Saving money, time, and frustration! What better convenience would aircraft owners in business to sell one of their private or commercial jets ask for? Actually, other than the primary goal of making a profit, you’ll probably not think of any other items of convenience for any business, across different industries, including the aviation industry, without listing a time-saving and frustration-free transaction or process.
During the purchase and sale of an airplane, a team of professionals known as aircraft brokers comes in handy to help in easing the process. Remember, only by hiring a professional will you get quality service and value for money.
Therefore, in deciding whether to engage an aircraft broker, let’s try and help demystify some of the questions you may have: What is the role of an aircraft broker? Why hire one? How much do they charge? How do you select one? What is the marketing process like? How do you know the value of your aircraft when selling?
There are two types of brokers – the buyer and the seller broker. It, therefore, means that when you are thinking of selling an aircraft, you can engage a seller broker, and the same analogy applies to those buying airplanes. By looking at a typical sale process of a private jet, including the appraisal, marketing, contract negotiations, and post-sale support, a private jet broker offers much-needed purchase facilitation to both the buyer and the seller throughout the sale process.
During the appraisal phase, which is the maiden aircraft sale phase, an aviation broker could help in establishing the true market value of the aircraft on sale, especially if it is a used aircraft.
For example, from the buyer’s perspective, during the initial discussions and pre-purchase inspections, the buyer broker could assess the maintenance history of the aircraft and if the information gathered distorts the asking price of the aircraft, then he or she can advise the buyer to look at other better purchase options available. This is particularly useful to investors in making informed purchase decisions considering that no detail or decision is too small for curious consumers.
Further, from the seller’s perspective, the seller broker can look at the prevailing market prices for a variety of similar aircraft models, both new and old, and set a reasonably competitive price for that specific airplane on sale. Undoubtedly, as a seller, wouldn’t it be fulfilling to get the best possible market price for your business jet?
Additionally, during the marketing phase, the aircraft broker establishes a workable marketing strategy that would not only enable the aircraft to attract the best possible market price but also expedite the whole sale process. After all, the quicker clients come knocking, the earlier you move on to other businesses of the day.
Contract negotiation is another role of aircraft brokers. They help in putting the final ink on paper towards closing the deal – thanks to their exceptional negotiation skills. Despite the breadth of market knowledge about the resources on sale, what stands out more in making a successful sale is the consistency of the asset’s value with the expectations of the buyer or seller.
Finally, an aircraft broker provides post-sale support that could arise from unforeseen complications regarding aircraft acquisitions. As such, they ensure a seamless transition of the aircraft’s acquisition process by fixing any issues that could stall the new ownership of the aircraft.
As already stated, the purchase process of any asset, including aircraft, stretches beyond just being a good negotiator. Whereas being one is helpful, adding an extra element of sufficient market knowledge to a negotiation process would not harm any deal.
Therefore, even though we live in a free world where one may or may not choose to hire an aircraft broker, those who choose to seek the services of professionals ones would have the following benefits:
Specialization is where one is an expert in a specific skill, role, or subject instead of having a general idea of a range of subjects without being a master of any. If a broker is specialized, for example, in a given type of aircraft such as the Airbus, he or she may be in a better position to assist operators (buyers or sellers) of the viable Airbus models that would best suit their mission profile requirements because of their deeper understanding of the models, than a broker who does not have any specialization.
On the other hand, a private jet broker might be a good idea if you are looking to obtain a smaller aircraft for your private or business needs, such an aircraft broker will have a completely different specialization than a commercial aircraft broker.
This is not to dispute the appreciation of the broad knowledge by such a person but sometimes, specific problems require specific answers!
Because of their expertise and experience, brokers can create curated marketing plans that target a given audience that they best believe could be interested in being active parties to a purchase process. As such, they eliminate low unattractive bids from buyers. These strategies can include social media use, in-person business talks, trade fairs, aviation blogs, and magazines.
Experienced brokers can help both buyers and sellers to get value in the transaction despite sitting on opposite sides of the negotiating table. For example, the buyer can get a fair price for the aircraft based on the budget, and at the same time, the seller can maximize getting the best possible market valuation of the aircraft.
Well, the charges are not standard for all types of aircraft brokerage. So basically, brokers would charge you the much you are willing to offer and that which they are willing to accept. It is like a willing-buyer-willing-seller type of arrangement.
However, commissions and flat fee payments are the common payment options in the industry. For example, commissions can be worked around based on a percentage of the selling price of the aircraft, and retainers can be feasible options as well.
Brokers can range or vary from being an individual to a company. CSF Jets may be a good place to start you off considering its rich brokerage history with Fortune 500 companies. AvBuyer and Latitude 33, a charter broker, are also firms with a proven track record that can link you to a directory of aircraft and their parts.
Back to the topic of how to select a good aircraft broker, first, it is prudent to conduct due diligence in assessing the reputation of the company or individual you are willing to work with. The ideal option would be a firm or an individual with diverse experience in aircraft sales and acquisitions with other reputable firms.
Usually, a team rather than an individual should offer a better experience in aircraft management. Also, you can always look into the broker’s previous clients and their testimonials to figure out if the aircraft broker is a good fit for you.
Importantly, knowing the difference between an aircraft dealer and a broker would help reach out to the right team for help. Whereas aviation brokers do all that we have discussed, facilitating transactions, aircraft dealers are profit-oriented because they trade for resale.
Digitization has helped in market penetration and reach. As such, active social media usage and the internet in general help brokers in marketing aircraft and generate some leads for initial discussions. Sometimes, cold emailing is used to reach out to new potential buyers, even though most aircraft brokers prefer warm emailing to reestablish connections with already-known people and institutions.
Based on online resources, relationships in the industry, and market information such as the number of similar aircraft recently sold and for what price, the broker should help in establishing the fair market value of the aircraft. However, you can engage asset financing institutions, who sometimes partner with brokers, to conduct a market valuation of the plane. They could as well help you as the buyer get partial or full aircraft finance.
Broking is no inferior job. In fact, some industry’s practicing professionals such as pilots (both private and commercial pilot license holders) and engineers are part-time aircraft brokers. Therefore, when looking to buy or sell your aircraft, it is important to seek the services of one of the industry’s proven team of brokers for a seamless flow of the entire sale process.
Aircraft · 1 min read
The global aircraft leasing market, which has been on a steady rise for a number of years, is expected to surge to even greater heights in the coming decade. By 2029 the aircraft leasing market is estimated to reach the value of almost 300 billion USD.
