Ensuring a Successful Trade-In

In today’s competitive market, one of the easiest and fastest ways for aircraft owners to upgrade is via a trade-in transaction. To successfully complete such a transaction, owners need to work with a partner that has the capability to facilitate it and has an aircraft that the seller is interested in purchasing. Transaction specialists such as Jetcraft can not only market an owner’s aircraft to a wide audience of potential buyers but can serve as the buyer if another can’t be found quickly. In addition, they can offer a replacement aircraft from their inventory and may be willing to bring another aircraft into inventory that better fits the client’s mission.

Once sellers show interest in an exchange, the transaction specialist will establish their aircraft’s trade-in value, as well as the price of the new aircraft. In such a case, an agreement can be created whereby a seller agrees to purchase an airplane from the transaction specialist’s owned inventory, paying for it in part with the trade-in aircraft.

After the values are established, a term sheet is created that indicates the purchase price and condition of both aircraft, inspection logistics, and any taxes and fees associated with the transaction. The company employs a team dedicated to this process that will gather all the necessary information to help keep the client informed.

In some cases, a trade-in is a good backup option for sellers who prefer that their representative try to find a buyer for their aircraft and close on the sale before they purchase the new one. The transaction specialist may agree to procure a seller’s aircraft as a backup option if a buyer is not identified before the set closing date for purchase of the replacement. Once terms have been agreed upon, the seller signs the trade-in contract.

The closing procedures for a trade transaction do normally add to the time required to complete the deal; in fact, though, it can take less time overall since the transaction bypasses what could otherwise be a lengthy wait to find a buyer. Transparency by both buyer and seller is important because this process needs to be coordinated and executed in a particular order. For example, before a transaction specialist brings an aircraft into inventory specifically for the buyer, it must clear and approve for purchase the aircraft that is being traded in. Likewise, financing for the procurement of the new aircraft must be agreed upon and in place prior to the trade being accepted.

In the rare instances where a representative and seller can’t reach a mutually beneficial agreement, they can consider a more traditional alternative, such as listing the seller’s airplane, waiting for the right buyer, and then using the cash from the sale to purchase the new aircraft.

Factors to Consider in the Trade-in Process

So, what makes an airplane a good candidate for a trade-in transaction? Maintenance is paramount, especially for pre-owned aircraft. Owners who anticipate trading in their airplane should have a program such as Honeywell’s Maintenance Service Plan, Jet Support Services, or Rolls Royce CorporateCare in place to ensure a smooth transaction and top-dollar return on their investment. In cases where such a program is not in place, the deal needs to reflect its absence.

Another factor that affects trade-ins is the life or pedigree of an aircraft, particularly if it has been operated by the flight department at a highly recognized global corporation.

One of the most common factors that can reduce residual value of an aircraft to be traded in is its interior configuration. When customizing a cabin, owners should consider whether modifications will appeal not only to them but to a future buyer.

It is also important that the aircraft’s avionics meet NextGen/2020 requirements (i.e. ADS-B, CPDLC, FANS). And in today’s always-connected world, internet connectivity will greatly affect trade-in value. 

Jetcraft is a leader in international aircraft sales, marketing, and ownership strategies, managing over 20 offices globally. The company’s success over more than 50 years in business aviation has earned it a world-class reputation, along with an exceptional customer base, a wide network of connections and one of the largest inventories in the industry.