The saying “Buyer beware” is as old as there are people buying and selling. Unfortunately, in the aviation industry, the stakes can be high.
It is important to understand the term “fiduciary responsibility”. In simple terms, the person you hire has a fiduciary responsibility to only represent your best interests in the transaction. They cannot represent both sides. Lawyers live by this standard of ethical conduct, having to do conflict checks prior to taking on any client to ensure there are not conflicts within their firm for representing one party or the other.
How does this apply in the aviation market place? If a broker offers to help you find a plane, they are not doing this out of the goodness of their heart. They expect some kind of compensation. If you have no intention of paying them, then they technically do not have a fiduciary responsibility to you, even though they may act like they are looking after your best interests. Same with a seller, when they help you in the purchase of the aircraft, they still have the responsibility to represent his/her client. They can offer assistance and make the transaction go more smoothly, but their ultimate responsibility on anything that pertains to a monetary value is to the client that is paying them.
We often go beyond our seller duties to help make the transaction go smoothly and I think many professional brokers do the same. However, they are not bending their responsibility to the seller, they are just doing things that perhaps the other side broker is not doing to make the transaction easier.
I think there are more than just a few buyers who do not fully understand that if someone offers to help them find and buy the right aircraft, that they need to ask how they expect to be paid and how much. Recently, I have had three cases of people calling on the aircraft I have for sale. Gathering all of the information about my plane and then coming back to me and saying, “I think this is the best plane for my client, how much do you plan to pay me?” My first question is that I thought he said they were working on behalf of the buyer and they have said as much. The typical answer is yes, I told him I would help him find the right aircraft, or he is a charter customer of mine and I told him I would find a good aircraft for him to use in our program. Often, they tell me that the buyer is cheap and thinks they are doing this as part of their relationship and if I don’t pay them, they will just steer the buyer to an aircraft where they can get paid.
I suspect the ultimate buyer would be quite surprised to find out he might be missing out on the best plane for him and not seeing the whole market because the person he is working with, that he thought has his/her best interest, actually has his own personal monetary interest in mind. I had one charter company tell me that is their profit center and they expect to be paid on all transactions and not necessarily by their charter customer, or at least directly.
There are solid management and charter operators who actually do help and expect nothing in return except finding their customer a great plane that will fit into their operation so both parties will have a win/win experience. However, when you ask them about compensation, they will tell you how they work and then it is your option to proceed with their help.
Bottom line for buyers is to ask a few questions upfront when someone offers “free” assistance. If a buyer says “I don’t expect you to do this for free, so tell me what you expect for compensation,” the answer will tell you if you really have someone on your side or not.
Asking someone to put hours into an aircraft search project for “free” will net you “free” results”.
Mike McCracken is President of Hawkeye Aircraft Acquisitions–36+ years in the aviation industry.
