Ethical Aircraft Transactions

Unlike real estate and other asset transaction service businesses, aircraft transactions (and the broader broker/dealer/consultant business) are largely unregulated, as there is no licensing process or oversight of the industry as a whole. All participants conduct their businesses differently, and different models are acceptable as long as there is transparency and positive ethical practices in the process.

A highly ethical aircraft sale or acquisition is one in which:

• The ultimate buyer and seller know who the participants in the transaction are
• Each party knows who is looking out for their specific interest
• The person looking out for one party’s interest is only working on their behalf, as opposed to working both sides of the same transaction
• Both parties are advised correctly with thorough due diligence conducted on the aircraft’s history, records and mechanical condition (An aircraft’s condition is typically evaluated through a third-party inspection facility, or if a pre-purchase inspection is waived it is done with an understanding of the trade-offs of cost vs. risk)
• There is an aircraft purchase agreement agreed upon between buyer and seller clearly defining the terms, conditions, timelines and protocol for the transaction, and if the transaction will be conducted as a “back-to-back” transaction with an aircraft dealer taking title in the middle that it is done for a purpose with transparency to the ultimate buyer and seller.

Questions to help you enter into an ethical positive aircraft sale or acquisition transaction:

1. Who are the buyer and seller representatives, if any?
2. How is your representative being paid?
3. Is your representative paying anyone else or accepting payment from anyone else in the process?
4. Will you contract with the actual buyer or seller on the other side of your transaction, or with a dealer in the middle?
5. Have you consulted an aviation attorney on ownership and tax strategies? Will the aviation attorney be involved in the contracting process of the transaction?
6. Do you know what to expect regarding transaction costs and post-closing costs to bring the aircraft up to speed for your operation (cosmetics, maintenance and avionics