Failure to consider all cost, expenditures, taxes, and risk involved with an aircraft purchase

The operating and maintenance cost of a King Air are so predictable that they should be easy to calculate and consider, but there are other costs that sometimes get overlooked.

The operating and maintenance cost of a King Air are so predictable that they should be easy to calculate and consider. There are other costs that sometimes get overlooked.

Some examples are:

Pre-purchase Inspections

Depending on the maintenance facility used, the pre-purchase inspection of a King Air should cost at least $15k–$20k. If you are spending less than that, you are probably not getting the proper level of inspection. Add to that the cost of bore-scopes and test flights, and we typically budget $25k

Insurance

The insurance market is weird right now, unpredictable. It doesn’t mean your rate will be high, in fact some companies are avoiding the risky business and are hungry for the low risk business. In the last 6 months, I have seen the highest rates quoted—but also the very lowest—ever.

An Aviation Attorney

A good aviation attorney is worth everything he charges. A bad one will kill deals for you and drive up the cost of the entire process while simultaneously sucking all of the fun out of it!

Sales Tax 

I’m still surprised by how many folks don’t have a plan for sales tax. With sales tax in some states exceeding 8%, it’s a serious expense that must be planned for. There are several options, but registering the airplane to a Delaware corporation isn’t one.

Risk 

When I talk to a prospective client, I always tell them that part of our service is to make sure that you don’t make a $50,000 mistake. It is incredibly easy to make a $50k mistake when buying a King Air. This can be based on the purchase price, hidden damage history, overdue maintenance, or engine issues.

Additional Risk

There’s some level of potential risk that buyers are seldom aware of, here are some examples:

  • Buying an airplane with falsified records
  • Buying an airplane from someone engaged in the drug trade or money laundering. 
  • Buying an airplane with life-limited engine parts
  • Buying an airplane from an unscrupulous broker
  • Buying an airplane with a lien against it 
  • Buying an airplane that doesn’t fit in your hangar

 

I’ll sign off of #9 with a short story. There was a turboprop years ago that was for sale. I asked the owner if the airplane had any damage history, stories, etc. The owner replied, “No, but it is missing one of the airframe logbooks. No one knows what happened to it.” A little research through contacts that knew the airplane shed some light on the missing logbook. It turns out that the previous owner was traveling in Mexico. He became lost and decided the best course of action was to find a place to land and get his wits about him. Apparently, he landed at the wrong airport. Sadly, one of the folks at this clandestine strip opened fire with an AK-47, killing him in the airplane. I guess a missing logbook did less to the value than all of the fuselage repairs required to rid the airplane of dozens of bullet holes.

Note: I did check before writing this, and the airplane has since been scrapped, so I’m not telling stories on anyone’s airplane.

Stay tuned for #8.

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