Pre-Buy Inspections: At the Facility

Once the Agreement for Sale has been signed, the balance of the purchase price has been safely deposited in escrow, the next step in the sale/purchase of a business jet is the pre-buy inspection.

A pre-buy is done to ensure the aircraft is airworthy and that any modifications that have been made have been approved. All the discrepancies found during the pre-buy inspection are corrected at the expense of the seller.

You might think if you spend upwards of $20 million for a pre-owned business jet that everything should be in order, but that's rarely the case. Where the aircraft has been, and whether it was continually hangared when it wasn't flying can make a big difference in the condition that it's in. Sand, snow, humidity, extreme heat and extreme cold will weather an aircraft, and hangars aren't always available in remote locations.

For the sellers, they want the asset off their books and the transaction completed as quickly as possible, with the most profit. So, when representing the seller, the pressure is on.

For the buyers, they want the best possible product for the price they're paying, and they want it in their fleet as soon as possible. Buyers don't really like having $20 million or more sitting in an escrow account for an extended period of time, without the ability of using that asset. So, when representing the buyer, the pressure is on.

Although both buyer and seller want a quick conclusion, the polarizing financial goals tend to make pre-buys a challenge. 

I started doing pre-buy inspections more than 10 years ago while working for Global Jet Luxembourg. Global Jet recognized that having someone on site to push, supervise and monitor would save the seller money and minimize invoice shock. If they were representing the buyer, the buyer would inevitably receive a better product, one that met the our standards.

When I represent the buyer, I'll meet up with the aircraft for its ferry flight to the maintenance facility. This gives me a feel for the product and gives me an opportunity to make a preliminary cabin review. It also saves money as I treat it as a test flight which would otherwise be a secondary flight scheduled during the pre-buy, which would incur additional expenses.

When I represent the seller,  I'll meet the aircraft once it taxies into the designated service centre. Since pre-buys are always last minute and unscheduled, the service centre may have the slot but not the personnel immediately available to start the pre-buy right away due to other priorities. My first job is to make sure this aircraft gets moved up the list.

Regardless of which party is being represented, I meet with the CPM or Maintenance Coordinator as soon as possible to review the scope and schedule. Then, barring any surprises, and there are always surprises, my real job begins, to push, scrutinize, discover, analyze and report - always with the goal of respecting the target date.

Buying an business jet? Here's my advice:

  • Ask where the aircraft has flown, how often it was at repeat destinations, and whether it was hangared. Approach the pre-buy believing it was parked in the open for most of it's life in the most common destination, and imagine it shivering in the cold, or sweltering in the heat.
  • Modifications? As soon as you become the owner, you can personalize, brand enhance or just make utilitarian changes. But remember: you'll need to plan in advance as even easy things, like the carpet replacement, can take 6-8 weeks to manufacture, depending on whether it's custom or stock.
  • Hate the CCF? (China, Crystal, Flatware) - Now is a good time to swap it out. You can usually find a CCF specialist in the city where the pre-buy inspection is being made, and there are various charitable organizations in every city who would be happy to receive the old stock.
  • Know where you'll be registering the aircraft beforehand. If there's no registry change it will be easier and less expensive than if you intend on changing Authorities.
  • Hire someone to protect your interests.

Selling a business jet? Here's my advice:

  • Hire someone to protect your interests. I've received invoices from service centres that included the work on the seller's aircraft as well as someone else's. If I hadn't been present, the seller may have paid for both.
  • Keep your representative on site until the pre-buy report is delivered. Sometimes the pre-buy is "closed" but as soon as the rep leaves, new discrepancies are reported and those can only be confirmed if you have someone on site.
  • Remember that it took time to get your aircraft delivered to you when you bought it, and it will take time to get it in shape for its future owner too.