Private jets belong to wealthy people, but that doesn't mean those planes are purchased outright. Even the upper echelon take out loans to finance their major purchases. If their circumstances change and they fall behind on payments, an airplane repo person may come to seize the plane for the bank or seller.
Repossessing a plane requires a specific skill set. Namely, the airplane repo person must be able to fly the airplane. However, not all planes are the same, so not all pilots can successfully fly and repossess all airplanes. Even if you're a pilot, you'll need a team of people on your side to succeed in repossessing an airplane.
Therefore, you may be interested in starting an airplane repossession company to handle a large type and quantity of aircraft for clients.
Airplane Repossession Companies Require Teamwork
A pilot who can fly the aircraft and deliver it to the client is the final player in the game. A team comprised of people with different skills has laid the groundwork for a successful repossession before the pilot gets involved. First, the plane has to be located, which requires analyzing flight records and refuel logs among other records.
A mechanic needs to go along with the pilot on the repo mission to confirm that the plane is safe to fly. Sometimes, people continue to use and care for a plane while defaulting on payments, but other times, their financial situation prevents routine maintenance, which means the plane could be in subpar condition by the time the repo team arrives. The mechanic's quick evaluation and tune up, if necessary, can lead to a successful and safe airplane repossession.
Once the plane has been found, the repossession can take place, but there's no way to know how the plane's "owner" will react to the arrival of a repo team. That's why hired muscle works alongside the pilot to keep him safe. In the best-case scenario, the "owner" of the plane will fully cooperate, but it could take a more violent turn. This means the repo team needs to be ready to work quickly and keep clear heads no matter what happens.
Get Legal and Understand the Repo Process
It also doesn't hurt to have a lawyer on your team because repo laws vary from state to state. In most cases, you'll need to register your business with the state, show proof of insurance and pass a background check to obtain a repo license if required.
Depending on where the plane is located, you or the bank may need to inform the owner of your intention to repossess. This gives the owner one last chance to repay the debts. The exact paperwork that you'll need on hand when you repossess the plane also depends. For example, you may need a copy of the bill of sale. Know the laws where you'll be operating your business so you don't get tangled in red tape.
Set Your Commission
Every business needs a working budget, and an airplane repo company is no exception. You won't be sending a team out on repo missions every day and sometimes not even every week. However, you still have a team working behind the scenes, and those people need to be paid. That means you need to analyze your overhead costs and make sure your commission is sufficient to keep the business afloat.
One of the top airplane repossession companies, International Recovery and Remarketing Group, has a standard commission of 6% to 10% of the resale value. Keep in mind that this is the commission of an experienced company. If you're just starting out in the repo business, you may need to make your commission a little lower than your competitors' rates to gain some clients and experience.
- Decide if you will help with storing the plane after repossession.
- Get a copy of the lender/borrower agreement with each case to be sure it is a legitimate repossession.
Cathy Habas specializes in marketing, customer experiences, and behind-the-scenes management. Cathy has contributed to sites like Business and Finance, Business 2 Community, and Inside Small Business. She served as the managing editor for a small content marketing agency before continuing with her writing career.