Private aircraft transactions fizzle and fail for multiple reasons. Sometimes a failed transaction is a good thing because there was no meeting of the minds, and ultimately no deal to be reached. However, sometimes an aircraft transaction fails due to differences in business culture and methodology that hinder and needlessly end a transaction that otherwise is favorable for both parties.

Such failures are unfortunate, but can be avoided by developing a better understanding of the business culture and motivations of the other party that you are dealing with. The following article discusses – based on the authors’ direct and recent experiences – the business culture impact when “East-Meets- West” (Asia-based buyers and North American/Western European sellers) in an aircraft transaction, and offers suggestions on how to prevent the business culture divide from interfering with a transaction.


Business aircraft transactions are, at this point, predominantly governed by English language documents, U.S. currency, and often rely upon US or UK law and jurisdiction. This may change as the epicenter of business aircraft purchases shifts East, but for the near future, buyers and sellers will be working within a US/UK legal system and culture. (That is not to suggest that US/European business culture is preferred or superior, but rather that it is the current circumstance).

Aircraft transactions are often between parties that have no prior dealings, so there is no established trust between them, and there may also be pre-conceived biases, based upon a party’s nationality. Also, such aircraft transactions rarely involve face-toface communications due to the distances between the parties, which also makes it difficult for a party to develop personal comfort with the other party.

All of these challenges are best overcome by the parties following the fives steps for a “perfect” aircraft transaction: (1) Offer Letter, (2) Preliminary Inspection, (3) Aircraft Purchase Agreement, (4) Pre-purchase Inspection and (5) Closing. This is a process designed to minimize surprises and protect both parties, with the Aircraft Purchase Agreement as the centerpiece.


For East-Meets-West aircraft transactions, a mutually agreed upon written Offer Letter followed by an Aircraft Purchase Agreement are vital, as these documents are the best substitute for personal business relationships that otherwise do not exist between the parties.

The aircraft transaction is initiated with a counter-signed Offer Letter, and formalized by the signing of a binding Aircraft Purchase Agreement. The goal of the Aircraft Purchase Agreement is to have a detailed, written roadmap that governs all actions and establishes the rights and remedies for all likely events.

Simply put, a negotiated and clearly understood Aircraft Purchase Agreement will organize and control an aircraft transaction. Most importantly, the Aircraft Purchase Agreement provides for continuous forward movement until the transaction is successfully closed or formally terminated.

In addition, a significant purpose of a detailed Aircraft Purchase Agreement is to avoid misunderstandings and unanticipated problems, not to set up grounds for litigation. (It is a misconception that Western (particularly U.S.) parties are litigious and frequently file lawsuits to solve business disputes. In fact, litigation over aircraft transactions is very rare (particularly in multinational business transactions) and only occur when other alternatives are exhausted).


If an Aircraft Purchase Agreement is well prepared, all events from signing to closing (or to termination) should be as stated in the Agreement. The time to negotiate over deal terms is before executing the Agreement.

Western transactional culture is defined by linear, uninterrupted negotiation and execution through closing. It is also expected, by most Western sellers, that issues discussed and resolved will not come back to life in later discussions; and that major issues that are not raised early in the transaction will not appear as the parties discuss the fourth draft of the Aircraft Purchase Agreement.

Non-linear negotiation (looping back to resolved issues or raising new issues late in the day) is often associated with an unclear chain of authority, which is to be avoided and is discussed further under our sub-heading “Who Carries the Pen?” below.

The Western seller considers the Aircraft Purchase Agreement to be the guiding light that leads the aircraft transaction to its end. Westerners will consider any deviation from the Agreement, and any attempt to renegotiate the deal terms after the Agreement is signed, to be an act of “bad faith” and a potential breach of the Agreement. Usually, the buyer’s deposit is subject to forfeiture if the buyer breaches the Agreement after the buyer has agreed to accept delivery of the aircraft in its current condition, subject to correction of airworthiness discrepancies. To avoid difficulty, a party to an aircraft transaction should fully understand what they are signing, sign only when irrevocably committed to the transaction, and avoid re-negotiating important deal terms after the Agreement is signed. When dealing with a Western seller, stick closely to the Aircraft Purchase Agreement, or be prepared for the aircraft transaction to unravel.


Everything about business aircraft is expensive, including an idle aircraft. For that reason, once a private seller has made a decision to put a used aircraft on the market, the costs begin to accrue and the deal must go full speed forward to achieve closing. A thirty day delay on a $30 million aircraft sale may cost the seller $125,000 or more. The Western seller will put a very high value on achieving a smooth, prompt transaction, and a buyer that cannot respond quickly will have its candidacy discounted.

The Western seller will expect a buyer to accept and abide by firm contractual deadlines, and to meet its deadlines for performance, most particularly those deadlines involving the payment of money. Delays cost the seller money, and when the reason for the delay is illogical or difficult to determine, the seller becomes paranoid and immediately begins to assume the worst.


As noted above, the parties to an aircraft transaction often have no prior relationship, and the buyer’s credibility (meaning the seller’s confidence that the buyer will act in accordance with its commitments) may be the most valuable component in the transaction.

When a buyer acts illogically or unpredictably (i.e., is unresponsive for extended periods of time, or responds with unclear intentions) - or if the buyer fails to meet clear obligations, credibility suffers (and that will impact the remainder of the transaction).

More importantly, a buyer can acquire a reputation in the market that will hinder future transactions. We have personally seen sellers accept aircraft bids several hundred thousand dollars below the higher bid, simply because the higher bidder lacked credibility as a result of prior actions, or prior transactions.


Aircraft Purchase Agreements typically require that the buyer make cash deposits (usually in escrow), and as the seller makes commitments (i.e., taking the aircraft off the market, moving it to an inspection facility, allowing inspection to begin), the Agreement requires the buyer to be prepared to forfeit part, or all of that deposit.  

The deposit is normally made by the buyer after the non-binding Offer Letter is signed, but before the Aircraft Purchase Agreement is executed. The deposit is very important to the Western seller, as the deposit is the ultimate proof of a buyer’s seriousness and ability to purchase an aircraft.

A Western seller that commits to sell its aircraft to a particular buyer loses other potential buyers, loses the use of the aircraft, and incurs expenses by allowing the buyer access to the aircraft. Thus, the deposit is evidence of the buyer’s commitment to the transaction equal to the seller’s commitment. An Aircraft Purchase Agreement is structured to require mutually escalating commitments of the parties to each other. The failure of a buyer to make a timely deposit as required by an Agreement is the strongest message that the buyer is not committed to the transaction (and conversely, the making of a deposit is the strongest message that the buyer is committed).


Western sellers expect to deal with persons who are fully authorized and empowered to execute and perform on aircraft acquisitions. If the person at the negotiating table needs to “call back to the home office” in order to take a significant step, negotiations will be slow, especially if the home office repeatedly overrules commitments made by its representative.  

However, that is sometimes unavoidable, and in those situations, when the person at the negotiating table has limited authority, this should be disclosed. We have seen transactions turn sour when the decisionmaker at the negotiating table is suddenly powerless and overruled by someone who has not previously participated in the transaction.


While certainly important to a seller, your broker/advisor and your attorney are important players in aircraft acquisition strategy. They are resources for advancing your acquisition objectives, but also can help you understand the expectations of Western aircraft sellers.

As legal counsel, we often see Eastern aircraft buyers hesitate at the prospect of hiring an attorney because the role of legal counsel is not understood. In Western transactions, legal counsel is engaged as a trusted advisor to assist in:

  1. Capturing the client’s desires in the contracts that govern the transaction;
  2. Identifying alternatives and compromises to resolve disagreements; and  
  3. Ensuring compliance with applicable laws.  

Attorneys are ethically obligated to protect the client’s interests and suffer suspension or loss of license for failing to do so.

Your broker/advisor brings the technical knowledge and familiarity with transactions to guide you to the right aircraft, at the right price, and to closing.

It does not matter to a Western lawyer with an Eastern client that there is a Western seller; the Western lawyer will protect and represent only his Eastern client’s interests.


There is a misconception that the Eastern aircraft buyers prefer new aircraft over used aircraft. This is an over-simplification, however. If you consider the above business cultural gaps, it becomes clear that Eastern aircraft buyers prefer the new aircraft transaction process. Easterners prefer dealing with new aircraft manufacturers because of the higher level of trust and comfort that comes with dealing directly with a known and reputable manufacturer offering warranties and support.

Second, a manufacturer has the global staff and the presence to conduct business face-to-face – an option rarely available in used aircraft transactions. Lastly, an aircraft manufacturer will be willing to work with the buyer for months (or longer), negotiating the terms of a new aircraft sale, without pressure. The lesson here is that, when the business culture gap can be closed, the flow of used aircraft transactions between East and West is likely to increase significantly!


Private aircraft transactions between Western and Eastern parties has its challenges, but by following these simple guidelines, and putting aside minor differences so as to seek common ground, the prospects for a successful closing are greatly increased.