January 22, 2014

What does “Pre-buy” mean?

Written by Dan Dunn, Jetcraft Vice President Sales, USA

A used aircraft sale will usually include a pre-purchase inspection to verify that the condition of the aircraft meets the representations made by the seller.  This inspection is often referred to as a “Pre-Buy.”  An industry standard Pre-Buy inspection requires selecting an appropriate service facility that is approved to perform work and inspections by the manufacturer. It may be a center owned by the manufacturer itself, or a mutually agreeable facility.

The scope of a pre-purchase inspection is determined on several factors, namely age of aircraft and warranty status, recent or due inspections, and comfort level with the transaction in general.  A Pre-Buy inspection is traditionally paid for by the buyer and may also include a test flight of the aircraft.

Many buyers will review the technical status of the aircraft and may negotiate with the seller to include scheduled maintenance that is near due in the inspection, or they may find an aircraft that has had extensive scheduled maintenance in the recent past and may only wish to review the findings and include test flight and system operation checks.  If the buyer and seller agree on a standard Pre-Buy inspection, the selected service center will provide a quotation and a list of items to be inspected on the aircraft.

On all aircraft types, a standard Pre-Buy inspection includes specific tasks for each model type. These tasks have been selected by the manufacturer and their service center network. They identify known areas of potential problems based on frequency of findings during the entire fleets scheduled inspection program. The inspection will verify operation of all systems, airworthiness of the aircraft, and can include a records review and verification of suitability for certain types of desired operations.

To ensure the quality of the aircraft is reflected in the representations, the aircraft’s history and records will be examined, as well as the aircraft’s airworthiness and any current discrepancies or areas of concern.  Typically the seller will pay for any airworthy items to be corrected, and aesthetic or cosmetic items are brought to everyone’s attention but require no further action on the part of the seller to repair.

Every deal will vary, and every strategy or need is different. Your broker will be able to assist in identifying an appropriate inspection requirement with a purchase and will be able to ensure you have adequate technical representation.  The goal of the Pre-Buy is to know what you are buying, and be able to understand that the pricing is appropriate to the condition of the aircraft.  Remember, she will look pretty on the ramp, but asset cost is only 1/2 of the battle.