AINsight: Why Buying a Bizjet Is Like No Other Deal

Knowing the right steps and hiring the right people make all the difference when buying or leasing a business jet—the difference between navigating a smooth journey and encountering turbulence en route to closing.  

In general, purchase transactions have been harder and longer to negotiate over the past couple of years, as sellers seek favorable sale prices and contract terms from buyers who often push back. Also, buyers are choosing more complex structures for tax and privacy reasons. Gone are the days of the pandemic buying frenzy when buyers would unwisely sacrifice inspections and diligence to acquire a jet quickly.

Nevertheless, some buyers claim that after closing many complex non-aviation deals, they can buy and finance a jet with few, if any, aviation experts involved. Unfortunately, some of them ultimately realize the error of their ways by making avoidable mistakes. A client recently told me that his high-dollar aircraft financing was just a simple loan his inside counsel could handle. Yet, he later admitted that he—and his inside counsel—had overlooked at least five critical issues we discussed, and he asked me to negotiate them for him.

What It Takes To Own and Operate a Private Jet

Although a business jet offers undeniable benefits, it is a unique and expensive machine. Unlike other assets, it is essential to understand fully what you are getting into as an owner of a new or used jet—financially, emotionally, and operationally. Beware that you may feel some rush to buy and fly, and if you are not careful, you could end up with buyer’s remorse.

In all cases, analyze the full cost of owning, operating, and maintaining the jet against its long-term benefits in your realistic travel planning. Unexpected or untimely cash demands for capital improvements, maintenance, flight operations, and repairs can turn a presumably great aircraft into an upsetting money pit.

As a buyer, you should consider engaging experts, including select aircraft brokers, to prepare a detailed cost, budget, and aircraft analysis. I have found that clients often do not even know about or how to find these resources, nor do they appreciate the value they add to informed decision-making.

Failing to do so may have unfortunate consequences, as a client discovered. To illustrate, relying primarily on the seller’s maintenance practices, my client declined to hire technical analysts, conduct a full independent aircraft inspection, or enroll in maintenance programs. After the closing, my client discovered damage that required major repairs, grounding the aircraft for months and incurring an extremely high cost to return it to service.

Complicated but Feasible

Almost all business jet buyers are sophisticated, successful, and motivated, usually undaunted by predictable aircraft costs. In the U.S., prospective buyers, often high- and ultra-high-net-worth individuals or various private or public companies, may be driven to purchase a jet by the permanent reinstatement of 100% bonus depreciation under The One Big Beautiful Bill Act. Or they may understandably desire to avoid commercial airport hassles, preferring to travel in peace with enhanced security, privacy, and comfort.

Buying a business jet can be complicated, but it is manageable and worth the effort. Many buyers realize or admit, and most others quickly learn, that purchasing a jet differs, despite the similarities in purchase transactions, from buying real estate, cars, yachts, or other high-value assets. This becomes apparent as buyers face new issues when buying, leasing, financing, operating, or owning a jet.

Whether you are a first-time or experienced buyer, you will benefit from educating yourself as you venture into a market that constantly changes. An aircraft broker, an aviation lawyer, and other seasoned industry experts on your deal team can provide current, informed, and reliable services that highlight the unique elements of your deal. In any case, do not embark on this journey alone.

Navigating the Deal Journey

How do you buy a jet? Where should you start? And who can help you determine whether a jet will provide the benefits you seek rather than become a costly albatross in your life? Before you begin a search for a jet, write down why you need or want a jet, where you will go, how many passengers you may carry, and the number of hours you expect your aircraft to fly. In aviation jargon, you thereby establish your mission profile.

As you move through the purchasing process, it’s important to meet the key people in person before engaging with them, especially brokers and operators. Keep an open mind, pay attention to the deal points, and be patient, because your transaction might take longer than expected for the aircraft search, negotiation of the letter of intent (LOI) and purchase agreement (APA), aircraft inspection, closing the purchase, and any financing.

Many clients manage their affairs through a family office team under the watchful eye of their principal (ultimate beneficial owner, or UBO). The UBO or the family office oversees the transaction, and they frequently admit that this area is new or differs from any transaction they have closed before. Family offices typically recognize they need to engage and tend to rely on experienced aviation subject-matter experts.

Key Issues and Tasks for Your Transaction Team

With the benefit of referrals and research, you can find quality professionals to hire for your transaction. Do not choose an aircraft broker or lawyer based on the lowest fees. Instead, hire these professionals, who form the core of your aviation team, based on their likely value-add, integrity, and deep knowledge of business aviation transactions like yours. These qualities also apply to any other specialists you might engage—often on your lawyer’s and/or broker’s recommendation—such as technical analytics consultants, aircraft inspection experts, aviation insurance brokers, management companies, and aviation tax accountants.

Your aircraft broker should review your ideas on the aircraft that interest you, parse your mission profile, advise you on appropriate jets for sale, both on and off-market, and guide you on the best jet make, model, price, and terms for you based upon your mission profile. Your broker will be your chief negotiator for business and aircraft terms, along with the lawyer. As your broker leads off the aircraft search, your aviation lawyer should, as a priority, devise ownership and operating structures for new and used jets alike that meet your objectives, while considering myriad issues.

These issues typically include structuring the jet ownership and complying with Part 91 and Part 135 of the Federal Aviation Regulations (or comparable international law with the assistance of local counsel) for operation of the aircraft.

The process also includes forming or using an existing limited liability company (LLC), corporation, or trust to own the jet; analyzing applicable property, sales, use, excise, federal and international tax issues, including possible tariffs; addressing risk management, including the mitigation of personal liability and purchase of the right insurance coverage; consulting on the buyer’s privacy and security protocols; and, if applicable, export/import issues and financing. Other experts can assist with hiring the best available pilots and other flight department personnel or aircraft manager/charter operator.

Non-aviation lawyers cannot provide the necessary expertise in these areas, but they can and should offer insights into family office or UBO needs, as well as support on issues such as corporate approvals, other affected UBO transactions, hot-button issues, and organizational decision-making.

Plan Ahead for Financing or Leasing Your Jet

If you intend to lease or finance your jet, you should ideally obtain a financing commitment—not just a proposal—before you sign an LOI. This timing enables you to analyze your cost of capital and anticipate a three- to six-week period from proposal to funding.

Amid a long list of loan or lease issues, ask your aviation finance lawyer—a subspecialty within aviation law—to explain how the terms in your financier’s documents may adversely impact your non-aircraft business operations, grant extra non-aircraft collateral, or limit how, when, and where you can use your aircraft. It may be particularly helpful if your legal advisors know the lender’s and lessor’s teams, as well as other financiers that may offer other attractive financing or leasing options.

Conclusion

Even though purchasing a new or used jet can be complex, it is also an exciting, emotional, and worthwhile experience, differing in many respects from buying or leasing real estate, cars, yachts, or other high-value assets. It is achievable mainly by assembling the right team of skilled advisors and actively participating in the transaction. I always look forward to a buyer’s first flight in the acquired jet, knowing that the deal team is nearby and sharing their accomplishment in that moment.

This blog is purely informational and reflects the author’s experience and legal practice. It does not, and should not be construed to, provide advice of any kind, express or implied, create a lawyer-client relationship, or, in using the word “should” or the like, suggest a course of action to take without expert guidance. Each person involved directly or indirectly in any issue, transaction, or other matter covered in this blog should inquire of, and rely on, their own aviation professionals and other trusted advisors. The opinions expressed in this column are those of the author and are not necessarily endorsed by AIN Media Group.