Dr. Mary Ann O’Grady
So what comes first: the pilot’s license or buying an airplane? At first glance, this question seems to elicit a fairly straightforward response that an individual would not be buying an airplane if he or she was not planning on flying it personally. However, business entities, organizations, associations, and even individuals often purchase aircraft with the intent that they will be hiring a corporate pilot to transport them in their own airplane. There is one other category of individuals who makes the decision to purchase an aircraft prior to completing their private pilot’s license, because it provides him or her with the incentive to finish his or her pilot’s training by removing the option of quitting due to the financial investment that is now sitting on the tarmac or in the hanger as a constant reminder of that individual’s commitment.
Whichever option comes first, there are specific guidelines that should be followed to ensure that buying an airplane runs as smoothly as possible. Financing is at the top of the list as many individuals and/or companies do not enjoy the luxury of paying cash for their aircraft. It is often wise to remember that the aircraft purchase is the least expensive part of owning an airplane, due to the costs of items like insurance, periodic inspections, and required maintenance, so investigating the operating costs and loan information then becomes a priority. Another financial consideration is the valuation or online Vref of the aircraft under consideration, which allows the prospective buyer to see if it is reasonably priced. In addition, conducting a pre-purchase inspection helps to eliminate any unanticipated [and typically unhappy] surprises. It is important to verify that parts are still available for the aircraft and that the local mechanics are able to work on it. Taking the airplane for a test flight prior to purchase is the best way to determine if it is a good fit for the skill level of the buyer. A thorough examination of the aircraft logs is a must and non-negotiable. Any evidence of an unusual entry should immediately raise suspicion, such as “replaced sections of fuselage skin,” which could be an indication of a gear-up landing. While still compiling the financial obligations of buying an airplane, it also becomes necessary to research the cost and availability of aircraft insurance.
Probably one of the most common errors in purchasing an aircraft is making an impulsive buying decision without fully considering the effects of that choice, rather than analyzing the requirements realistically and carefully [want versus need scenario]. To avoid purchasing more aircraft than is needed or can be used, it is wise to reflect upon whether all those fancy bells and whistles are really warranted. Renting the type of aircraft of interest is an excellent and less-expensive way of seeing how well it suits the frequency and duration of anticipated flights. Since the amount of the loan, as well as the interest rate, has a substantial impact on the total cost of the purchase, it pays [no pun intended] to invest considerable effort into finding the best source of financing.
The major factors that affect the resale value (valuation) of the aircraft are the following: