Issues That Cause Bizav Aircraft Transaction Closings To Take Longer

MIAMI—Closing a used business aviation aircraft transaction this year is taking more time than it did the past two years, which is causing some headaches and bigger expenditures.

“It takes longer to close a transaction than it ever has” for 10 different reasons, but “unfortunately, those 10 reasons are different for every transaction,” says Jay Mesinger, Mesinger Jet Sales president and CEO, speaking at Corporate Jet Investors Miami.

However, one thing that can slow a closing is the pre-buy inspection.

Unlike the frothy years of the pandemic, when some buyers were foregoing the pre-buy inspections, most buyers are now scheduling them.

“Buyers are reacting normally, which feels weird after the frothy years,” when buyers feared if they didn’t purchase a particular aircraft there wouldn’t be another option due to high demand and low supply, says Chris Ellis, Avpro co-founder and managing partner.

Pre-buy inspections identify maintenance issues with an aircraft, so they are encouraged for used aircraft transactions. However, maintenance capacity is tight, and like the broader aviation industry, parts supply challenges and a shortage of maintenance technicians can hinder maintenance turnaround times.

As an example, Brian Proctor, Mente Group founder, president and CEO, describes the pre-buy inspection market as taking a bag, filling it with 100 pieces of wood each labeled with a different reason why a transaction will go wrong, “shaking it up and pulling out a different one every time.” 

“We had a client who had a four-year-old ultra-long-range aircraft that just went through a pre-buy, and we thought it was going to sail through because it had just had a 48-month inspection,” he says. However, a maintenance shop found corrosion on one of the struts. That aircraft ended up with “a couple $100,000” of landing gear corrosion that delayed the transaction by two months because the maintenance shop didn’t have the people or parts needed, he says.

And there is an expense to having an idle aircraft.

Earlier this year as part of a different pre-buy inspection, a landing gear that went in for overhaul and maintenance found corrosion. “We searched and searched—for three weeks—to find a bolt. A bolt to get an airplane closed,” says Proctor. Neither the maintenance overhaul facility, other maintenance facilities contacted or the OEM had the part.

He points to three problems in this instance: supply chain, planning and personnel. “If anyone at this overhaul facility had just picked up the phone, they would have found the part, but no one took the initiative,” says Proctor.

The maintenance industry lost a lot of experienced talent during the COVID-19 pandemic due to retirements, and “I think that’s bleeding over now and we’re starting to see it through operations,” he says.

Janine Iannarelli, founder and president of Par Avion, agrees that pre-buy inspections are taking longer today than a couple years ago because of a shortfall in MRO labor.

“Some MROs are simply not learning how to use the word ‘no’ in accepting business,” she says, speaking on the sidelines of the CJI conference.

To make sure an MRO is dedicating resources to that pre-buy, she advises knowing the planning schedule. “You need to make sure that when they accept your aircraft for the agreed upon inspection, they have the hangar space” and a dedicated team assigned to the job for the duration of the basic part of the pre-buy,” she says. “And third, it’s advisable to have someone at the site to make sure that the maintenance facility is delivering what it promised,” she adds.

The scope of pre-buy inspections can vary, but on average, Iannarelli says they take about 10 days. But if a light maintenance inspection is requested, too, add another five days.

Because of the nature of aircraft transactions, booking a maintenance slot far in advance is not realistic. “My advice to anyone who needs to find a pre-buy slot is to book a slot as soon as you sign a letter of intent,” she says.