Aircraft Sales Insights

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Selling Your Aircraft on the International Market

August 25th, 2011 Posted in Aircraft Sales, Brad Harris
Aug , 25 20 11
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When you’re selling your airplane, the more buyers that see it, the more likely you are to sell it quickly and for the best possible price. Selling your aircraft on the international market simply makes sense – a larger market equals more opportunity.

There has been exceptional growth in business aviation outside of the United States in recent years.

When you put those two facts together, it makes sense to work with a broker who can accurately market and potentially sell your aircraft to any qualified buyer in the world.

To do that effectively, it is important to use a sales professional or broker who understands the implications of international transactions. It’s important to select a professional who:

  • Has experience with international sales and understands how the process works in the country the buyer is in.
  • Has the connections and channels to market and advertise the aircraft internationally
  • Is able to manage all of the legal requirements for export and import of the aircraft
  • Is able to evaluate the available options and give you the best advice about the details of the transaction.

A broker who doesn’t have this experience can expose you (the seller or buyer) to unnecessary delays and potential legal and financial risks.

There are two major processes that have to take place If you sell an aircraft to a buyer in another country.  First, you have to export the aircraft from the country of the registration by performing an Export Certificate of Airworthiness. . Second, you will have to perform an Import Certificate of Airworthiness  into the new country of registration by conforming the aircraft to the local aviation authorities regulations and requirements.

The rules are not the same in every country.

In recent years there have been some regulatory changes made which affect aircraft that have been previously registered in the U.S.  The changes allow an aircraft that has been sold overseas, but previously registered in the U.S., not to be required to undergo another Export Certificate of Airworthiness (C of A). The new U.S. buyer must simply display to the FAA DAR that the aircraft is in compliance and has the required inspections for the Import Certificate of Airworthiness.

If you sell an U.S. aircraft into a foreign country, an Export C of A may be required, which would entail additional inspections.  Different controlling government bodies have various requirements, for example, in Switzerland it’s the Federal Office of Civil Aviation (FOCA); however, the European Aviation Safety Administration (EASA) governs the majority of Europe.

Each of these entities may require additional inspections or even additional equipment (such as a flight data recorder, which may add $30,000.00 to $300,000.00 to the cost of bringing the aircraft into compliance!)

When we represent a U.S. seller with a foreign buyer, we are very careful with the language of the agreements for many reasons; one of which is to be very explicit about which party is responsible for costs associated with ensuring the aircraft conforms to the legal requirements of the buyer’s country’s governing authority.

Besides the government agencies and their procedures, there are other risks.

Once a U.S. seller has filed the de-registration request and/or delivers a bill of sale, he is no longer the owner of the aircraft, yet the closing will not have occurred and the seller will not be paid until confirmation from the foreign local registry is issued. Given time differences between countries, the de-registration request and the acknowledgment of the re-registration documentation approval by the foreign local registry may actually occur on different business days.

There is also a risk that the buyer may default on the contract after the de-registration and Export C of A have been accomplished; yet the seller will not have been paid. From a U.S. seller’s perspective, the only thing that the U.S. seller should do is agree to file the de-registration request or bill of sale concurrent with being paid.   One of our specialties is the generation of such agreements that cover the risks of the seller.

Other things to consider:

  • Currency fluctuations
  • Delivery of the aircraft  (across an ocean – through airspace that may be unfamiliar to the crew)
  • Getting the aircraft through customs and immigration

As you can see, it is very important that all parties in these negotiations are experienced and knowledgeable.

Dallas Jet International Transactions are International

Dallas Jet International (DJI) has experience with international transactions in many countries and circumstances.  Dallas Jet International personally oversees every aspect of each transaction. We have a network of trusted inspection facilities and legal and tax professionals throughout the world.

Our most recent aircraft transactions include the following:

  • Bahrain
  • Channel Islands
  • Denmark
  • South America
  • Brazil
  • Canada
  • England
  • Ireland
  • Italy
  • Spain
  • India
  • Isle of Man
  • Switzerland
  • Venezuela

Question- Is it worth it to sell your airplane on the worldwide market?

Answer – We suggest that you are missing out on a large number of potential buyers and a large amount of capital in foreign markets if you restrict your aircraft sales efforts to the U.S.

We also suggest that you select a broker that can represent your interests and protect you from the potential risks involved in these complex transactions.

About Brad Harris

Brad Harris is founder and CEO of Dallas Jet International. Mr. Harris holds a Bachelor of Science Degree in Professional Aviation and Airway Science and a Masters Degree in human resources from Louisiana Tech University. Mr. Harris entered the aviation industry in 1989 as a corporate pilot for a Fortune 500 corporation. In 1993, he started a successful aircraft leasing and renting company which expanded to a successful aircraft management company in 1995. In 1993, Mr. Harris began his aircraft sales career and, in a very rapid fashion, became one of the most highly respected aircraft brokers in the World. In 1998, Mr. Harris started an aircraft sales, consulting, and brokerage company that is known today as Dallas Jet International. Mr. Harris is a current airline transport pilot who is type-rated in ten (10) different jet aircraft including the Gulfstream 550, 450, 350, GV, GIV, GIII, GII, Hawker 125, Falcon 10, Citation 550/500, Beechjet 400, 400A, Lockheed Jetstar II, Diamond Jet and King Air 300/350. In the many different aircraft markets, Mr. Harris parlays extensive hands-on knowledge and experience into clear results for his clientele. In addition to Mr. Harris maintaining a career focus on aircraft sales, he also has extensive experience in aviation consulting and management. Included on his client list are several clients for whom Mr. Harris and his firm have set up flight departments, consisting of aircraft crewing, aircraft management, aircraft maintenance and aircraft operating budgets. He and the firm are currently managing a Gulfstream V, a Gulfstream IV, a Falcon 50, a Citation II, a Citation ISP, a Citation Mustang, a Hawker 400XP, and two King Air 350’s.What most people do not know about Mr. Harris is that he possesses significant entrepreneurial experience in real estate and commercial insurance. This business experience, combined with his unparalleled experience in all facets of corporate aviation, has been the foundation of success for Dallas Jet International and its clients.

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Market Volatility and Your Aircraft Purchase Decisions

August 15th, 2011 Posted in Aircraft Cost, Aircraft Sales, Background/Industry, Shawn Dinning
Aug , 15 20 11
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With the last week of market volatility in Wall Street and across the globe, I have been asked where the aircraft market is going, and what aircraft buyers and sellers should be considering as we approach the home stretch of this year.  While I don’t ever say I can predict the future, my response to my clients’ inquiries on the future involves a major discussion of market volatility, including where we are and where we’ve been.

Market Volatility in The Last Three Years

The height of the bubble that was the aircraft market was reached in early 2008.  Since early 2008, most markets have been in a steady, and sometimes rapid, decline.  While there is frequent discussion on the major causes of this market decline, allow me to review some raw numbers with you.  Below are average aircraft “Basic Selling Prices” as recorded in Q1 of 2008 and then in Q2 of 2011.  These prices are average, and I must advise you that aircraft were selling at higher and lower prices than the averages listed here, but these numbers are certainly good reference points.

Q1 2008  Q2 2011 % Change
1998 Gulfstream V $40,750,000 $22,000,000 -46%
2002 Gulfstream V $45,500,000 $26,000,000 -43%
2004 G550 $54,000,000 $37,000,000 -31%
2007 G550 $58,000,000 $41,000,000 -29%
2001 Falcon 900EX $34,800,000 $19,500,000 -44%
2007 Falcon 900EX $42,900,000 $28,000,000 -35%
2001 Falcon 2000 $22,200,000 $11,000,000 -50%
2007 Falcon 2000EX EASy $34,000,000 $20,000,000 -41%
2001 Bombardier Global $45,000,000 $25,000,000 -44%
2007 Bombardier Global XRS $60,000,000 $39,000,000 -35%
2001 Hawker 800XP $8,900,000 $4,000,000 -55%
2007 Hawker 850XP $13,300,000 $7,000,000 -47%
2001 Lear 60 $8,100,000 $4,100,000 -49%
2007 Lear 60XR $12,500,000 $6,900,000 -45%
2001 Citation Excel $8,500,000 $4,000,000 -53%
2007 Citation XLS $12,200,000 $6,900,000 -43%
2005 Citation CJ3 $7,200,000 $4,600,000 -36%
2008 Citation CJ3 $8,000,000 $5,700,000 -29%

 

As you can see, aircraft values have dropped dramatically over the last 3 years.  In some cases, values have dropped over 50% from their 2008 highs.  “Market Correction” is an understatement.

When people see these numbers, they are often shocked.  Aircraft owners and aircraft lenders have been hurt significantly by these value decreases.  Aircraft buyers, especially first time buyers who do not currently own an aircraft, are almost giddy about buying an aircraft that is 40%  cheaper than it was three years ago.

Are We At the Bottom?

A very common question for me is whether we are at the bottom of the market.  The question is difficult for me to answer, as the market has segmented itself.  Markets with the most momentum are 5 year old and younger large cabin aircraft such as the Gulfstream G550 and the Bombardier Global XRS.   These markets have shown a clear bottom, mostly in the latter part of 2009, and have stabilized at prices above the 2009 bottoms.  Markets that are still in a decline are all of the aircraft that are 20 years and older.  Even in markets such as the Lear 60 and Hawker 800XP, significant oversupply is making it difficult for prices to show any signs of appreciation in the near future.

Taking a Step Back – Looking At the Market Opportunity

In particular, aircraft buyers should take a look at this market from a broader historical perspective.  Are prices going to go lower?  In some markets, there is clear data that prices hit bottom over a year ago.  In other markets, they may.  But, in ALL markets, prices have made a major correction, in some cases over a 50% correction.  If anyone is seriously in the market, this could be just the right opportunity to secure a tremendous deal within the historical context of the market.  Moreover, the quality aircraft will always sell first. So, this could very well be the time to take the “pick of the litter” in many depressed aircraft markets.

In future articles, I will take some time and look at individual aircraft markets, showing you how a particular market is behaving in the context of the broader market.

Shawn Dinning, Director of Sales & Acquisitions

Mr. Dinning acquired his formal education at the United States Air Force Academy in Colorado Springs, Colorado, in the areas of Operations Research and Management Science and also holds a degree in Aeronautical Science from Embry-Riddle Aeronautical University. Mr. Dinning brings 16 years of aviation experience from a variety of aviation disciplines, including FAR 91, FAR 121, FAR 135, defense, and shared ownership sectors. A former full-time professional pilot, Mr. Dinning holds a current Airline Transport Pilot (ATP) certificate, and is type-rated in the Gulfstream V/G550/G500/G450/G400/G350/G300, Bombardier CRJ-200, and Citation 510 Mustang. He has logged over 5500 flight hours, with 3500 of those hours in corporate turbine aircraft. Mr. Dinning has been consulted in publications such as Business & Commercial Aviation on various issues related to turbine aircraft transactions.

Mr. Dinning brings to Dallas Jet International a rare and highly valuable skill set of operational and business acumen, and has become a leader in the professional marketing and procurement of corporate turbine aircraft all around the globe. He also specializes in aircraft mission analysis, aircraft valuation, and cash flow and operating cost analysis for private aircraft owners. Mr. Dinning has a track record of successful transactions that is well known amongst his clients and colleagues. His reputation for intelligent and meticulous management of aircraft transactions have made him one of the most respected aircraft brokers in the industry.

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