Buying Your First New Airplane

It feels great. It looks sexy. You catch yourself daydreaming about it in boring meetings. People come up and look at it wherever you go.

A brand-spanking-new airplane. There are few thrills and accomplishments as satisfying and special as buying a factory-new airplane. To the new owner, a new bird is the epitome of symphonic beauty and brilliant engineering; a powerful engine and supple, luxurious leather interior combined with the latest in navigation and communication technology, which, in many cases, outpaces commercial airliners. And it's all yours.

Intoxication aside, there are several easy-to-follow but vital steps in the process of acquiring your first new airplane. The following guidelines should assist you on the pragmatic side of this romantic and thrilling adventure. Follow them in their natural sequence, sort of like a "purchasing checklist," and you should have a very satisfying and enjoyable purchasing experience.

Pick Your Plane
First of all, clearly and realistically decide what kind of airplane you want to own---one that best suits your flying needs, experience level and budget. Indeed, the happiest airplane owners are the ones who have airplanes that are useable, enjoyable and affordable.

Nothing spoils the owner experience faster than being stuck with an airplane that's a struggle to pay for, a hassle to fly or that sits in the hangar because it's not practical for your travel and flying needs.

No airplane is perfect and no airplane is capable of accomplishing every mission within all your parameters. Examine the nature of 70% of the trips you've taken in the past six months to a year. Apply your findings to your current expectations. What's my mission? Where will I go? How many people will I typically take? What can I afford per hour or per month? Is my mission weekend fun flying to golf outings or $100 hamburgers? Is it covering a five-state sales territory? Or is it flying to New York on Monday, L.A. on Tuesday and Houston on Thursday? How many people actually go along on 70% of my trips? (Note: Be realistic about how many actually go versus how many you wish would go.) What can I comfortably afford per hour? (Include gas and engine reserve and unscheduled maintenance.) Per month? (Include hangar, insurance, maintenance, annual inspections, taxes, etc.)

Don't focus on the model you like best, but on the model you like best that also satisfies the practical requirements you've worked out for yourself. For the happiest experience, I'd highly recommend buying an airplane that you can grow out of in a few years, rather than one you must grow into. Always daydreaming about something newer, bigger and faster is part of the fun.

The answers to the questions about your true mission needs and capabilities may surprise you. Some find that a new C172SP or Diamond Star is the answer; others find that a new Cirrus, Columbia or Mooney is the rocket-ship they need; and others might find that a Saratoga or G36 Bonanza fits the bill when carrying along the whole family or sales team. A few lucky others place orders for a TBM 850, Pilatus, Meridian or Cessna Mustang.

Sure, sometimes we're downright envious of the latter group---until we hear them shriek with agony over receiving a $70,000 bill for a fuel pump. Then we're extremely satisfied with our Cirrus or 172SP.

As your business expands or if you strike it rich, then you can always trade up. For long-term peace of mind, however, use a methodical approach in which you take things one step at a time, in terms of money, your actual skill level and the time required for sophisticated training on higher-performance aircraft. It's better to daydream about a shiny tomorrow (with a bigger, faster airplane), than to face the dark and stormy nightmare of buying above your price or experience level.

Now that we've decided on what's going to be fun and smart, we can start shopping and actively looking, but there are a few small steps we need to engage at the same time. These small but vital steps, which require some lead time before signing the deposit check, include confirming your financing, ascertaining the depreciation/favorable tax treatment of your purchase and acquiring insurance.

While most manufacturers have some kind of in-house financing relationship with a major bank, it's often best to prequalify on your own and thus assure yourself of the best rates and terms. And a prequalified buyer is music to the salesman's ears---it establishes a stronger buying position for the customer who doesn't have to rely on qualifying for the manufacturer's program.

Hint: The clock is always ticking on a new airplane. The new airplane will automatically become a used airplane, chronologically, so the smart salesman or factory rep will want to move new inventory while it's still new. A prequalified buyer means "sale" to an astute salesman.

There are many good sources of financing, and you should compare terms and down payments. Don't expect residential-mortgage type rates---they don't exist---but the rate should be on par with a luxury car or new boat. Expect 20-year terms, with a reasonable down payment. A few excellent resources for financing are Bob Howe at Dorr Aviation---(800) 214-0066, Kathy Sterling, who used to be one of the top dogs at the aircraft financing powerhouse, MBNA. You can reach Kathy Sterling at (410) 569-6261 or

The next step is to call your CPA and quickly get him or her to determine the best way to buy your airplane, or how to take title. Depreciation on airplanes is excellent, better than real estate, so it's a double scoop of ice cream to have Uncle Sam help pay for some of it. If your CPA isn't sharp on airplanes, find one that can clearly help you with this valuable tool before you take title to a new airplane.

Call now to see what training requirements the insurance companies will have for your new airplane. I highly recommend Mark, Dave or Grant at Southwest Aviation Insurance in Scottsdale, Ariz., (480) 483-7822.

Now's the fun part. While you've been prequalifying, checking insurance rates and setting up an LLC, or whatever device your CPA recommends, you should also be face-to-face with the model, or models, of aircraft that seem best suited for you. Sit in them. Do they feel right? Fly them. Do they perform as advertised? Will they actually fly your typical profile trip? What are the various incentives offered by the different manufacturers?

Now it's face-to-face time with the salesman. Keep in mind that you both share the same objective: the salesman wants to sell, and you want to buy. Approach the purchase as a team effort that's headed toward the same touchdown.

Don't let the relationship become adversarial. In a nice way, up-front,
let the salesman know that you're serious about buying an "X," his product, or a "Y," his competitor's product. It lets him know he needs to "sell" you a bit. Let him know that you're prequalified, you have insurance in place and your LLC or ownership entity formed and ready, and you're ready to sign the check based upon the best offer reaching a satisfactory deal. This is all he needs to know to pay attention and get a deal made.

Negotiating The Price
Back in the '50s and '60s, it was much easier to negotiate price because there were independently owned new-airplane dealerships in every town. While the factories tried to enforce a "territory" protection for their dealers, it rarely worked, and a buyer could endlessly shop from dealer to dealer for the same airplane and get very different price quotations. Today, there are just a handful of new-airplane dealerships, with little new inventory sitting around and a much tighter pricing structure from the factory, so hard bargaining and shopping for price are almost nonexistent. The only real bargaining that can be expected is Brand X vs. Brand Y. I know of one customer looking at a new $600,000 G36 Bonanza, and he's frustrated because he can't seem to get a "deal." He has been trying for six months and, despite having the 600 Gs in the bank, he's still Bonanza-less. I've told him to forget about the hard bargaining and just buy. He's resisting, and as of this writing, is still flying his old airplane with old radios.

Feel free to visit the factory if you have the time, and meet the brass. They often welcome visits by highly qualified buyers and you may get a better sense of what the final, no-dickering price will be.

And here's the simplest, scariest, most fun and most important step in purchasing a factory-new airplane: hand the salesman your check.

If you've done all your research, know the costs, have an insurance quote, have established your preferred tax-advantage method for taking title, know your training requirements and understand the warranty, then by all means, buy, buy, buy.

Trust me, nothing is worse than dotting all the I's and crossing all the T's, and then clamming up and stalling about the purchase and losing your dream airplane. Chances are, out of 300 million other souls in America, you're not the only one seriously looking at that airplane at that moment. It may have been sitting there for a bit, but trust me, somewhere, someone is thinking about doing exactly what you're thinking about doing right now.

Buy it and start having the time of your life. Oh, and by the way, Jeff Berlin, editor of Plane & Pilot, says to remember to get the salesman to help you get your personalized N number. As the kids say...sweet!


AOPA Aircraft Insurance
(800) 622-AOPA

Avemco Insurance Company
(888) 241-7891

Aviation Insurance Resources
(877) 247-7767

Travers & Associates
(800) 888-9859


Allied First Bank
(800) 272-3286

Cessna Finance Corporation
(866) CFC-LOAN

Dorr Aviation
(800) 214-0066

Harley-Davidson Financing

Scope Leasing
(800) 357-5773

U.S. Aviation Finance
(888) 654-USAF


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