March 11, 2026

Understanding Transaction Structures for Acquiring an Aircraft

Acquiring an aircraft—whether for business, personal travel, or investment purposes—can be structured in several different ways. Each structure carries its own legal, financial, tax, and operational implications. For potential buyers, selecting the right structure is just as important as choosing the right aircraft. As aviation counsel, we frequently advise clients on the various transaction structures for acquiring an aircraft.

The optimal transaction structure depends on several factors, including:

• Intended use of the aircraft
• Financing arrangements
• Tax planning objectives
• Regulatory compliance
• Liability exposure
• Long-term exit strategy

Below is an overview of the most common transaction structures used when acquiring an aircraft (or an interest in an aircraft), along with key considerations for each.

1. Asset Purchase
The most straightforward structure is a direct asset purchase, in which the buyer acquires the aircraft itself from the seller through an aircraft purchase agreement.

Under this structure:

• Title to the aircraft transfers directly from seller to buyer.
• The buyer typically forms an entity, often an LLC, to hold title to the aircraft.
• The transaction is documented through a purchase agreement, bill of sale, and related closing documents.

Advantages

• Clear chain of title and ownership.
• Buyer avoids assuming most of the seller’s liabilities.
• Simplified due diligence focused primarily on the aircraft and its records.

Key considerations

• Proper title searches and lien releases.
• Registration with the FAA or applicable aviation authority.
• Sales/use tax implications depending on jurisdiction and operational structure.

This structure is most common when acquiring a single aircraft from a private seller, broker, or operator.

2. Fractional Ownership
Fractional ownership allows multiple parties to purchase a percentage interest in an aircraft, rather than the entire aircraft.

Under a fractional structure:

• Each owner acquires a defined share (for example, 1/8 or 1/16).
• Owners receive a corresponding number of flight hours annually.
• A program manager typically handles scheduling, maintenance, and crew.

Advantages

• Lower capital commitment.
• Predictable operating costs.
• Professional management of the aircraft.

Key considerations

• Limited scheduling flexibility compared to full ownership.
• Long-term program agreements with management providers.
• Exit and resale restrictions on fractional shares.

Fractional ownership is often attractive to businesses or individuals who want regular access to private aviation but do not need the utilization level that justifies full ownership.

3. Joint Ownership or Co-Ownership
In a co-ownership structure, two or more parties jointly acquire and operate an aircraft outside of a formal fractional program.

These arrangements typically involve:

• A joint ownership agreement governing scheduling, expenses, and maintenance.
• Shared operating costs based on usage or ownership percentage.
• One owner or a third-party manager overseeing operations.

Advantages

• Shared capital and operating costs.
• Greater control than in many fractional programs.

Key considerations

• Detailed agreements are essential to prevent disputes.
• Allocation of liability among owners must be clearly addressed.
• Regulatory compliance may vary depending on how the aircraft is operated.

Co-ownership arrangements are common among business partners or companies with similar travel needs.

4. Leasing Structures
Another common structure is acquiring an interest in an aircraft through a lease rather than direct ownership.

Examples include:

• Operating Lease: The lessee operates the aircraft for a defined period without acquiring ownership.
• Finance Lease / Lease-to-Own: Payments function similarly to loan payments, and the lessee may obtain ownership at the end of the term.

Advantages

• Reduced upfront capital requirements.
• Potential tax and accounting benefits.
• Flexibility in fleet management.

Key considerations

• Lease restrictions on aircraft use.
• Maintenance and return conditions.
• Lender or lessor approval requirements.

Leasing structures are particularly common in corporate aviation and fleet operations.

The Importance of Structuring the Transaction Correctly - Final Thoughts
An improperly structured acquisition can create unnecessary tax exposure, operational restrictions, regulatory noncompliance, or liability risks. Whether acquiring an aircraft outright, purchasing an ownership interest, or participating in a shared-use arrangement, the structure of the transaction will significantly impact both the economics and the legal obligations of the parties involved. Careful planning at the outset can help ensure that the structure aligns with your operational needs, financial goals, and risk tolerance—while positioning you for flexibility as your aviation requirements evolve. McGrath North’s Aviation Team has extensive experience in aircraft acquisitions and is equipped to guide buyers and sellers through every step of an aircraft transaction.