maintenance tracking program, like Duncan Aviation’s Tracker. And if on Camp make sure all cards are well organized, and that the latest status report is current.

Logbook Audit

To take this a step further, you can have an audit of your aircraft’s records performed by an independent third party, preferably a factory authorized service center for the model of aircraft you operate. A detailed report showing any discrepancies in your maintenance documentation is typically provided. These discrepancies can be corrected early on in the process.

If present, a records audit can uncover indications of previous damage to the aircraft or any major alterations or repairs that may not be significant to the seller but could be a deterrent to the buyer. Time and time again, this kind of evidence is a showstopper during a business aircraft sales transaction. In numerous cases, a thorough review has shown an incident the current owner was not aware of; that happened before they purchased the aircraft but was no caught during the previous pre-purchase evaluation. By finding these incidents early, a through explanation can be made to a potential buyer.

If it is not convenient for you to get your business aircraft’s logbooks and records to a third-party facility, Duncan Aviation can send representatives to your facility to perform a thorough logbook audit on-site.  

When your business aircraft enters a pre-purchase inspection, a complete records review is typically performed at the request of the buyer. By being pro-active, steps can be eliminated and unforeseen problems can be rectified before the pre-purchase inspection begins. Regrettably, a records review is usually not done until the aircraft arrives at the pre-purchase inspection facility where it is not uncommon for surprises to surface.

This records review early in the process will help insure a smooth transaction and streamline the selling process. Your broker can also provide a copy of the records research to potential prospects.

Duncan Aviation Aircraft Sales representatives have facilitated many buyers and sellers through the pre-purchase evaluation. They understand the impact a logbook can have when valuing a business aircraft in the secondary market. If you are considering putting your business aircraft up for sale and have questions about the current state of the logbooks, contact the Duncan Aviation Aircraft Sales & Acquisitions team

Bob McCammon is an Aircraft Sales and Acquisitions Rep. at Duncan Aviation’s Lincoln, Nebraska facility, specializing in turbine and turbo-prop aircraft. He began working in aviation in 1968

David Linscomb is the Records & Research Team Leader located at Duncan Aviation's Lincoln, Nebraska, facility, specializing in Chapter 4 & Chapter 5 requirements on the latest information coming from the Original Equipment Manufacturers (OEMs) or the FAA. His aviation career began in 1984.

Tags: Aircraft Sales

Backward Bank Lending Policies for Business Aircraft

Posted by Diane Heiserman on Tue, Sep 11, 2012 @ 04:00 PM

Contributed by Doug Kvassay, Aircraft Sales Representative

Depreciated Value 40 year

If the major banks followed a "reverse-loan" policy, we would see less volatility in aircraft prices.

Click to enlarge.

In a previous blog posts, I discussed how the depreciated value of a business aircraft compares to its market value over time and that there is usually a difference between these two values. The depreciated value is the worth of an aircraft based upon a predetermined depreciation schedule over the entire life-cycle of the aircraft until retirement.

Bank Lending Practices During Economic Swings

During times of economic prosperity, aircraft trade for far more than their estimated depreciated value. This is when banks are comfortable lending 90 to 100% of the aircraft’s current market value on an asset-based only loan, with longer than normal terms.

Conversely, when the economy has contracted resulting in a recession, aircraft market values fall below their depreciated value and banks become extremely restrictive when making new loans. While considering new loan parameters in this adverse environment, banks are haunted by the declining values of the assets backing their current loan portfolio. Now banks want shorter terms, larger down payments, and more collateral, sometimes beyond the asset itself.

These lending practices have banks lending too much money when asset values are inflated and restrict lending when there is little risk of further asset devaluation. This is actually the opposite of what the banks should be doing. I credit much of this problem to the current valuation process when making loans.

Current Business Aircraft Valuation Process

In order to get “current” market values for business aircraft, banks pull numbers from one or both aircraft pricing guides (Vref Aircraft Value Price Reference & Aircraft Bluebook Price Digest) and then may hire an “outside expert” to validate the numbers in these guides. Their due diligence for valuation is based solely on the last three months of pricing data. However, this information provides little insight into what an aircraft should be valued at when looking at the larger picture of values over the asset's entire life cycle.

A bank should consider the lifetime values of an aircraft. For example, when the aircraft is trading for $7 mil, but the depreciation model shows it to be a $5 mil asset, as the graph for a 1998 Citation Excel shows, banks should require a larger down payment, shorter loan terms and more collateral. This tightening of credit terms would dampen the rapid price inflation we have seen in the past.

Likewise, in a downturn, when the asset is selling for less than $3 mil, but its depreciated value is closer to $4 mil, the banks could loosen loan requirements, providing more liquidity to the market and help drive prices up to where they should be.

If the major banks followed these reversed loan policies, we would see less volatility in aircraft prices and in the collateral backing up their loans. There will always be the financing institutions that will continue to follow current policies, but when the economy turns, as it always does, they will be burdened as many banks are today and many smaller institutions will fall to the wayside.

Duncan Aviation has helped clients buy and sell aircraft since 1956, and has facilitated more than 3,000 transactions in several different countries. For the latest aircraft sales listings, visit www.DuncanAviation.aero/aircraftsales.

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

1st Quarter Business Aircraft Market Analysis Shows Improvement

Posted by Diane Heiserman on Thu, Apr 19, 2012 @ 06:30 AM

Contributed by Bob McCammon, Aircraft Sales Rep

The first quarter analysis gives all indications that the business aircraft secondary market is improving. More buyers with a true need for business aircraft are entering the market as opposed to those who have been purchasing simply because prices have been low.

First Quarter Sale Transactions

The market for late-model large-body aircraft has seen few transactions, while at the same time the light and mid-sized business aircraft have increased considerably. This is likely attributed to serious buyers exploring several markets for the best deals. Many markets have been depleted of quality domestic aircraft, leaving foreign aircraft available.

Available pre-2000 era aircraft continues to increase with few buyers, while prices of 1990 and older aircraft continue to decline with very little market activity.

Looking Ahead

The beginning of 2012 is substantially better than 2010 and is showing impressive improvement over 2011. We anticipate that the remainder of the year will continue to improve, with a firm rebound expected in 2013.

At Duncan Aviation’s Aircraft Sales & Acquisitions, we continue to expand our knowledge of the pre-owned aircraft market on a daily basis, assessing overall market strengths and weaknesses and determining numbers to evaluate pricing.

Choose the better way to buy or sell aircraft. Contact a member of the Duncan Aviation Aircraft Sales team today.

Bob McCammon is an Aircraft Sales and Acquisitions Rep. at Duncan Aviation’s Lincoln, Nebraska facility, specializing in turbine and turbo-prop aircraft. He began working in aviation in 1968.

Tags: Aircraft Sales

Your Business Aircraft is a Depreciating Asset

Posted by Diane Heiserman on Tue, Apr 10, 2012 @ 07:00 AM

Contributed by Doug Kvassay, Aircraft Sales Representative

Business Aircraft Depreciating Value Westwind 1

An example of a 40-year life depreciation schedule for a 1981 Westwind 1.

There is a general school of thought that the value of a business aircraft, once purchased, will remain relatively flat over time because it is maintained at a higher standard than most other capital investments; believing the investment in major equipment upgrades and maintenance will slow the business aircraft depreciation process. However, we have all seen prices increase dramatically in good times and fall far below expectations when the economy slows.

For example, in 2010, we had a 1981 Westwind 1 available for sale. This 30-year old aircraft was outstanding. Over the course of the previous 17 years, it had been well-maintained, as well as repainted and refurbished by Duncan Aviation. Prior to the last recession in 2008, we would have placed the value of this aircraft in the $1.6 to $1.8 million range. However, as with all aircraft in a recession, the value was deflated and we were faced with an aircraft that would need to be priced in the neighborhood of $750,000 to be competitive.

At the same time the owner thought he was giving the aircraft away, the buyer was thinking he got the “deal of the year.” Both believing values and prices would rebound to pre-recession levels.

Business Aircraft Depreciation Schedule

So what is the expected depreciation path a business aircraft will take? As a general rule, Banks and various financing institutions will value a 10-year old business aircraft at about 70% of the price when new. But to get a clear picture of aircraft older than that, I did some research of my own by creating a simple 40-year life depreciation schedule with a  residual or salvage value. I assumed faster depreciation during the first years, leveling off as the aircraft aged. After overlaying my data with Aircraft Price Digest’s historical pricing for a 1981 WW1, I was surprised how well the lines fit considering the economic variations during the last 30 years.

Pricing dropped during the recession of 1980-1982 and continued down until after the stock market crash in 1987. Prices then moved up until the recession in the early 1990’s and again softened. Prices moved to unprecedented levels during the period of “irrational exuberance” in the mid/late 90’s until the dotcom crash in 2000.  With the graph showing a depreciated value of around $800k at this time, I realized from this study, the Westwind will probably never be worth over $1 million again.

After using this same model on a number of aircraft of different vintages, two things became apparent:

  1. Business aircraft pricing in the secondary market is never level or static. It is always moving up or down, absolutely dependent upon the current state of the economy. And,
  2. During good economic times, dramatic price increases for popular models will most likely only be seen for aircraft less than than 20 years old. This is reflected in the graph where the price of this aircraft rose very little in the last economic upturn.

The pricing of some popular models, such as Falcons, will, on average, stay a little above this line throughout most of their life, holding their values better than most. Other aircraft run below the model’s line and you can see they never enjoyed the popularity or pricing support of some of their competition.                             

Business aircraft have an economic useful life and there are three events that will bring that life to an end as the value of the asset approaches the residual or salvage value.

  1. Major airframe maintenance
  2. Major engine maintenance, if not on a program
  3. Damage beyond economical repair

A business aircraft is a sound business investment, but it is still a depreciating asset with a useful life, maybe somewhat longer than most other capital equipment.

Duncan Aviation’s Aircraft Sales & Acquisitions reduces the confusion and stress of buying and selling used aircraft transactions by managing the entire process for you. From advertising in prominent outlets, to negotiating purchase agreements, to coordinating pre-purchases services; they do it all.

Choose the better way to buy or sell aircraft. Contact a member of the Duncan Aviation Aircraft Sales team today.

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

Know your Business Aircraft Purchase Agreement

Posted by Diane Heiserman on Tue, Jan 31, 2012 @ 12:21 PM

Contributed by Doug Roth, Aircraft Sales Representative

Aircraft Purchase Agreement

Whether you are buying or selling a business aircraft, The Aircraft Purchase Agreement is the most important document in the transaction.

Whether you are buying or selling a business aircraft, the Aircraft Purchase Agreement (the Agreement) is the most important document to the transaction. It incorporates all terms and conditions of the sale. It is vital that you understand all the details of the contract before you sign.

Agreement Language

The initial purchase agreement should be prepared by the legal counsel of either the buyer or seller with the final terms and conditions negotiated and agreed to by both parties. A typical Agreement can be only a few pages to well over 20 pages when finalized. The majority of the language will be about the pre-purchase inspection, the condition of the aircraft at closing, how the closing will occur and what happens if either party does not perform as agreed.

Buyer & Seller Responsibilities

Throughout the Agreement there will be detailed language instructing the buyer and/or seller to perform specific tasks at a specific time. For a buyer these tasks can include placement of a deposit in escrow, scheduling the pre-purchase inspection, accepting or rejecting the aircraft and placement of the balance of the purchase price in escrow for closing. For the seller these tasks can include movement of the aircraft to pre-purchase inspection, the correction of pre-purchase discrepancies and placement of the required documents in escrow for closing to transfer clear title to the aircraft.

Timing

The actual number of tasks and their timing can vary widely depending on what all Parties agree to and the legal safeguards added to the Agreement. Timing is a very important element to consider since one task may not be able to begin until another task is completed. For example, the acceptance or rejection of the aircraft typically does not occur until the pre-purchase inspection is complete or the closing typically does not occur until all discrepancies are corrected.

Check List

Before signing the Agreement, I recommend both the buyer and seller go through the Agreement and make a list of all the tasks that both Parties are responsible for including requirements and completion timing. Using a simple check list will keep you prepared to easily meet your obligations of the Agreement as the aircraft transaction progresses, eliminating the need to request a time extension for something overlooked. Also, by making the list before signing, there is still time to negotiate tasks that might conflict with each other or negotiate obscure tasks added by legal counsel.

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 Roth is only one of a team of four Aircraft Sales Representatives that has many years of aviation industry knowledge. With his experience as an avionics tech and pilot, he skillfully values aircraft and provides comprehensive aircraft consignment and acquisition services.

Tags: Aircraft Sales

The Tightening of Lending Rules for Business Aircraft Purchases

Posted by Diane Heiserman on Mon, Jan 02, 2012 @ 06:00 AM

Contributed by Marc McKenzie, Aircraft Sales & Acquisitions

Tight Bank Lending Practices

While banks protect themselves, they are choking small business opportunities.

Financing the purchase of an older aircraft has become a frustrating and tedious task. Many large companies avoid this hassle by purchasing older aircraft with cash. However many smaller business, who can only afford an older aircraft and must go through a lending institution, are finding fewer banks willing to talk to them.

Recently, Duncan Aviation had a buyer interested in purchasing an aircraft nearly 29 years old but still in great shape both inside and out. The prospect owned a small, successful business in the Midwest and was looking at purchasing a small business aircraft to expand into more regions of the United States. The aircraft fit his business needs perfectly.

The aircraft was manufactured in 1989 and had a Duncan Aviation maintenance track record. Aircraft specifications and photos were sent and it appeared we were on our way to price negotiations, intent letters and contracts. However, after calling the bank to see if they would finance, I got an entirely different answer. The financial officer told me it wasn’t likely they would even consider our buyer for financing.

He stated the age of the aircraft was a major factor. But even if the aircraft were 10 years newer and the buyer had already established a good financial relationship with them, the odds of financing would have only increased slightly. As it turned out, our buyer had never turned to this specific lending institution for any past financial needs. Therefore, the bank wasn't interested.  

The financial officer was still very helpful in referring us to other lending institutions that might have been willing to finance an older aircraft. Unfortunately, the processes to get the needed approval proved to be both tedious and very time consuming. In the end, the prospective buyer was unable to purchase the aircraft and it was sold to an operator who could pay outright in cash.

It is no surprise that lending rules have changed and the process is becoming longer with greater scrutiny on the buyer and aging aircraft. Even prior to the economic down-turn, many banks discussed the lending rules with business aviation groups and stated there would be changes coming. Today, lenders are more willing to finance an aircraft five to 10 years old. Yet if an aircraft is more than 20 years, lending becomes more challenging.

All small business owners who have a vested interest in opening a flight department need to keep two key elements in mind.

  • Have an established financial relationship with a credible lending institution.
  • Be aware the age of the aircraft in consideration will be a factor.

Duncan Aviation provides aircraft acquisition sales and consignment support for business aircraft. Our in-house aircraft sales team reduces the confusion and stress of used aircraft transactions by managing the process for you. From advertising in prominent outlets, to negotiating purchase agreements, to coordinating prebuy services: we do it all.

Marc McKenzie, is Duncan Aviation's Lead Market Analyst for Aircraft Sales, specializing in the after-market aircraft industry. His knowledge as an airframe maintenance tech gives him the practical and hands-on experience to accurately assess current market trends and aircraft resale. His aviation career began in 1989.

Tags: Aircraft Sales

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