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Flying High with Confidence: Expert Tips for Aircraft Transaction Due Diligence

Flying High with Confidence: Expert Tips for Aircraft Transaction Due Diligence

In this high-altitude and ever-changing world of aviation, one wrong move could send you into a tailspin of legal troubles and reputational turbulence. That’s why conducting comprehensive due diligence is the ultimate pre-flight checklist for any aircraft transaction.  

The National Aircraft Finance Association (NAFA) recently hosted a webinar titled "Tips for Conducting Due Diligence in Aircraft Transactions," which provided valuable insights and best practices for professionals involved in these transactions. Greg Luster from Insured Aircraft Title Service (IATS) moderated the webinar, which featured panelists Joan Roberts (IATS) and Lacey Perna (TVPX). Insured Aircraft Title Service (IATS) and TVPX sponsored the webinar.  

The discussion featured several industry experts who provided insights into different aspects of due diligence, highlighting the importance of collaborating with various stakeholders in each step of the aircraft transaction process.  

Introduction to due diligence in aircraft transactions 

Due diligence in aircraft transactions involves a thorough investigation to ensure all parts of the transaction are transparent and compliant with legal and regulatory requirements, that you are comfortable with the information and are confident to move forward with the transaction.  

The primary goal is to mitigate risks, whether they are legal, financial or reputational. The webinar emphasized that due diligence is not just a legal requirement but also an important step in protecting all parties involved in the transaction.  

Joan Roberts from IATS discussed the importance of understanding the legal and reputational risks of not conducting due diligence. Legal risks include non-compliance with sanctions and regulations, while reputational risks involve the potential damage to your career and the company’s image if due diligence is not properly conducted.  

Roberts highlighted the importance of using resources like the Office of Foreign Assets Control (OFAC) website to stay updated on sanctions and other legal requirements.   

Starting the due diligence process 

For those starting a due diligence program, the panelists emphasized the importance of meeting compliance goals and understanding the potential consequences of failing to conduct proper due diligence. The primary objectives are to minimize legal and reputational risks, avoid conducting business with questionable individuals or entities and steer clear of problematic jurisdictions. 

Lacey Perna of TVPX acknowledged that the due diligence process can initially seem overwhelming but stressed the importance of taking the first steps. A good start is simply an internet search. You can also use FAA/DOT data, perform a title search on the aircraft and look for airworthiness requirements or restrictions. Perna recommended starting with a general overview and using it as a guide to build a more comprehensive program. 

A critical tool in the due diligence process is the due diligence questionnaire. These forms should include comprehensive questions for the client to answer to fulfill legal and financial requirements. Typical questions may include identifying the parties involved, the source of funds and the business type. Perna noted that while many templates are available online, it is essential to customize the questionnaire to fit your specific requirements.  

If a customer says they have completed the information in your form at another step in the transaction process, such as insuring the aircraft, you can use this information, but you will still need to send your form back to the client for them to answer your specific questions.  No one wants their customer to do more work than necessary, but everyone is looking at the transaction from a different angle and requires different things. Additionally, information can rarely be shared across businesses and needs to come directly from the parties.  

An important step in the initial due diligence process is discovering who really owns the aircraft or the Ultimate Beneficial Owner (UBO). The new Corporate Transparency Act defines the UBO as individuals who directly or indirectly exercise substantial control over a company or directly or indirectly own a 25% or more interest. When designing due diligence questionnaires, it is essential to incorporate the U.S. government's guidance on customer information requirements outlined in the Corporate Transparency Act.  

Collaborating for comprehensive due diligence 

To effectively organize the due diligence process, professionals must understand the legal requirements and make sure every party conducts their own due diligence. However, due diligence doesn’t happen in a vacuum. Each person in the process will collect different information, and each professional will bring their point of view and knowledge to the process.  

Adequate due diligence requires collaboration among all parties involved, including buyers, sellers, brokers, escrow agents and legal advisors. Each party has a role in making sure the transaction is conducted transparently and follows legal requirements.  

Technology can also be a tool for collaborative due diligence. The webinar highlighted various tools and platforms that can help in conducting thorough investigations. These included automated screening tools, databases for sanctions and watch lists and online resources like LinkedIn for verifying employment history.  

Monitoring and ongoing due diligence 

Due diligence is not a one-time process but requires ongoing monitoring. Roberts emphasized the need for continuous screening and updating of information, especially in long-term relationships with clients. This includes conducting periodic reviews and ensuring all information remains current and correct.  

Even if initial due diligence comes back clean, ongoing tracking and screening are essential. Professionals should be diligent and remain aware of last-minute changes to the parties involved, reevaluating the risk based on these changes. Updated searches should be conducted just before closing, even for repeat customers, as their information can change. 

Roberts discussed the importance of ongoing screening, which involves conducting regularly scheduled searches on selected companies or individuals. While it may be impractical to perform manual searches daily, some retail programs offer automated ongoing screening functions that can help streamline the process.  

To make sure due diligence practices remain updated, professionals should work closely with their management teams, legal counsel and industry associations. Regularly reviewing practices and seeking advice from outside counsel can help identify any necessary changes or new requirements, especially given new regulations such as the Corporate Transparency Act.

Practical tips for conducting due diligence 

The webinar provided several practical tips for conducting effective due diligence:  

     1.  Use multiple sources: Rely on various sources of information, including government databases, information searches and industry-specific tools. A list of commonly used resources is listed at the end of this article.  

     2.  Verify information: Always verify the information from clients through independent searches and documentation.  

     3.  Stay updated: Consult legal experts and industry associations to stay abreast of changes in regulations and industry practices.  

     4.  Document everything: Maintain a thorough documentation trail to demonstrate compliance and due diligence efforts.  

     5.  Trust your instincts: If something or someone feels off, investigate further. Red flags should not be ignored.  

Real-world examples and scenarios

The webinar included real-world examples to illustrate the importance of due diligence in aircraft transactions. These included instances where gut instincts led to the discovery of potential issues, the appearance of unknown parties on insurance certificates and the receipt of funds from uninvolved parties.  

One scenario involved an escrow agent who noticed inconsistencies in a client's information. Despite pressure to close the deal quickly, the agent insisted on further investigation, which ultimately revealed significant issues that could have led to legal complications.  

Frequently Asked Questions 

The webinar also addressed several audience questions, such as the requirements for UBOs in different jurisdictions, the reliability of customer information and the applicability of sanctions when dealing with international transactions. 

The panelists recommended consulting with sanctions attorneys to obtain specific legal advice on these matters. They can provide valuable guidance based on their daily experience dealing with these issues. 


Conducting effective due diligence in aircraft transactions is a complex and ongoing process that requires vigilance, attention to detail, and a willingness to ask tough questions. By following the best practices and insights shared by the expert panelists in the NAFA webinar, professionals can navigate the complexities of due diligence and mitigate the legal and reputational risks associated with these transactions. 

Collaborating with industry peers, legal counsel, and professional associations can help make sure due diligence practices remain up-to-date and effective in an ever-changing regulatory landscape. By focusing on due diligence and taking a proactive approach to risk management, aviation industry professionals can protect their businesses and clients while facilitating successful aircraft transactions. 

Aircraft transactions are complex and involve significant financial investments, making due diligence a critical component of the process. Please email anytime to ask questions, report fraud issues or suggest topics for discussion for future webinars. 

Additional Resources 

For those interested in further information, the NAFA website offers a range of resources, including access to past webinars and detailed guides on various parts of aircraft transactions. Additionally, a list of due diligence information sources is listed below. The list is not all inclusive and is not intended to promote any particular product but describes some of the tools you may consider for performing due diligence. 

Due Diligence Information Sources 

On January 25th, NAFA hosted a webinar titled "Industry Developments in Due Diligence: Know your Regulators." We asked attendees what sources they used to gather due diligence information. Here's what they said (in alphabetical order): 

What platforms do you use for due diligence? 

  • 3rd party due diligence software 

  • CSC 

  • Descartes Systems Group - Visual Compliance  

  • Dow Jones - Customer Due Diligence (CDD) & Onboarding  

  • Export Controls & Sanctions Compliance Policy  

  • FAA  

  • Google  

  • Internal record keeping  

  • JETNET  

  • Kharon Research - Compliance and Financial Crimes Compliance  

  • Lexis Nexis Risk Solutions - Bridger Insight  

  • Lextegrity Compliance Data Analytics  

  • OFAC  

  • Online platforms  

  • Semaphore Intel  

  • Verafin - Financial Crim Management Solutions  

  • Wingform  

  • World Check 


What resources do you look at to determine compliance with FAA regs? 

  • Aeronautical Center - Central Region Counsel (ACC) Opinions  

  • Aircraft attorney  

  • Aircraft Operator or Management Company  

  • ARG/US  

  • Asset Manager  

  • Digital Mx records  

  • Escrow  

  • FAA counsel  

  • FAA examiner handbook  

  • FAA Interpretations  

  • / FARS / Ch 14 Code of Federal Regulations (CFR) / Advisory circulars / Aeronautical Information Manual (AlM)  

  • Internal company resources  

  • JETNET  

  • Legal research plate forms  

  • Logbooks  

  • Screening providers  

  • Summit  

  • Title Companies  

  • Westlaw  

  • Wingform  

  • WorldCheck, Semaphore and internet searches  

  • Wyvern 

 This NAFA article was originally published on June 3, 2024.