A question of form (part 1) – what business aviation can learn from yachting
There is a decent amount of overlap between yacht and aircraft buyers, so it is surprising how the two markets have evolved quite so differently. Especially when it comes to sales and purchases.
You may be sceptical, but one of the most popular and absorbing panels at a superyacht conference in London last week* was a session with four leading yachts lawyers debating standard yacht sale and purchase agreements.
The debate – and it was a real debate with heated arguments – centred on the strengths and weaknesses of the MYBA form (named after what was the Mediterranean Yacht Brokers Association) and the International Yacht Brokers Association (formerly the Florida Yacht Brokers Association) form. The US lawyers argued that there the IYBA form is far superior and the consensus at the conference was that the MYBA form needs updating.
But everyone in the room was supportive of standard forms. Even if some participants make significant amendments.
Yacht brokers created standard forms 30 years ago to make it easier to sign up buyers at boat shows.
The first time a prospective buyer sees either form they may appear a little daunting but yacht brokers say experienced buyers like the standard approach and are very comfortable about signing them (the IYBA form is just four pages, the MYBA eight). Yacht lawyers also accept that they can be useful for sales and speed up negotiations – especially because lawyers are so familiar with the main issue. There is no standard form for new builds (which can be very complex).
Both forms give buyers the chance to pull out later. In the MYBA form this is after the sea trial, the FYBA form has a hard date. Because the forms were driven by brokers, they also have sections covering commissions.
This is, of course, completely different to the business jet market. Most brokers have their own Letters of Intent. This means that a prospective buyer looking at several aircraft is likely to see many different approaches varying from one or two pages drafted by a broker to 20 pages or more prepared by a lawyer.
A lot of business aviation people will argue that things work fine now. But surely anything that makes buying aircraft easier should be encouraged? There are enough great lawyers out there to create a standard form for aircraft (we can even create a Corporate Jet Investor standard form if there is a need and no one else wants to). We would love to know what you think.
But even if standard forms happen, aircraft brokers should not expect their commissions to match yacht ones.
This originally appeared as the editorial in our Corporate Jet Investor One Minute Week newsletter. To find out more, and sign up for free, please click here.