Why Aircraft Buyers Need Tech-Savvy Brokers

It takes much more than a Rolodex to manage transactions these days.

With prices at historic lows, inventories high, and retrofit options able to transform old airframes into like-new airplanes, will there ever be a better time to buy a preowned aircraft? Possibly, should the long slide in preowned prices that began in 2008 continue. Still, great opportunities for buyers await right now. Just be sure you enlist the help of a broker who possesses the technology that has become so crucial to these deals.

“Top-tier brokers have a lot of technology behind them to manage the sales process for their clients,” says aviation attorney Paul Lange, a party to many business jet transactions. “That’s really a big difference between the larger brokers and the mom-and-pops.”

To be sure, brokerage remains a relationship-based business, but keeping up with today’s global marketplace takes more than a Rolodex. Expect a quality brokerage to employ online databases and proprietary software for data analysis, as well as secure communication channels and IT specialists.

Here are five transaction steps where a broker’s technological savvy can prove invaluable:
1. Identifying the right aircraft models for your needs. The most expensive mistake you can make is buying the wrong type of aircraft—too large or small, wrong range or baggage capacity. Brokerages use technology to conduct a detailed analysis of your travel patterns and preferences, create financial models, and identify which models offer the best opportunities for long-term economy of operation, upgradeability, and value retention.

2. Finding the best aircraft currently for sale. Online listings give today’s preowned aircraft arena the appearance of an open and transparent marketplace. But many of the best prospects are traded without ever having been publicly offered. This inventory includes aircraft coming off lease, trade-ins, and repossessions. The top firms can tap global networks of offices and agents that keep them ahead of the market and help them identify incipient deals early.

As for aircraft offered publicly, the databases at these brokerages have information on every business jet’s configuration and ownership history, enabling them to quickly conduct a preliminary evaluation of those offered for sale. They also use the data to contact owners of candidate aircraft that aren’ton the market, to ensure the widest choice for clients.

3. Conducting a prepurchase inspection. Logbooks need thorough examination, and prepurchase inspections require technicians who are intimately familiar with the make and model of aircraft being scrutinized. Top brokers have the technical expertise on their teams to conduct these evaluations, and contacts with premier inspection facilities to ensure the examination can be done at the most appropriate place and time. Once the inspection commences, these brokers can use secure platforms to quickly share information such as photos and logbook entries with all or selected parties to the transaction, speeding resolution of any adverse findings.

4. Determining value. Establishing an aircraft’s current value is among the most critical services a broker can offer. Price guides like Aircraft Bluebook and Vref, available to subscribers online, were long regarded as the bibles of preowned aircraft values. But thinly traded platforms and rapidly fluctuating asking prices define today’s marketplace. The online guides can provide a general sense of the current market and past pricing trends, but they can’t tell where the market is going. That requires not only historical knowledge and the reams of data on today’s values that brokers have long employed, but analytical tools and modeling software.

5. Closing the deal. Aircraft purchases require multiple specialists on both sides of the deal—flight departments, attorneys, financial institutions, title companies, aircraft technicians, regulatory officials, and more. Aircraft brokers have long served as transaction conductors, keeping teams coordinated, but to do that today you need technology to manage details that extend far beyond deal points; in a market still looking for its bottom, a seemingly minor paperwork glitch can delay and add significant cost to a sale—or derail it completely.

International transactions, now representing a larger portion of sales, increase complexity exponentially. Brokers can leverage technology to establish clear title, ensure compliance with all regulatory requirements, and securely route millions of dollars through international financial institutions.

How Brokers Charge
Almost all brokers today charge a flat fee rather than a percentage commission. (The post-’08 plunge in values cut the knees from the traditional percentage commission on sales, and that arrangement never made sense for the purchaser’s agent, whose objective is to negotiate the lowest price possible.) Fees vary based on the complexity of the search and the value of the transaction, but “the right brokers earn their fee two to three times over,” says aviation attorney Stewart Pearl, a Connecticut-based aircraft transaction specialist. —J.W.

Finding a Broker
To find a tech-savvy broker, get recommendations from colleagues and associates who use business aviation. The National Aircraft Resellers Association, which promulgates a pro-consumer code of ethics, has about 40 brokerage members, and the National Business Aviation Association maintains a listing of aircraft broker members in the Products & Services section of its website. Ask brokerages about their transaction procesases to get a sense of their use of technology, suggests Mike Nichols, the NBAA’s vice president of operational excellence and professional development. —J.W.

James Wynbrandt is a private pilot and regular BJT contributor.