20 Minutes With: Aviation Transaction Consultant Zafar Asghar
Few can match
knowledge of the private jet industry. Formerly a corporate and asset finance lawyer, Asghar has extensive experience representing banks, private equity, and asset managers on a wide range of commercial aircraft acquisition, finance, and leasing transactions. He has also represented high-net-worth individuals, family offices, and businesses in the acquisition and financing of private jets.
In 2018, Asghar launched Rochdale Kōkū Sentai Group, a New York City-based boutique aviation transaction consultancy and investment firm, with the aim of advising private equity, family offices, and asset managers on their aviation sector transactions and investments, while investing alongside private equity partners in the aviation sector. Asghar is now planning big things with Rochdale Jet Privé (RJP), a centerpiece of Rochdale’s group of companies.
Asghar and his staff pivoted from the commercial aircraft sector to private aviation because of circumstances brought on by the Covid-19 pandemic. By February 2020, Asghar set up RJP as a standalone consultancy, and shifted staff from the commercial aircraft side of the practice to attend to private aircraft transactions on an exclusive basis.
“We made the same shift on the investment side of the business and have taken further steps to focus on investing in sustainability, innovation, and all-enabling technologies related to electric and hydrogen-powered aircraft and urban air mobility,” Asghar says. “It will take something seismic for us to make such a major pivot again, especially on the investment side.”
Penta recently spoke with Asghar in Dubai, where he maintains an office.
PENTA: What are some of the key items you ask clients to keep in mind when buying a private jet?
Zafar Asghar: One rule that I cannot emphasize enough is to start the process early, as more time and strategic sequencing of actions equals bargaining power. Best deal, in my opinion, means enhancing benefits and mitigating exposure in every aspect related to ownership—not just the price tag on the aircraft.
Starting early gives us the ability to plan and optimize all aspects related to a purchase and ownership. Purchasers are not doing themselves any favors by commencing financing discussions with their bank two weeks before an installment payment that they would like to finance is due. They will save themselves a great deal of money and headache if they undertake a selection process during the term sheet phase and make a selection based on best pricing, workable financial covenants and not an overbearing security package.
Same applies to ownership structuring, management agreements and other aspects of a purchase and ownership. We provide a roadmap and game plan to each client on day one and lead the selection process with respect to counterparties.
What are some of the most common problems your clients encounter, both pre- and post-purchase?
Our clients are a little different than those that typically have buyer’s remorse. Buyers need to understand that if they do not negotiate a solid purchase agreement they may suffer financially and have problems down the road.
For example, for a new aircraft purchase, today with supply chain and workforce issues, having tolerable force majeure and excusable delay provisions is critical, otherwise their toy may not arrive in time for Christmas. Signing a term sheet or purchase agreement without an experienced and capable aviation lawyer having reviewed it is pure madness. Even if it is a pre- owned aircraft, delineating liabilities and risk between a seller and buyer is critical.
On fractional interest purchases from any program provider may appear boilerplate and straightforward, but there is a long list of items that need to be addressed upfront related to ownership structuring, cost allocation during the term, and remarketing and valuation on the back-end.
The most common post-purchase pitfall is not spending the time and effort to properly vet a company or assemble the team that will operate your aircraft. You can have the fanciest fully customized new aircraft, but it will ultimately come down to the capabilities and performance of your pilot/crew/operator/maintenance provider which will ensure your continued use and enjoyment of your jet.
What are some of the key sustainability trends with respect to private aviation?
The private jet industry and its various organizations have made commitments to have net-zero carbon emissions by 2050, which is fine, as pretty much every other industry has made a similar pledge. What is encouraging about the private jet industry is that participants and end users are taking real steps that will not only help the industry meet its overarching goals of carbon neutrality but will position it as a front runner when it comes to sustainability.
What have you been hearing from your clientele during the pandemic?
The clients that have always had a private jet and were predominantly using it for business are now using it more and more for personal and leisure travel with their family. Among the new purchasers, it has been a lifeline both for business and leisure, and I have not heard of anyone keen to return to commercial air travel. As for those that have bought an aircraft but are awaiting delivery—for them the delivery date cannot come soon enough. They are paying a premium for charter and hourly use which can be spotty even with the best program providers as you are lower down on the food chain.
What are the biggest challenges your company is facing?
As a firm we are at the very beginning of our life cycle. We are still pushing to gain and retain market share and our business model is dependent on it. We will only realize our full potential and objective when we have a client base of at least 150-200 clients and are adding 15-20 new clients per year.
Our objective is clear and single-minded: we want to be the go-to option for purchasers and owners of private jets while having a large and influential client base that enhances our bargaining power and influence on the industry, transferring the benefits gained on all the prior transactions to the next purchaser, and so on, deal by deal. There is no other firm or consultancy like ours in the world that is purely owner-centric, and it will be difficult for anyone to start one as they will have to give up a lot.
What gives you hope for the future of private aviation?
Public acceptance in general, especially among the younger generation, and democratization of the industry. There are now a tremendous variety of aviation products available to end-users that are tailored to particular needs and budgets, which are being offered by a deep bench of operators in the U.S. and around the world. Therefore, we see a demand pipeline.
From a supply and supplier standpoint, program providers like NetJets and OEMs are now turning a profit year-over-year, which they weren’t historically, and most OEMs are being savvy and thoughtful about not over-ramping production.
In addition, the private jet industry is no longer playing second fiddle to the commercial aircraft sector. It is leading the way when it comes to innovation and technology, and sustainability. For example, the private jet industry has taken a lead and made the push for sustainable aviation fuel (SAF) which is clean, safe, drop-in fuel that can reduce the carbon lifecycle emissions of turbine aircraft by up to 80%.
The private aviation industry is in a very healthy state—double the size it was five to 10 years back in terms of contribution to GDP and employment—and will continue to grow.
This interview has been edited for length and clarity.