Aircraft Delivery Conditions: What Are You Buying?

When it comes to buying a plane, the price alone doesn’t tell the whole value story. The same jet can be a dream or a financial disaster depending on the delivery conditions.

What matters is knowing exactly what you’re getting for that price. The difference can swing millions of dollars in value.

Defining Delivery Conditions

The aircraft condition that a buyer is getting and the seller is promising vary wildly from transaction to transaction. A buyer and seller negotiate these “delivery conditions” in the letter of intent and finalize them in the aircraft purchase agreement. 

The most common delivery condition is basic airworthiness. In other words, is the plane legal to fly? This includes a Standard Airworthiness Certificate. 

Airworthiness also includes Airworthiness Directives and mandatory Service Bulletins. But does that include every one ever issued? Or only those required to be complied with before closing? And can any be deferred or extended, leaving the buyer to deal with them down the road?

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Damage and Corrosion

Common requirements include no undisclosed material damage or material corrosion. Both can impact the resale value of the plane and may have recurring inspection requirements that cost the new owner money and downtime. 

Records and Logbooks

Delivery conditions should require complete logbooks and other required aircraft records unless disclosed otherwise. If a plane will be put on charter, then some additional records will be required that need to be spelled out in the delivery conditions.

It’s also important to clarify whether any records can be in electronic format or recreated. Addressing this upfront avoids disputes later.

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Equipment and Specifications

What equipment is installed or comes with the aircraft? The seller should list (and the buyer should verify) the aircraft specifications, and any known loose equipment, such as engine covers or headsets. 

Without this level of detail, surprises can cost you. Imagine buying a plane advertised with Wi-Fi only to learn it was never installed, leaving the seller with no contractual obligation to provide it if not part of the delivery conditions. 

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Engine Programs

As discussed in this article, it’s important to document engine programs and their transfer. Unverified obligations or program conditions can haunt a buyer if the contract excludes them and due diligence overlooks them. You’ll also want to confirm whether deferred hours or balances exist that shift to the new owner at overhaul or the hot section inspection. 

Be sure to require the seller to pay any minimum usage requirements that are common on many engine programs. 

Temporary Parts

A savvy buyer should also require that no temporary parts are installed on the aircraft. Otherwise, you may need to later return a rental part or exchanged part, which could require a repair or shipping fee, as well as maintenance charges lurking that relate to the original part.

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What Must Work

The biggest negotiation concerns what systems and components must function on delivery. Does the seller only need to fix things for the plane to be airworthy? Or must they fix other broken items, such as the coffee maker, window shades, or tray tables? 

Obsolete systems, such as DVD players or ancient satellite phones, complicate matters even further. Replacing these items could be impossible, instead requiring expensive upgrades. Prudent sellers will exclude any old systems unsupported by the manufacturer that they won’t repair. 

Whether buying or selling a plane, it is imperative to have an experienced aircraft broker check in advance what obsolete systems exist and work hand-in-hand with your attorney to address these in the delivery conditions.

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“As-Is, Where-Is”

The simplest, and rarest, delivery condition is “as-is, where-is.” Simply put, the buyer will “kick the tires” at a visual inspection, say “yes” or “no,” and accept all risk. These deals are unusual and typically involve older planes sold at steep discounts to offset buyer risk.

No matter the aircraft or price point, it’s imperative to document the delivery conditions in the purchase agreement. With careful planning, buyers and sellers can avoid unnecessary disputes over repairs during the pre-buy inspection. This way buyers know what they’re buying, and sellers know in advance what they will be on the hook to fix. 

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This article is not intended, nor should it be construed or relied upon, as legal advice. The comments, recommendations, and analysis expressed in this article are those of the individual author, John Farrish, are purely informational. This article does not create an attorney-client relationship between you and the author or his law firm. If specific legal information is needed, each person should retain and consult an attorney with knowledge of the subject matter.

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