AINsight: Counting the Days

 - November 6, 2020, 12:15 PM

It seems like all we have done lately is count! Now it is time to take out a calendar and count the days. We are still getting calls every day from prospects asking if it is possible to get a preowned business airplane bought and put into service by the end of the year. Given the complexity of the entire process, that task is getting more and more difficult by the day.

The first thing that must happen, and happen in just days, is to find the airplane to buy. Believe me, if you are contemplating this exercise, know you are not at the head of the line. Many of the best choices are already in play and the remaining airplanes might not either be the best pedigree, best equipped, or most solid choices overall. That is not to say that you couldn’t wake up in the morning and find that perfect airplane coming to the market. It is just this end-of-the-year rush that might have taken many choices off the table.

Let’s say you can find that perfect choice. Next, you or your representative or flight department personnel will want to go see it and review at least initially the logs and records. That might take as long as a week to set a visit and accomplish the cursory review. Many of the people calling us are first-time buyers. Therefore, on a parallel course, there will need to be a search for either pilots or better yet a management company.

These searches do not just fall off a tree. This is a carefully executed search that has many critical facets. The management company will, among many other operational pieces, have to locate hangar space in the appropriate city and find contract pilots ready to take the important flights to qualify for the bonus depreciation by year-end.

Once you have the airplane identified, then the all-important contract phase begins. This could take up to 10 days to accomplish. Given the rush to get airplanes purchased and in service, the maintenance facilities are slammed with pre-buys. Getting a slot and having the confidence to pay the inspection cost upfront usually does not occur until you have the certainty of a contract signed by the buyer and seller.

These are all precious days. Another tricky part can occur if, during the inspection, items are discovered involving parts or engineering requirements that start to hold up the aircraft’s return to service. Covid-19 has presented several supply-chain complications.

Can it all be done if one starts the process today on November 6? Some would say yes if you, for instance, found an airplane new at one of the factories. Getting that into service would be a much easier path since there is no pre-buy, an easier contracting process, and fewer service-entry risks. I have seen buyers wave a pre-buy at year-end—that is risky and a path I would not recommend.

The list of critical path players needed to accomplish a transaction will include an aviation attorney, tax strategist, management company, maintenance company, and a broker.

I do not want to take any wind out of anyone’s sails, but just approach these starting-today transactions that have a must close by year-end mandate with eyes wide open.

Jay Mesinger is the CEO and founder of Mesinger Jet Sales, an international aircraft brokerage firm. With 46 years of successfully buying and selling aircraft, Mesinger Jet Sales has a global reputation for personalized and transparent service.