An age-old question in purchasing an airplane or vetting a management company is, “Should I employ the services of a consultant, or trust the broker?” The answer depends on one’s depth of understanding when it comes to aviation and the specific aircraft sought. The need for expert knowledge and skill is especially important when purchasing an older super-mid-size or heavy jet. “Great” below-market sub-five million dollar deals on aircraft selling at a fraction of their original cost seem to permeate the market these days. Although the purchase price may be low, the buyer will still be maintaining what was once a very expensive airplane. To make matters more difficult, companies offering cookie-cutter projected operating costs rely heavily on subjective data which can vary greatly from actual cost. It’s not uncommon to find actual maintenance costs over twice that which was projected. A good consultant with significant experience in managing and operating aircraft will generally have a more realistic projection on costs and revenue. Brokers and most management companies use industry standard numbers to help sell their product, however, they do not represent the buyer, nor are they bound to protect the buyer’s best interests. Consultants and brokers advocating for buyers have good reason to be skeptical of this industry standard data, and should share such misgivings with their clients. However, if selling brokers did appreciate the extent of variation in their own data, do they have an obligation to tell the truth?
In general, purchasers of goods and services bear their own risk in vetting the veracity of statements made by sellers and brokers. The term caveat emptor, meaning “let the buyer beware” governs the overwhelming majority of such deals. Under this doctrine, the seller or broker has a defense against a customer who relied on any subjective statements or “puffery” made for purposes of closing a deal. One example of puffery in the aviation industry can be found in the case Morris Aviation, LLC v. Diamond Aircraft Industries, Inc.[i] In Morris Aviation, the buyer purchased a Diamond aircraft directly from the manufacturer, who touted the “quality and reliability” of its Thielert engine. Shortly after the buyer closed on its brand new Diamond aircraft, Thielert Aircraft Engines, GmbH declared bankruptcy, voided all of its warranties and went out of business. The aggrieved buyer sued Diamond Aircraft claiming that the Diamond sales representative fraudulently misrepresented Thielert’s financial health.