IADA logo

NARA Roundtable: Should You Use NARA Professionals For Your Next Airplane Transaction?


National Aircraft Resale Association (NARA) members are responsible for more than 50% of the global transactions for used business aircraft. Why do so many buyers, sellers and operators trust NARA with one of the largest investments they’re likely to make?
 
To find out, three executives with decades of aircraft sales and support experience sat down to talk about why they choose to be members of NARA and why it should be important to you. They talked about NARA’s unique approach to aircraft transactions.
 
The three executives included Aircraft Broker Brian Procter, Mente Group President; Like-Kind Exchange Specialist Tobias Kleitman, TVPX President and Founder; and long time aviation executive Lou Seno, JSSI, Co-Founder and Chairman Emeritus.

NARA: Gentlemen please tell us a little about your experience in business aviation.
 
Brian Proctor: I have been the president of Mente Group for years. We are an aircraft brokerage and consulting firm, specializing in preplanning feasible aid studies and direct acquisitions and dispositions. I am active as a certified NARA member and the future Chairman of NARA.
 
Tobias Kleitman: I am the President and founder of TVPX, which stands for Time Value Property Exchange. We do 1031 property exchanges for tax purposes. We also have an owner-trust company that provides FAA owner-trusts for non-US citizens.  I’ve been in NARA for many, many years. I’ve also been on the board as an associate member.  It’s been a very valuable association for our company.
 
Lou Seno:  I am co-founder of JSSI, Jet Support Services, Inc., an independent provider of hourly cost maintenance programs for virtually the entire business aircraft fleet. I have had the pleasure of chairing the Products and Services Group.
 
NARA: So the basic question is, from a customer’s perspective what is the difference between working with somebody who is a NARA Certified Broker, and someone who just gets an airplane to sell and decides to call himself a broker?
 
Brian:  Well, there is no regulatory commission for aircraft brokers. In the absence of a national certification process, NARA is the only program in the world that has set high standards and a rigorous vetting procedure for professionals involved an aircraft deal. Therefore, you know when you are using a NARA broker that there is the highest level of ethics along with those vigorous standards.
 
To become a NARA Certified Aircraft broker/dealer, a candidate must pass a stringent application process that assures only the most respected and experienced brokers become NARA members. Brokers and Dealers then participate in a program of ongoing education to remain current on best practices and new developments in acquiring and selling business aircraft. Only then, are they certified as a NARA Broker/Dealer. In addition, all NARA members strictly adhere to a code of ethics that guarantees they will always conduct themselves honorably and represent the best interests of their clients.
 
NARA:  Tell us about that code of ethics.
 
Brian: It is critical, and really, the core of what we are. Our goal is to protect the customer’s interest first and foremost in every transaction. And when you are putting a multi-million dollar asset in the hands of someone who has no boundaries in the way act it can be really problematic. Having an ethical approach creates a much higher level of certainty than you are working with somebody who is representing your interests and not their own.
 
NARA:  Products and Services Associate Members also have a vetting process. How does that work?
 
Lou:  In recent years, I have sponsored a number of Products and Services Members. You need three members to sponsor another member. If any NARA member objects, it does not go further.
 
Tobias:  You are not likely to become sponsored as  Products and Services Member if you do not have pertinent experience and you have worked with NARA broker/dealer clients and have a good reputation. If you have not been involved in the industry at an advanced level, you are not likely to get sponsored. So, you will have to have been around for some time and successfully participated in transactions while conforming to ethical business practices. We are all held accountable to that level.

Brian:  NARA Members also speed up the process. Aircraft are machines, and machines depreciate over time. Unfortunately, in today’s marketplace, there is a very rapid depreciation. Consequently, you could lose a million dollars in a quarter, $2 million in two quarters. Time is money.
 
But, being able to tap into a network of people who have a high level of trust with each other and control 50% of the transactions in the world is extremely powerful. If there is somebody who is representing a seller or a buyer, the probability is they are being represented by a NARA broker. And with one email strike, we can cover basically the entire world without having to spend a lot of energy advertising and going through an extended process to find a qualified buyer or seller.
 
NARA brokers recognize that a multi-million dollar business jet is a complex asset. In a general sense, an airplane does not sell unless you have a company like JSSI to protect the engines, and people like TVPX to do 1031 exchanges. We have done a good job of picking out the very best service providers to be part of NARA. NARA simplifies the transaction so that what might take weeks, literally can take one phone call.
 
NARA: Explain a 1031 exchange.
 
Tobias: When selling and replacing business aircraft, we can add significant value to the transaction by structuring the disposition and purchase as a tax deferred exchange under IRC Section 1031 of the U.S. Internal Revenue Code, which allows investors to defer capital gains taxes on the exchange of like-kind properties.
Lou:  If a broker is in the middle of a transaction and his client decides to borrow some money, or do a 1031, or add the APU to the transaction then NARA brokers and service providers can make that happen seamlessly because they know that the most trusted service providers in the business are fellow NARA Members. That makes the transaction experience for the client, the ultimate user, that much better.
 
Brian:  For example, instead of going to a website and Googling 1031 exchanges, I can pick up the phone. If it is critical, I can call Tobias. It is literally one phone call as opposed to two days of research, and having an unvetted stranger on the other end of the phone.
 
NARA:  How does that benefit the buyer? 
 
Lou:  It expedites the process. It delivers a swift closing. And it makes a closing easier. You can get to the finish line better because of these relationships with assurance that you are involved in a fair process.
 
Brian:  I think it actually does two things. It expedites the sale and it mitigates risk, because we are not putting our clients with someone who may not know how to do a 1031 involving aircraft.
 
NARA:  So, familiarity and trust is important.
 
Lou:  Furthermore, NARA specialists have all been involved together in previous transactions. You are not inventing the wheel in a complicated closing where you are bringing many parties together. Summing up what we have been talking about here today, NARA brings value to both buyers and sellers of aircraft. Simply, it creates a competitive advantage for members and their customers by leveraging collective knowledge and resources while maintaining the highest professional standards through the certification process.

Posted on: June 21, 2017

Written by: Devri Pitts