How Airplane Business Transactions Work


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There are options when it comes to purchasing or renting a new or used airplane, and in reality, most aviation experts recommend pilots purchase a plane instead of renting one. More often than not, it will cost an individual more to rent a plane than own that plane in relatively short period. Why so? If you are a business entity or private individual, the cost of hiring pilots, arranging planes, and paying for related expenses will very rapidly accumulate, and in return, individuals and entities have no assets following their expenditures.  Not the best idea for any individual, let alone a business. 

Purchasing and Leasing an Airplane

The reasons anyone may decide to purchase an aircraft are numerous, but for the most part, private consumers will be purchasing or leasing private aircraft from a pre-existing private aircraft vendor or owner.  Aside from the financial hurdles involved, the cost of the transaction requires a large amount of due diligence, which an individual may not prove adept at doing given aviation is not their area of expertise.  Some points to consider along the way:

 

Financing: Talk to your bank and acquire financing to purchase or lease the plane. Determine how much money you will put down, and how much you will need to finance.

Insurance: There are two types of insurance: liability and hull. Liability insurance protects the assets of the owner from being claimed in the event of an accident. Hull insurance covers physical damage to your plane and is required by most lending institutions.

Storage: The plane can be stored in hangars or via grass tie downs, whichever option suits your plane.

Operation: You have to fuel your plane and replace the oil every now and then, and most likely replace outdate products and parts on the aircraft too.

Maintenance: This includes the yearly inspection ($500-$1,000) and other yearly repairs, which can cost up to $800 or more.

Other: This category includes taxes and other fees that could cost up to $200 per year, as well as the depreciating value of your aircraft over time

Due Diligence When Buying an Aircraft

Once the logistical issues of purchasing or leasing an aircraft are worked through, potential buyers need to understand their options when it comes to owning, leasing, or fractional ownership agreements of an aircraft.  These plans, which highly vary, are detailed in contracts prior to purchase.  A large number of considerations need to be take, which an aviation attorney is adept at taking care of for clientele.  Additionally, the terms of the aircraft ownership, whether temporary or permanent, will require a formal, independent inspection of the working condition of the aircraft itself.  Once again, an aviation attorney is your best resource for ensuring all integral components of a safe, legally operated aircraft are met.  An aviation attorney can also cater to insuring a breach of contract does not occur during the sale, as well as accurately informing you of the legal, financial, and other responsibilities and risks you may incur. 

Hire an Aviation Attorney

An aviation attorney will be able to help you obtain an airplane financing, drafting purchase agreements, filing necessary administrative papers, registering with the appropriate entities, and recovering damages for breaches of contract involving the aircraft. The attorney can also assist you when doing due diligence on the actual aircraft itself, which may require an experienced and independent individual or company to review the craft in its entirety.

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