Category: The rules

An aircraft sale isn’t one negotiation — it’s a sequence of roughly ten steps, and most involve someone other than the buyer or the seller: a broker, an aviation attorney, an escrow or title company, an independent inspection facility, and at least one government registry. This is that sequence, in the order it actually happens, with the document and the money named at each step.

This covers the sales side only — for how charter brokerage differs, see IABI’s comparison of the two roles. For what training should teach, see Aircraft Sales Broker Training; for the wider career picture, How to Become an Aircraft Broker. This site is published by the International Aircraft Broker Institute (IABI, iabi.aero).

1. Engagement: who the broker represents, and how they get paid

A sale usually starts with an exclusive listing agreement, giving one broker the sole right to market a specific aircraft for a defined period at an agreed commission. Representing a buyer instead runs on an acquisition agreement, the buy-side equivalent covering the search rather than the listing. (Both terms, and others below, are defined in the aircraft broker glossary.)

Either agreement should say how and when the broker is paid — almost always a commission tied to the transaction, negotiated case by case rather than fixed industry-wide. See Aircraft Broker Salary for what independently reported pay data shows, and why no single figure applies to every broker.

2. Finding and valuing the aircraft

Once engaged, a broker checks the aircraft — or the market, if representing a buyer — against current data rather than a guess. Four services brokers commonly use, described from their own sites:

• JetNet — aviation business intelligence combining primary research with proprietary and public data on aircraft and transactions.
• AMSTAT — a research company focused exclusively on the business aviation market: fleet data, transaction history and analytics.
• VREF — an aircraft valuation and appraisal company offering valuation reports and appraisals.
• Aircraft Bluebook — a valuation data source covering current and historical aircraft market values.

These are inputs a broker interprets, not a verdict. A subscription report gives a starting range for a price conversation; it doesn’t set the price.

3. The letter of intent

A letter of intent (LOI) sets out the price and headline terms a buyer proposes and a seller accepts in principle. Most of it is deliberately non-binding — either side can still walk away before signing the purchase agreement. What typically is binding, in its own clause: an exclusivity period (the seller stops marketing to other buyers for a set window), confidentiality over deal terms and aircraft data, and how any deposit paid at this stage would be handled if the deal falls through. Because binding and non-binding provisions sit in the same document, both sides should have the LOI reviewed by an aviation attorney before signing — not by the broker, whose commission depends on the deal proceeding.

4. Deposit into escrow

Once a deposit is due — at LOI or at the purchase agreement, depending on how the deal is structured — it goes into escrow, not to the seller. A title and escrow company acts as the neutral third party: it holds the buyer’s funds, and later the balance of the price, until every closing condition in the purchase agreement is met, then releases the funds to the seller and handles the paperwork that moves title. Money passing directly between buyer and seller, without that step, removes the protection for whichever side pays first.

5. The aircraft purchase agreement

The aircraft purchase agreement (APA) is the contract that actually binds the sale — the LOI isn’t it. It sets the final price, the deposit and what happens to it on default, the buyer’s inspection rights and window to use them, the required delivery condition, and the conditions that must be satisfied before closing (clear title, a passed inspection, any registration or export step). Because the APA is what a court would enforce if the deal went wrong, it should be drafted or reviewed by an aviation attorney — not by the broker.

6. Pre-purchase inspection

Between signing the purchase agreement and closing, an independent inspection facility the buyer selects — not the seller’s own maintenance shop — examines the aircraft’s airframe, engines, and records. The buyer typically pays for this inspection, often shortened to “pre-buy” or PPI; cost varies by aircraft size, engine type and facility, and no single figure applies across the industry.

A pre-buy checks two things: whether the aircraft is airworthy (legally fit to fly, current on required inspections) and whether it meets the delivery condition the purchase agreement promised — a separate, often higher bar covering items like cosmetic condition or avionics currency. What happens to a discrepancy is a purchase-agreement question: some agreements let the buyer walk away, some require the seller to fix or credit the item, and some send it to negotiation. There’s no standard split of who pays for what an inspection finds — it’s written into the contract, or argued over.

7. Records and title

Separately from the inspection, the buyer’s team reviews the paperwork: logbooks for the airframe, engines and propellers, showing total time and cycles; confirmation that required airworthiness directives are complied with; and whether the engines are enrolled in a maintenance program covering future overhauls. A title search — usually run through the escrow/title company or a title specialist — checks the aircraft’s ownership history for recorded liens: an unpaid loan, an unpaid maintenance bill, or another claim. A lien has to be released before a buyer can take clean title; an uncleared one is one of the most common reasons a closing date slips.

8. Registration and the registries

A US-registered aircraft’s ownership record lives with the FAA Civil Aviation Registry, under 14 CFR Part 47 (Title 14, Chapter I, Subchapter C). By rule, an aircraft eligible for US registration may not be operated unless “it has been registered by its owner” (14 CFR 47.3(b)). To register one not previously registered anywhere, the new owner submits an Aircraft Registration Application, AC Form 8050-1, with an Aircraft Bill of Sale, AC Form 8050-2, signed by the seller, or other evidence of ownership the rule allows, plus a $5.00 registration fee (14 CFR 47.31(a); 47.33; 47.17).

For many turbine aircraft, the deal also touches the International Registry, the electronic registry created under the Cape Town Convention. Its own site describes it as a system where users “electronically record international interests for the purpose of establishing the priority of those interests” — used to rank competing claims, such as a lender’s security interest, separately from the FAA’s domestic record. A broker doesn’t file either registration personally; that’s usually the escrow/title company’s job.

9. Closing and delivery

At closing, the escrow company confirms every condition in the purchase agreement is met, releases the purchase funds, and processes the documents that move title: the FAA bill of sale, the registration filing, and any lien release. Delivery — where the buyer formally accepts the aircraft — is a tax question too: where an aircraft is delivered can affect what sales, use or import tax applies, and that varies by state and by country. That’s a question for a tax adviser, not the broker or this article. On closing day, the broker’s job is mostly coordination — confirming the attorney, escrow company, inspection facility and lender, if there is one, have each done their part, and that the aircraft, its logbooks and its title arrive together.

10. Where deals die

Most collapsed aircraft deals trace back to a handful of problems: damage history the seller didn’t disclose and the inspection later finds; logbooks with gaps that can’t be reconstructed, which depresses value or blocks financing; a lien nobody cleared before closing; or an inspection discrepancy neither side will pay to fix, with the purchase agreement silent on who should. None of these are exotic. They’re the reason the sequence above exists — inspection, title search and a purchase agreement with real closing conditions catch them before money changes hands, not after.

Frequently asked questions

What’s the difference between a letter of intent and a purchase agreement?

The LOI sets out proposed price and terms and is mostly non-binding. The purchase agreement is the binding contract that governs the sale. See the glossary for both terms.

Who pays for the pre-purchase inspection?

Typically the buyer, since the buyer selects the facility and acts on what it finds. Cost varies by aircraft and facility.

Does the broker hold the deposit?

No. A neutral escrow or title company holds it, never the broker or either party.

Do I need an aviation attorney for an aircraft purchase?

Talk to one before signing the purchase agreement. It’s the binding contract, and this page isn’t legal advice.

What is the International Registry, and does every aircraft need it?

It’s the registry created under the Cape Town Convention for recording international interests in aircraft equipment, separate from a country’s domestic registry. Not every deal touches it; many turbine transactions do.

How is an aircraft sales broker actually paid?

On commission, tied to the transaction, set out in the listing or acquisition agreement rather than fixed by the industry. See Aircraft Broker Salary and IABI’s explanation of how brokers make money.

14 CFR Part 295 is the US Department of Transportation’s rule for air charter brokers. It doesn’t test or license you — it tells you what to say to a charter client, and when, before you can legally arrange their flight. Below is a section-by-section read of the rule text itself (eCFR, retrieved 2026-09-21). It’s a summary, not legal advice: read the rule yourself before relying on it, and talk to an aviation attorney before building a compliance process around it. For whether you need a license at all, see aircraft broker license and certification — this page assumes the answer is already no.

Who Part 295 applies to, and who it doesn’t

Part 295 applies to “any person or entity acting as an air charter broker… with respect to single entity charter air transportation” arranged “as an indirect air carrier, foreign indirect air carrier, or a bona fide agent” (14 CFR 295.3). “Single entity charter” means one charterer pays for the whole aircraft, not individual passengers buying separate seats, with a narrow exception for self-aggregating passengers on a small aircraft (14 CFR 295.5(h)). It doesn’t reach the company that flies the trip — the direct air carrier answers to its own FAA and DOT authority — or an owner flying their own aircraft under 14 CFR Part 91: no charterer, no broker, no rule engaged. For the roles themselves, see the glossary; for how this fits the job day to day, see air charter broker training.

Agent or principal — and why you have to say which

A broker acts in one of two capacities, and Part 295 requires stating which.

As an indirect air carrier, the broker acts “as a principal” — it holds out, sells or arranges the transportation and separately contracts with the direct air carrier (14 CFR 295.5(g)): buying capacity and reselling it to the charterer in its own name.

As a bona fide agent, the broker acts on behalf of the charterer or the direct air carrier, “when such charterer or direct air carrier, as principal, has appointed or authorized such agent to act on the principal’s behalf” (14 CFR 295.5(c)). This isn’t fixed: a broker “may choose to act as a bona fide agent in individual cases where a charterer, direct air carrier, or foreign direct air carrier has expressly authorized such agency relationship” (14 CFR 295.7) — principal on one deal, agent on the next, never both at once, and it must say which applies (14 CFR 295.24(a)(2), below).

What you must disclose — automatically, and only on request

Before entering a contract, a broker must disclose three things automatically:

1. The direct air carrier’s corporate name — “the corporate name of the direct air carrier… in operational control of the aircraft… and any other names in which that direct carrier holds itself out to the public” (14 CFR 295.24(a)(1)).
2. The broker’s own capacity — indirect air carrier or agent, as above (14 CFR 295.24(a)(2)).
3. Its liability insurance status — “the existence or absence of liability insurance held by the air charter broker… and the monetary limits of any such insurance” (14 CFR 295.24(a)(6)).

Three more are owed only if the charterer asks:

1. Any relationship with the carrier — as the charterer’s agent, “any corporate or business relationship, including a preexisting contract” with the carrier that might have influenced which one got picked (14 CFR 295.24(a)(3)).
2. Total cost — the full amount paid “to or through the air charter broker, including any air charter broker or carrier-imposed fees or government-imposed taxes and fees”; line items don’t have to be itemized (14 CFR 295.24(a)(4)).
3. Third-party fees — fuel, landing, and parking or hangar fees the charterer owes directly, “if known (or a good faith estimate if not known)” (14 CFR 295.24(a)(5)).

None of this is one-and-done: changed information must be disclosed “within a reasonable time” (295.24(b)); miss that window and the charterer can cancel for “a full refund of any monies paid” (295.24(c)). Everything owed under (a) is disclosed again before departure (295.24(d)), and the same notice-and-refund cycle covers changes after the trip starts (295.24(e)–(f)).

Every solicitation has to say what you are

This extends into marketing. “All solicitation materials and advertisements, including internet web pages,” must “clearly and conspicuously state that the air charter broker is an air charter broker, and that it is not a direct air carrier… in operational control of aircraft,” with the flight actually flown by “a properly licensed direct air carrier” (14 CFR 295.23(a)). A broker may put its name and logo on the aircraft only if the carrier’s name is “prominently and clearly” displayed and nothing misleads a consumer into thinking the broker is the carrier (14 CFR 295.23(b)).

The ban on unfair and deceptive practices

Beyond specific disclosures, Part 295 sets a blanket rule: “an air charter broker shall not engage in any unfair or deceptive practice or unfair method of competition” (14 CFR 295.22); any violation of the part is itself treated as one (14 CFR 295.50(a); 49 U.S.C. 41712). Section 295.50(b) lists examples: misrepresenting itself as a direct air carrier; misrepresenting service quality, aircraft type, timing or routing; misrepresenting safety record or pilot qualifications; implying passengers are directly insured when only the broker or carrier carries coverage; selling a flight it has reason to know “cannot be legally performed”; and misleading use of its own name or logo. DOT enforces the whole part: a compliance proceeding, civil penalties, loss of exemption authority, and — for a willful violation — criminal penalties (14 CFR 295.52, 295.12).

Where operational control sits — and why it’s never the broker’s

“Operational control, with respect to a flight, means the exercise of authority over initiating, conducting or terminating a flight” (14 CFR 1.1). Part 295 is built around that idea: the broker must always name who holds it (295.24(a)(1)) and never let anyone believe the broker holds it (295.23(a)). Structurally, it can’t — a broker “shall not… arrange charter air transportation to be operated by a person or entity that does not hold the requisite form of economic authority from the Department and appropriate safety authority from the [FAA]” (14 CFR 295.20). The broker arranges the flight; the direct air carrier, under its own authority, is the only party allowed to fly it. For the FAA side of that boundary, see IABI’s FAA Part 135 and Part 91 — a related, separate regulation.

What Part 295 does not do

It is not a license: no exam, no application, no number issued before a broker can operate. Subpart B grants a conditional exemption from parts of federal transportation law, “only if and so long as they comply with the provisions and the conditions imposed by this part” (14 CFR 295.10) — the opposite of applying for and being granted a license. It is not a certification and not a registration: nothing in the part requires registering with DOT or the FAA before arranging a charter. See aircraft broker license and certification for the fuller picture. A private training certificate, including IABI’s own, is separate again — evidence of completing a course, a distinction IABI’s own blog covers from another angle.

How this plays out on a booking

Mapped onto an ordinary charter, in the rule’s own order: before quoting, you already know the direct carrier and your capacity (295.5, 295.7). Before signing, you state the carrier’s name, capacity and insurance status unprompted, adding relationship, cost and fees if asked (295.24(a)). Later changes are disclosed in reasonable time or the charterer can cancel for a refund (295.24(b)–(c)), and everything owed is confirmed again before departure (295.24(d)) — while your marketing has already been saying you’re a broker, not the carrier, throughout (295.23).

A checklist to keep by the phone

• State the carrier’s name and your capacity before signing.
• Disclose your insurance status up front — it’s automatic, not on-request.
• Have the carrier relationship, total cost, and third-party fees ready if asked.
• Never quote or book with a carrier lacking current DOT and FAA authority.
• Word every web page so no reader could mistake you for the carrier.
• If a disclosed fact changes, tell the charterer promptly — late disclosure means a refund.

If you broker outside the United States

Part 295 is a US Department of Transportation rule with no force outside US jurisdiction. Other countries regulate charter brokers differently, or not at all. If you arrange charters outside the US, check the rules of the country you operate in and speak with a local aviation attorney rather than assume US practice transfers. This page, like the rest of this site, is a summary for orientation, not a substitute for reading the current rule text or getting qualified legal advice.

Frequently asked questions

Does Part 295 require a charter broker to get a license?

No. It grants a conditional exemption from federal transportation law and sets disclosure and conduct rules, not a license, exam or registration (14 CFR 295.10). See aircraft broker license and certification.

What’s the difference between automatic and on-request disclosures?

Carrier name, capacity and insurance status are disclosed unprompted, before signing. Carrier relationship, total cost and third-party fees are owed only if the charterer asks (14 CFR 295.24(a)).

Can a broker ever be in operational control of the flight?

No. That belongs to the direct air carrier holding the FAA and DOT authority to fly the trip; a broker must name that carrier and never imply it holds that authority itself (14 CFR 1.1; 295.20; 295.23(a)).

What happens if a broker violates Part 295?

DOT can bring a compliance proceeding, impose civil penalties, and revoke the broker’s exemption authority; willful violations can bring criminal penalties (14 CFR 295.52).