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Jet Journal Broker or No Broker? The Smart and Safe Approach to Purchasing an Aircraft by Matt Stringfellow The purchase of an aircraft is both an investment and a major finan- cial commitment. An aircraft bro- ker does far more than coordinate loan documents or assemble a purchase con- tract. From the beginning, your broker is your advocate and your advisor. They will understand your aircraft needs, tak- ing into account how often you travel, who you travel with and where you go. Along with advising you about the best aircraft for your needs, your broker can help you with the decision to buy factory new or purchase a pre-owned aircraft. Unlike real estate, where the major- ity of a purchase investment is made up front, aircraft come with costly in- spections and maintenance. Buying a business aircraft can easily come with tens or hundreds of thousands of dollars in annual maintenance and inspection expenses on top of aircraft management fees, hangar rent, pilot salaries, and fuel. Skip required maintenance and your aircraft is not airworthy or legal to fly. Your broker can help you understand the ways you can keep maintenance and aircraft costs down. Some aircraft come with factory “parts programs” that mitigate the risks associated with the costs of maintaining your aircraft, even providing protection to the hourly rate of mechanics and volatility of parts prices. You may have the option to put your aircraft on a charter certificate to offset your expenses with leaseback revenue. Your broker can help you understand your options after the purchase, and what your decisions will ultimately cost you in the years to come. Regulatory Differences Between Real Estate Sales, Aircraft Sales and Client Implications It’s easy to make comparisons be- tween real estate and aviation invest- ments. The real estate and aviation mar- kets are different yet similar. Both are federally regulated, with the difference being that the housing industry is regu- lated in terms of transactions (meaning brokers are required). In the aviation industry, the federal government only regulates how brokers operate, register and take title to airplanes – not how we sell them. For the client, this is both good and bad news. A major downside to this lack of regulation: Any Joe off the street is able to print business cards and call himself an “aircraft broker” or “aircraft acquisition consultant” that suggests he runs or owns an aircraft sales business. Some brokers, in attempt to gain buyer clients, will actually use a fake listing to generate calls on an airplane that isn’t even for sale. Although aircraft sales websites have tactics in place to prevent this from happening, if the broker does have a client that allows the listing, it may be impossible to prevent. This is a simple and misleading tactic to gain your business. However common it may be, starting a business relationship based on deception, is at the very least disre- spectful of your time. It may be unethi- cal. This is why it’s even more critical for an aircraft buyer to have a known, reputable and trusted representative on his or her team. In an industry where regulation is lacking, experience is key. As a buyer, you will not be concerned with the li- censes your broker has. You should, however, be concerned with their ex- perience. If you weren’t given a direct referral, ask a lot of questions. How many transactions have they completed? Have they only represented buyers, or only represented sellers? How many 24 • TWIN & TURBINE / August 2019 Jet Journal