The most common first step in the acquisition of an aircraft is for one of the parties, usually the buyer, to prepare and submit a letter of intent (“LOI”) to the other party. The main reasons for using an LOI are to express each party’s understanding of the basic terms of the transaction and to commit those terms to writing, at the outset, to confirm that the parties really have reached a meeting of the minds on those basic terms.

For aircraft transactions, the LOI is usually a short, one-or-two page document that includes the essential terms (e.g., identity of the parties and the...

Nothing is forever. Things change. That’s just a fact of life. Unfortunately, events and outcomes can alter the need for employees, or need for the same number of employees, as previously required to do the job. Mergers and acquisitions bring in new owners, or create redundancy in flight department personnel and aviation assets. Business directions and resource allocations are dramatically altered. Aircraft get sold. Or alternative methods to access the benefits of business aviation become the new order. Whatever the situation, the result is that people who were once in...

Operating the business jet or turboprop which you were hired to fly is certainly one of the more enjoyable parts of a Chief Pilot’s or Director of Aviation’s job. But there are other aspects to these positions that can pose more challenging than even maneuvering around thunder storms or working through unexpected and complex maintenance situations. Yet dealing effectively with those additional issues can also yield substantially greater success for you and your operation.

Employ cockpit resource management outside of the cockpit. Identify the specific tasks you need to accomplish...

The acquisition and financing of a business aircraft may appear to be no different than the purchase of any other capital asset. But it is – dramatically so. Thus, the most prudent step is to seek high-quality assistance. Nearly 90 percent of all business aircraft transactions, new and pre-owned, involve a professional brokerage and acquisition firm. These experts are in the market all day, every day, and have experienced nearly every variation of aircraft financing along with a full range of providers – the good, the bad, and the ugly. Solicit their input at the outset....

While the economic snap roll in 2008 altered the United States as well as global fiscal landscapes in many respects, the basics of financing a business, or a business aircraft, remain essentially unchanged. That oft-repeated phrase "banks only lend money to people who don’t need it" may sound believable, but just the opposite is generally true.

Banks DO want to make aircraft loans today.

However, lending institutions are being increasingly analytical in loan application evaluation. Frequently there are also additional, although not necessarily onerous, requirements...

When NBAA-BACE 2016 opens on November 1st, and any aircraft you operate is not yet ADS-B Out compliant, alarm bells should be sounding loud and long in your fight department.

As this year’s Business Aviation Convention and Exhibition begins, only 1,155 days will remain before all business, general, and commercial aircraft in the United States must have complied with the FAA Next Generation Air Transport System (NextGen) mandate to be ADS-B Out capable. Prudence dictates that January 1, 2020, should be utmost in your thoughts since that is the decreed date for completion.

In...

Country and western performer Kenny Rogers may have been singing about a card game, but his words are most applicable to business aircraft ownership. Unlike Poker, where rules of play exist, there is no universally accepted, cut-and-dried formula for determining when to keep (and perhaps upgrade) or dispose of business aviation assets.

Complicating factors include the multiple points of view from different stakeholders regarding retain or resell decisions. External factors, such as IRS rules and generally-accepted accounting principals, play large roles. Bankers, finance companies...

Few conversations strike more needless apprehension into the heart of even the most experienced Director of Aviation than the Chief Financial Officer’s request for an aviation department forecast. Many Chief Pilots fear this particular task as much or more than other challenging responsibilities that he or she is required to perform. But truth be told, there is simply no valid reason for such undo concern when aviation managers know, and understand, exactly what information the CFO truly wants to have. To reach that point, step back and look at why the financial executive wants a...

Aircraft Insurance Insights

Like nearly everything else in business aviation, aircraft insurance is both unique and complex. If coverage came in a "one size fits all" package, policies could be purchased on line or from a vending machine. However, the reality is anything but that.

How, then, do you truly make valid and actionable "apples to apples" comparisons when evaluating various options for insuring a valuable asset against loss while also providing protection in the event of an accident or incident? What is the secret to obtaining the type of...

In addition to the normal monetary considerations, tax consequences and financially detrimental issues to be avoided, a host of specific and often confusing Federal Aviation Administration (FAA) and Internal Revenue Service (IRS) rules and regulations also exist. Strict adherence to and rigid compliance with these numerous requirements are non-negotiable prerequisites for the successful outcome of any transaction, whether buying or selling an aircraft. Consequently, the potential for problems not only always exists, but is also always very real.

However, the much more frequent...

Business aircraft market valuations are one of the most critical – and most complex – elements in the brokerage or acquisition process. Yet Aircraft valuation is utilized for everything from analyzing and / or predicting residual values to effectively pricing an aircraft appropriately so it will sell in the current marketplace. Failure to get this aspect of a business jet or turboprop transaction exactly right can cause sellers to benefit less than they could or require buyers to pay more than they should.

So then, you justifiably ask, how and why does this occur? Usually the...