What is the difference between an aircraft dealer and a broker?

Buyers and sellers have three options when attempting to complete a transaction for an airplane: selling it yourself, using a broker, or going through an aircraft dealer. Each option has its own unique set of benefits, responsibilities, and required labor. This article will discuss what an Aircraft Dealership does and the pros and cons of using one during a transaction.  

What is an Aircraft Dealership?

“Any person or business who sells, offers for sale, or imports aircraft into Florida for sale at retail must register with the Department as an aircraft dealer.” This quote is directly from the Florida Department of Revenue, which defines the classification for an Aircraft Dealership. The State’s classification is helpful for brokers, particularly those who reside in another state. If you are strictly an aircraft broker, you mustn't engage in the activities of an Aircraft Dealership without the proper credentials. For example, at one point during the transaction, an aircraft dealership will own the aircraft, while brokers will not.  Also, the typical business model for Aircraft Dealerships is to accept aircraft trade-ins and provide newer aircraft for purchase to these same sellers.  Businesses like KCAC outside of Kansas City, Missouri, are labeled certified dealers for Pilatus and Piper products, making them a top destination for owners to upgrade to a newer plane. Aircraft Dealerships also often complement their business model by providing a certified technician center specializing in fixing aircraft models they are “certified” to sell. Doing so makes the dealership a one-stop shop for the consumer. Buying, selling, upgrading, and repairing is an efficient and effective model that is attractive to many clients. 

Requirements to be an Aircraft Dealership

An Aircraft Dealership is a place of business that must abide by all the local and state operating regulations specific to Dealerships. A Dealership must register both as a business and separately register with the FAA as a Dealership annually. Becoming a dealership is not just limited to having a place of business; having a hangar and service center is essential for a successful business model. Dealerships are very competitive with aircraft brokers and, unfortunately, brokers lose clients to successful, well-run Dealerships.  Have you lost any clients to a full-service Aircraft Dealership?    

What is an Aircraft Broker

An aircraft broker’s role is to represent their client zealously and guide them through the sales process. While some brokers do not have the same resources as a full-service Aircraft Dealership, such as an in-house technician center, accounting, and other staff, first-time buyers may prefer the independent nature of a broker's services. Buying and selling the same aircraft can create a conflict of interest between the two parties as it could be grounds for biases toward completing a sale. At a Dealership, one company represents both the acquisition and sale of the aircraft, potentially profiting from both transactions. In contrast, a broker is an independent third party acting solely in their client’s best interest. This factor appeals to certain clients who decide to work with a broker rather than a Dealership. Brokers can explain this critical difference to clients considering using a Dealership instead of a Broker.  

Brokers and Dealerships can work together

Depending on the type of purchase, a client might be interested in using both a Dealership and a broker when buying an aircraft. A broker might need the additional resources available to a Dealership to complete a competitive deal for the client. If you represent a client, you may want to consider teaming up with a Dealership Service Center that can help you complete this project. Doing so will help make this transaction process easier and limit the use of outside resources.