Credit: Barry Ambrose
Credit: Barry Ambrose

Buying an Airplane? Here's What to Consider

The aviation experts at Business Jet Traveler outline what you need to do when shopping for an aircraft.

Once you’ve decided you’d like to buy an aircraft, your next several moves are critical to ensuring you get the best value. Your first step should be to decide which aircraft model, or models, best fit your needs. 

Tips for Selecting a Model

• See Business Jet Traveler’s Aircraft Guide for specifications for every turboprop, jet, and turbine helicopter currently being manufactured as well as many popular out-of-production models. 

• Get advice from experienced owners and pilots and from an aircraft broker/consultant. For a flat fee or a percentage of the purchase price, a broker/consultant can help you evaluate aircraft models. 

• Consider how you plan to use your aircraft—how many hours, how many people, primary destinations, and how many times a year.

[Related: The Best Aircraft for Your Needs]

• Decide whether you plan to offer the airplane for charter.

• If a new airplane would fit your budget, consider placing an order for it even if production is sold out for two years or more. In the meantime, you can use other options, such as charter or jet cards. 

• Consider that warranties, operational efficiencies, and lower crew-training costs may make a new aircraft ultimately less expensive than buying preowned. A nearly new aircraft may offer many of the same benefits. 

• If a used aircraft better fits your needs and budget, evaluate the time until engines are due for overhaul, the value of existing maintenance plans, and the time until the next major inspection. 

Illustration: John Lewis

Reasons to Buy New

• You can customize to your heart’s content. You get to choose the paint scheme, interior configuration, fabrics, leathers, and optional cabin and cockpit equipment. 

• Repairs won’t break the bank. A new aircraft comes with a warranty covering the airframe, engines, and avionics, typically for five years, as well as the interior; and many of your maintenance costs will be negligible during the warranty period. 

• You won’t face unpleasant surprises. New aircraft generally prove more dependable than preowned models. They are less prone to unforeseen maintenance problems that may be costly and disruptive to operations. 

• You’ll get state-of-the-art equipment. New jets have the most advanced avionics, engines, and systems available for the aircraft at the time of manufacture. This can translate into a more mission-capable, cost-effective, and comfortable jet. 

Reasons to Buy Preowned

• You won’t spend years twiddling thumbs. The range of preowned aircraft on the market gives you access to a wide variety of jets that can likely fulfill your missions. Moreover, it’s typically quicker to get into the sky in a preowned aircraft. 

• You’ll likely pay less and get more. Preowned jets typically have a lower purchase price, enabling you to buy an airplane even if you can’t afford a new one. And used aircraft often deliver comparatively better value. A 10-year-old airplane will arrive at its destination at just about the same time as a new model. 

• You can say goodbye to manufacturer service centers. As a buyer of preowned aircraft, you have a greater choice of service options. To keep from voiding warranties, owners of new aircraft are obliged to use only factory-owned or -approved service facilities. 

• Turning oldies into goodies can save money. Though buyers of new aircraft can configure them at the factory, the great variety of aftermarket refurbishment products and programs enables buyers of preowned jets to upgrade or update to “almost new.”

Finding a Broker 

• You might want to start by visiting the websites of the International Aircraft Dealers Association (formerly the National Aircraft Resale Association) or the National Business Aviation Association. Each has a code of ethics to which its members must adhere. 

Negotiating the Purchase

• If you’re buying a new aircraft, you or your consultant will be negotiating with the factory. 

• If you’re purchasing a used aircraft, negotiating with a seller or a seller’s broker can be difficult. You should know how long the aircraft has been for sale and how the overall market is affecting its value. You should also know whether required maintenance inspections are coming due and, if so, whether the seller should pay some or all of the cost. (When a large inspection is due within a year, most sellers will pay the full cost to make the aircraft more saleable.)

[Related: Surviving the Aircraft Purchase Agreement

Illustration: John Lewis

Financing and Insuring the Purchase

• Attend to financing early in the process and be sure to explore all your options. 

• Have an aviation attorney draft and send a “request for proposal” to lenders. 

• Lots of money is chasing aircraft financing these days. 

• It’s prudent to have at least three or four lenders competing for your business. 

• With the IRS now treating personal flights aboard company aircraft much more harshly about depreciation and allowable deductions, the lender may be better able than you to use depreciation flowing off the aircraft. 

Benefiting from the Prepurchase Inspection

• The purchaser usually pays for the pre-purchase inspection

• During this inspection, mechanics develop a list of “squawks.” 

• Keep in mind that the seller will probably have a technical representative try to limit its scope and keep the list as short as possible. 

• You’d be wise to hire a technical representative, even for a newly built aircraft. 

• Pre-buy inspections are an important part of due diligence. 

• It’s much more about dollars than about safety—the latter must be a given. 

• Identifying big-ticket maintenance discrepancies before signing on the dotted line can save millions. 

• The elements you should look for in an inspector are brutal honesty and solid expertise. 

• Factory-owned or authorized centers are a good choice for inspections. 

• Much of the inspection involves a thorough review of the computerized documentation such as records from engine maintenance service plans, which will tell you when the parts need to be revitalized, and how much that will cost. 

• Once you have made an offer, have an aviation insurance broker begin the process of obtaining hull and liability coverage. Your attorney should get involved with insurance. 

• Who will ride in your aircraft is a factor in how much liability insurance you need. 

Closing the Deal 

• Where should you close? It’s an important question, and it’s all about state taxes. Get advice from an attorney or CPA who knows the state tax issues. Six percent sales tax on a $20 million aircraft is $1.2 million. 

Illustration: John Lewis

Dealing with Today’s Market 

• The demand for business jets remains strong, particularly in the preowned market, which has created a shortage of late-model inventory. Some next-generation aircraft have come to market recently, and delivery positions for new models are now extended into the 2020s. Buyers who might prefer a factory-fresh aircraft may not be able to wait, forcing them into the preowned market. Demand in that market has shrunk supply, particularly of late-model aircraft, though prices haven’t spiked in tandem. 

• If you must have a new aircraft and aren’t willing to wait, you may be able to secure a delivery position. Buyers who’ve put down a deposit may have a change of plans requiring them to sell their slot. Also, investors sometimes make a deposit for an aircraft with the intent of selling the position for a profit. 

• The tightening market might also cause shoppers to be more willing to look at airplanes that require refurbishment. However, many completion and refurbishment centers are themselves booked up with pre-purchase inspections and avionics upgrades. 

• Be aware that even getting a pre-buy inspection can be time-intensive owing to these market conditions.