Transaction costs when buying an aircraft
The advertised price is one budget line out of about fifteen. A deal takes three to six months from the first enquiry to the first flight with passengers, and almost every stage of it is paid for separately: the ferry flight to the service centre, the engineer's time, the lawyer on the agreement, the escrow agent, customs clearance, insurance, crew entry into service.
The seller answers for the aircraft matching its declared condition; the buyer pays for checking it.
Stage 1. Documents — no cost
Airframe and engine logbooks, the history of aviation occurrences, the lists of airworthiness directives and service bulletins, the status of maintenance programs. Half of a short list drops out here, before anyone travels anywhere. The only expense is a specialist's time: one to two weeks per aircraft.
Stage 2. Letter of intent and deposit
A lawyer on the wording of the agreement: from two days to two weeks of negotiation, longer when the parties sit in different jurisdictions.
Escrow agent: an independent company holds the buyer's money and the seller's documents until the conditions are met, and its fee is known before signing. The deposit is credited against the price or returned on the grounds written into the agreement; it turns into an expense when the buyer walks away without grounds.
Stage 3. Pre-purchase inspection — the main line on the way in
▪️ The ferry flight to a service centre rated for the type, and back.
▪️ The slot at the centre: booked before the agreement is signed, the queue can run three weeks ahead.
▪️ The centre's work: opening panels and access hatches, borescope inspection of the engines and the auxiliary power unit, ground runs of the systems, the acceptance flight.
▪️ The buyer's own engineer present when the panels come off.
Timing: two weeks on a light type, three to four on a heavy one; with the queue and the bargaining that follows, up to a month and a half. Work uncovered that runs to several hundred hours adds another two weeks at least.
Stage 4. What the findings do to the price
| Item | What it costs |
|---|---|
| Overdue 120-month inspection, Global 6000 | minus $0.8–1.5 million |
| 120- and 180-month inspections, Global Express built 2000–2002 | $1.5–2.5 million on their own |
| Freshly completed 144-month check, Challenger 604 | plus $700,000–1 million |
| Engines outside an hourly-cost program, Challenger 604 and Global 6000 | minus $1.5–2 million |
| Engines outside a program, Legacy 450 | minus $1–1.5 million |
| Engines outside a program, Phenom 300 | minus $500,000–800,000 |
| No ADS-B Out and FANS 1/A, Challenger 604 | $600,000–1 million for the package |
| Engine and airframe programs in place, Learjet 45 | plus $300,000–500,000 on the asking price |
It is the same money either way: the seller pays it as a discount, or the buyer pays it in the first year of ownership.
The reserve for an engine removal stands next to the price of the aircraft itself. Removal and overhaul of a pair of Rolls-Royce Tay 611-8 runs $2–3 million, against $4–5 million for a Gulfstream IV-SP in good condition. A pair of CF34-3A on a Challenger 600/601 is restored for $1.5–2 million on a 6,000–8,000 hour run to removal: $188–333 per hour for the two engines.
Stage 5. Closing and paperwork
▪️ Legal support on the purchase agreement and the release of the funds from escrow.
▪️ Deregistration from the previous register and entry into the new one: dual registration is not permitted, and in the window between the two no flights are possible. Some registers take five working days, others a month.
▪️ Export and import certificates of airworthiness.
▪️ Customs: broker, declaration, payments under the chosen regime. With a complete file, weeks; with discrepancies in the documents, months, and the aircraft sits on the ground all that time.
The regime and the calculation of the payments are checked on the date of the transaction. Ferrying the aircraft into the country before the regime is settled is the most expensive of the typical mistakes.
I have brought types new to the country onto the Russian register: a HondaJet transferred from the Maltese register, and an AW169.
Stage 6. Entry into service
The aircraft is bought and still cannot fly: this stage takes from two weeks to two months.
▪️ The ferry flight to base, ground handling, parking or a hangar.
▪️ A contract with an operator, or entry onto your own certificate.
▪️ Insurance: hull cover for an agreed value plus third-party and passenger liability. The hull rate is a fraction of a percent of the value per year.
▪️ Crew, the longest item of all. A pilot with the type rating takes weeks to find; without the rating it is a simulator course of a month or more plus a slot at a training centre.
▪️ Joining hourly-cost programs: buying in retroactively costs more than continuous participation.
What to do
- Put together a short list of three to five aircraft and request the documents on all of them at once.
- Work out the full figure for each: price plus first-year work plus entry into the programs.
- Write out the grounds for returning the deposit and the procedure for handling findings, with response deadlines.
- Allow a reserve of three weeks. It will be spent.
What to avoid
▪️ Wiring the deposit straight to the seller: getting it back turns into litigation in someone else's jurisdiction.
▪️ An inspection run by the seller or by the centre he always uses. The buyer picks the centre.
▪️ Vague grounds for walking away: "unsatisfactory condition" is read in favour of the side with the stronger lawyers.
▪️ Comparing candidates on the advertised price: two aircraft three hundred thousand dollars apart come out level once everything is counted.
A buyer who counts only the price learns the other lines from the invoices, at the worst possible time.
The figures here are reference points from transaction practice and open listings, as far as I know. The specifics are worked out for the specific aircraft, its documents and the jurisdictions of the parties.
If you are going through a specific offer, ask in the comments.
Alexander Filimonov — business aviation: sourcing, purchase and entry into service of aircraft.
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