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Reviving the Pre-purchase Inspection

Many buyers have been forgoing it in the hot current market, but this critical transaction step appears ready for a comeback.

The prepurchase inspection—frequently called the prebuy—has long been deemed essential for aircraft shoppers. However, it has been all but abandoned during the post-COVID sales stampede, for reasons that have often been beyond buyers’ control. Now, though, it seems likely to make a return in the months ahead, according to market watchers, which is good news for shoppers. 

Given the large sums at stake, brokers recommend a pre-purchase inspection “to find things whose costs to repair are catastrophic, or that might keep you from saying yes to buying the airplane,” said Jay Mesinger, CEO of Mesinger Jet Sales, during an August online forum hosted by the National Business Aviation Association (NBAA). But in the post-COVID market, demand has been so high and offers so plentiful—often above the asking price—that many sellers have simply refused to make their aircraft available for inspections, and buyers have often gone along.

“I understand why [buyers] did it,” says Chris Buchholz, CEO of Crew Chiefs, a prepurchase and pre-delivery inspection service provider. “There are so many people fighting to get their hands on an aircraft that they said, ‘Let’s just buy it.’”

That approach has grown riskier as older aircraft have come to dominate preowned inventory, a data point underscored by the purchasing experiences over the past year at JSSI. A guaranteed maintenance cost plan provider, JSSI usually buys 15 to 25 jets per year but never demands a prebuy because it disassembles them for parts rather than operates them. “Now we’re competing with people who intend to fly the aircraft, but they're not even making [their offer] contingent on a pre-purchase inspection,” CEO Neil Book recently told BJT sister publication AIN.

Last year, JSSI put in offers on more than 100 ready-for-scrap but still-flying jets and acquired just two, Book said. Given that his company’s business is based on knowing the fine points of maintenance costs and their relation to aircraft values, his thoughts on unprotected transacting carry special weight: “I think we're seeing people do things that don't make any economic sense,” he said.

Sellers Have Less Leverage

But balance is returning to the preowned market, with inventories ticking up, said Rolland Vincent during the NBAA forum. Others in the industry echoed his comment and prebuys are no longer off the table as sellers feel they have a little less leverage. Among the indicators: “Aircraft sellers are advertising ‘reduced price,’ ‘next to sell,’ and ‘motivated seller,’” said Tony Kioussis, president and CEO of appraisal firm Asset Insight, during the forum. “Those are things we hadn’t seen in quite a while.”

But Kioussis and others emphasized that demand remains strong, and “only the frenzy” is slowing, as the overall market remains “extremely buoyant.”

Even as seller resistance to prebuys fades, however, they are now limited by a shortage of slots for inspections at MRO facilities. “Here’s the dilemma,” explains George Bajo, modifications sales manager at Duncan Aviation: “We’re scheduling out further than we have before, and customers are planning further out, and all the capacities and inspections and maintenance are booked. It’s the same way at a lot of our competitors.”

For that, blame demand for upgrades and maintenance being done on recently acquired aircraft, as well as similar work on aircraft whose owners have decided it doesn’t make sense to buy in this market and are upgrading their current rides instead. Additionally, delays in getting parts and personnel shortages mean aircraft are taking up more time in MRO hangars than usual.

Keeping Up with Demand

“Typically, you need a prepurchase [inspection] tomorrow or next week or two weeks from now,” says Bajo, “and there’s no capacity for that.”

Buchholz at Crew Chiefs is among those expecting a return of balance to the preowned market, including in the inspection arena. “We’re entering a more normal period of supply and demand,” he says, “and we expect the majority of super-midsize and larger aircraft will have professional technicians representing both parties’ best interests during the prebuy inspection.”

Indeed, New York–based Crew Chiefs, which opened for business in July, intends to be part of the solution. Buchholz, a business aviation charter and management veteran, founded the company after years of “listening to frustrations and pain points” about prepurchase inspections from clients. Some buyers complain about the difficulties of finding qualified prebuy technicians, for example, while others have trouble locating a suitable inspection facility when a seller is based on a different continent.

Rather than perform prebuy inspections itself, Crew Chief provides technicians to oversee them on clients’ behalf and has relationships with MROs globally, ensuring it can find an inspection slot as needed, Buchholz says. The company has some 16 inspectors with airframer experience, with “boots on the ground” in North and South America, Europe, Asia, and Australia.

Crew Chiefs says it aims to ensure that “anytime there is a transaction that requires someone to oversee the prebuy inspection anywhere in the world, it’s always going to be the same high standard.” Toward that end, the company has developed what it claims is a “transparent, thorough, and methodical” web-based app that reflects ISO 9001 standards and can track and document inspections in real-time. 

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Meanwhile, the consensus is that buyers shouldn’t wait for a return to normalcy to seek a prebuy inspection—or let a slot shortage deter them. 

“I encourage everybody to keep reaching out,” says Bajo at Duncan Aviation. “Things change in our schedule, and with our competitors, as well.”

Adds Buchholz: “The slots are out there—don’t give up. Be flexible. You may have to fly beyond your immediate area. Look around. Or get someone who is well versed in looking around to do it for you.”