What to look for in aircraft audit and transaction management

By Daniel Welinder, Head of Aircraft Management and Sales at Jet Agent

The acquisition of a private jet is not, in the first place, about choosing a specific aircraft type. It is about managing risk across technology, regulations, finance, and operations before a transaction is concluded. For those with a background in technology or corporate finance, this process will be very familiar: due diligence for a high-value asset that moves between jurisdictions.

From our base in the UK, where aircraft often operate in Europe, the Middle East, and North America, we need to ensure that regulatory compliance, VAT treatment, and operational preparedness are all integrated into a transaction management process. Our goal is simple: remove uncertainty prior to investment.

The four pillars that define the process are outlined below.

Technical audit and inspection discipline

The technical record is the foundation of aircraft value. Logbooks, status reports, and maintenance tracking systems are not niceties; they are the evidence that the aircraft meets its certification basis and that subsequent owners will accept it.

A good audit compares and reconciles aircraft, engine, and APU logbooks against digital aircraft status reports. Life-limited components must be accurately recorded. Airworthiness directives must be complied with for each component serial number. Service bulletins must be incorporated, and modifications must be traceable back to approved data.

For aircraft under the jurisdiction of the Civil Aviation Authority, the paperwork must conform to UK regulations. If the aircraft is registered under the European Union Aviation Safety Agency or the Federal Aviation Administration, the equivalency or transfer implications must be factored in before a deal can be made.

The pre-purchase inspection must take into account the aircraft’s age. A high-cycle charter plane will require a much more in-depth inspection of the structure and systems than a corporate plane with a low time-in-service. The inspection of the engines, corrosion inspection, avionics configuration check, and cabin inspection must all be part of a pre-defined inspection scope before the plane is inspected.

The inspection facility must also be factored in. The facility must be independent of the seller. The facility must have expertise in the aircraft type. The inspection must have a system of definitions for discrepancies. The discrepancies must be separated into economic and cosmetic discrepancies. Without a system of definitions, the inspection process can become a subjective negotiation.

The maintenance programme must also have a comprehensive analysis. The engine programme, APU programme, or other programmes can help stabilize costs. However, the contribution levels, escrow levels, and the timing of the next heavy inspection must be forecast at least two to three years in advance. A cheap price tag does not necessarily mean a bargain if the capital expense of a heavy inspection is looming.

The purpose of the technical audit is not to avoid all risks. The purpose of the technical audit is to identify, quantify, and price the risks before the deal is closed.

Regulatory structure, VAT, and ownership alignment

For the UK or European buyer, the most sensitive part of the deal will often be the regulatory or tax structure. The plane’s location at the time of closing, payment of the value-added tax, and its use after the closing will all have an impact.

It is also important to verify the aircraft’s customs status and the operating environment in which it will operate. If the aircraft will operate in multiple jurisdictions and require acceptance under multiple sets of regulations, such as between the UK and EASA, this should also be planned in advance of the acquisition. If the structuring is incorrect, it could limit the aircraft’s operational flexibility and/or trigger tax liabilities.

It is also important that the transaction management team involve aviation lawyers and tax experts at an early stage. These are not issues that can be cured once the funds are exchanged and the deal is completed.

It is also important that the structure under which the buyer will own the aircraft aligns with the intended operational outcome. Will the aircraft be owned through a special-purpose vehicle, operated directly, leased, and so forth?

It is also important that the structure and the overall framework in which the buyer will operate aligns to the intended purpose and outcome of the aircraft from day one. If the structure is incorrect, even an otherwise properly functioning and maintained aircraft can become a compliance nightmare.

Financial exposure and market positioning

Whilst the price ultimately paid for an aircraft is clearly an important factor in the acquisition process, it is only one piece of the overall financial exposure required. A properly managed acquisition process will also seek to understand and evaluate the aircraft’s overall forward financial exposure.

Maintenance requirements, programme contributions, and other expenditures such as major inspection and upgrade requirements will need to be evaluated in relation to expected utilization and other factors. The buyer will want to understand not only what the aircraft will cost to purchase, but also what it will cost to operate and maintain over the next three to five years, to ensure it is properly maintained and remains compliant and marketable in the future.

When finance is involved, the requirements should be coordinated with the inspection scope and the documentation review. Loan-to-value ratios, maintenance reserve requirements, and security registration should be integrated into the overall process. Misalignment between inspection results or documentation review is one of the major causes of delay in the process.

Another factor to be considered is the market position. The value of aircraft is subject to cycles driven by production rates, the economy, and the age distribution of the fleet. The buyer should also consider the aircraft’s position within its model lifecycle, the configuration relative to market demand, and the impact of a customized interior or avionics on the aircraft’s liquidity at the time of disposal.

A separate valuation benchmark should be considered, reflecting results from similar past transactions. Liquidity should be considered at the time of acquisition, not at the time of disposal.

Financial discipline in managing the process safeguards capital not only at the time of acquisition but also throughout the ownership cycle.

Closing mechanics and operational transition

The process should be structured to protect the legal and operational integrity of the transition. The search should be conducted to ensure the ownership history is clean, with no liens or security registrations. The escrow should be structured to provide funding upon the documentary evidence of the registration transfer and the resolution of the discrepancies agreed to during the inspection process.

The closing should be structured to follow a defined checklist, with the timing coordinated among the buyer, seller, lender, inspection facility, and the registration authority. The process should not be left to chance.

Operational transition planning should start long before the actual delivery. The crew type ratings should be confirmed, and the simulator bookings should match the delivery date. The minimum equipment list should be compliant, and the avionics database should be updated. The maintenance tracking system should show the correct status from the time the aircraft enters the new management structure.

The aircraft could be idle for weeks or months while the administrative and regulatory hurdles are cleared. This is an unnecessary cost and inefficiency.

An internal review process within the first year of ownership can validate that the tracking, contributions, and regulatory processes are functioning as intended. It is not a one-time event but an ongoing process for managing the asset.

A managed investment, not a speculative purchase

The process of aircraft audit and transaction management is a structured discipline to inject clarity into the high-stakes aircraft acquisition process. For the technically savvy buyer, the process is relatively simple. Verify the data, align the structure, model the exposure, and control the close.

The majority of issues related to aircraft ownership are not related to the aircraft type or model. They are related to incomplete due diligence, inadequate regulatory planning, or inefficient close mechanics.

The process, when executed correctly, becomes predictable. The objective is not to eliminate all risk. It is to understand each risk before committing capital and to build the asset, so it performs as desired over time.

About Jet Agent 

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