What is the 1 in 60 rule? If a pilot takes off headed to their destination and they are just one degree off course, every 60 miles you fly with that error moves you one full mile off course. So you can see that even a slight variance from accuracy can create a real issue.
Buying and selling business aircraft is a complex and complicated business. The dollars are high, the risks of mistakes are great, and the reputations of us all depend on doing things correctly. I want to stress how critically important to a transaction the accuracy of the specifications of what you are selling or buying are, and what a difference mistakes make.
Aircraft values are in great part established by the installed equipment. I know you are familiar with the disclaimer of “subject to verification” that is written at the bottom of each page of the marketing specifications, but that should be a last resort safety net for honest mistakes.
Checking, rechecking, and several sets of eyes should go into building and approving the specifications before marketing an aircraft for sale. People depend on the accuracy of the specs. In fact, when we are buying an airplane, one of the tasks we contract for with the inspecting facility is to audit the sale specifications. We must know any variances that are potentially found between the specifications given to us and the actual aircraft.
We often do find variances. Sometimes not material and sometimes the findings are in our favor. The latter could be an upgrade or revision accomplished that enhances the equipment but is not evidenced on the specs.
In our current environment of “hard” deals where the purchaser has limited rights to reject, the accuracy of the specifications is only subject to verification for the purpose of meeting the delivery conditions and may not be used by the seller to say, “Too bad, what is installed is what you get.”
These are the things that make transactions fall apart if the variance is large enough. They are also the things that create more time on the market. In a changing market where prices are weakening, more days on the market for whatever reason can cost real dollars in lost value. Time is money.
Take the time as a seller to verify, re-verify, and be prepared to stand behind the accuracy of the specifications and representations of the aircraft. If you have an expensive item on your specifications that the aircraft does not actually have, and the price for the aircraft was determined because of that equipment, then just saying subject to verification is not a leg to stand on.
This mistake leads to either a canceled transaction or a price renegotiation. But it is not realistic to expect the same price for the aircraft if it is missing a critical element previously contemplated for the sale.
As a buyer who will inherit the faults of an aircraft, if not found in either the accuracy of the specifications, the records, or the mechanical integrity of the aircraft, look very closely at what you are buying. Have a contract that allows for an inspection and opportunities to be sure you are buying what you expect to exist between parties.
One of the most problematic elements of a transaction over the last couple of years that troubled us as brokers was the reluctance of the seller to allow the correct protocol of inspection. Do not be willing to give up this opportunity to understand the asset you are buying.
Jay Mesinger is the CEO and Founder of Mesinger Jet Sales, an international aircraft brokerage firm. With 49 years of successfully buying and selling aircraft, Mesinger Jet Sales has a global reputation for personalized, transparent service.
The opinions expressed in this column are those of the author and not necessarily endorsed by AIN Media Group.