Aerlex Law Group

Becoming a Prepared Buyer: Aircraft Acquisition

Becoming a Prepared Buyer: Aircraft Acquisition — Originally published in BusinessAir Magazine, August 2020, Volume 30, No. 8.

As we continue to face the “new normal” of traveling during a pandemic, I have been inundated with calls from individuals and companies who are exploring the idea of whole aircraft ownership for the first time. For anyone in the market for an aircraft today or in the near future who would like to make the purchase and closing on an aircraft as efficient and straightforward as possible, please consider taking the following steps prior to making your first offer.


Aircraft Broker/Consultant – Select a consultant or broker who knows the global market for the aircraft type you are purchasing. The broker/consultant must also be respected among his peers. There are certainly instances when an offer is not taken as seriously if the broker representing the buyer lacks experience with the particular category of aircraft being sought or has had previous conflicts with the broker on the other side. If international aircraft are going to be considered, be sure the Aircraft Broker/Consultant takes into consideration the quarantine rules where the aircraft is located and/or where the pre-purchase inspection will take place.

Aviation Counsel – Retain aviation counsel in advance so she is ready to jump into a deal once the aircraft is selected. This will save valuable time later. Including a provision in the Letter of Intent (“LOI”) that the buyer will have an initial draft of the purchase agreement to the seller within three days of signing of the LOI will be very appealing to a seller. But this can only happen if aviation counsel has already been identified, retained, and is up-to-speed on the specifics of the deal. Technical Representative – Hire the right technical expert so that he is ready to start immediately once the aircraft is identified. The technical representative will review aircraft maintenance records and identify any inspection items that must be rectified. The technical representative can also help determine which aircraft is the best aircraft to make an offer on, based on aircraft pedigree. Be sure that the technical representative is willing to travel during the pandemic in order to be able to oversee the pre-purchase inspection.

Lender – As in all transactions, sellers prefer cash deals. But if the aircraft is going to be financed, contact lenders and select a lending partner before a specific aircraft is chosen so that lenders are able to close quickly once the aircraft is identified.

Management Company – Is the aircraft going to be managed by a third-party provider? Will charter be allowed on the aircraft when not being used by the aircraft owner? Selection of a management company early in the process means you will have the management company acting as your advocate throughout the acquisition. Many management companies don’t start charging management fees until the aircraft is acquired, so you may get valuable advice from the management company at little cost by selecting a management company early in the process.

Insurance Broker – Decide if the insurance will be procured through the management company or if you need an insurance broker to provide the comprehensive coverage to diminish liability concerns.

Escrow Agent – Identify your escrow agent and obtain their wire instructions so you are ready to send a deposit as soon as you have an accepted LOI. This demonstrates to the seller that you are a committed buyer.


Your aviation counsel can help you determine the following: What entity will own the aircraft? Does the proposed structure make the most sense, based on the intended use of the aircraft and the potential tax implications for those who will use the aircraft? Is the ownership structure legal under the Federal Aviation Regulations?

Retain a qualified aviation tax attorney and CPA who can review the ownership structure to make sure it is the best tax-plan available. What are the sales and use tax consequences of the ownership structure? Are there adequate liability protections under the ownership structure or at least adequate insurance for all parties involved in the ownership structure?


There are a number of miscellaneous items that often get negotiated in the LOI and purchase agreement. These items comprise a small amount of the overall transaction cost, and having flexibility on them may make your offer stand out. Understanding the cost of these items and your position on them before the LOI may allow your offer to appear more competitive than another offer. One approach is to have the seller pay all of these costs and then adjust the purchase price higher since that is the number the seller will most likely focus on. Some of the small items are Escrow Fees, Aircraft Movement Costs, Customs and Registration Change Fees (if applicable), and Registration Number Change Fees.

Spending time and effort at the beginning of the aircraft acquisition process to prepare as much as possible, can lower the naturally-occurring stressors related to aircraft transactions and make you a more attractive buyer.

Please contact Amanda Applegate at or at 310-392-5200.