Technical and business guide to buying and reselling demilitarised military aircraft: study of the stages, advantages, disadvantages and concrete examples.

Market study and identification of opportunities

Selling used military aircraft involves rigorous market research to identify buy-back and resale opportunities.

Identifying aircraft to be demilitarised

Countries such as Switzerland, France and the United States regularly demilitarise their military aircraft. For example, Switzerland recently put several Mirage IIIs up for sale. These aircraft can be purchased at competitive prices, often between €1 and €5 million, depending on their condition and equipment.

Analysis of target markets

Once the aircraft have been identified, it is crucial to determine the target markets for their resale. Developing countries, particularly in Africa, Asia and Latin America, are often interested in used military aircraft because of their lower cost compared with new aircraft. For example, several African countries have bought Mirage F1s from France to modernise their air fleets at lower cost.

Advantages : Second-hand aircraft offer a lower initial cost and can be attractive to countries with limited defence budgets. The availability of spare parts and maintenance services for these aircraft is generally good.

Disadvantages : Used aircraft may require upgrades or repairs, which increases costs. In addition, their remaining lifespan is often shorter than that of new aircraft.

Consequences : Correct identification of aircraft to be demilitarised and target markets can lead to lucrative transactions. However, poor assessment of retrofit costs can reduce profit margins.

Acquisition and refurbishment process

The acquisition and refurbishment process for demilitarised military aircraft involves several crucial stages.

Negotiation and purchase

Negotiation with governments or defence agencies is the first step. It is essential to have a clear understanding of the conditions of sale and the legal requirements. For example, the purchase of Mirage IIIs in Switzerland may involve checks on compliance with Swiss and international regulations.

Upgrading and maintenance

Once the aircraft has been acquired, it often needs to be upgraded to meet the needs of the target market. This may include avionics upgrades, structural repairs, or improvements to combat capabilities. On average, upgrading an aircraft can cost between €1 and €3 million, depending on the modifications required.

Benefits : Upgrading enables aircraft to be modernised to meet today’s standards, increasing their attractiveness to potential buyers.

Disadvantages : The costs and time involved in upgrading can be significant. There are also technical and financial risks associated with refurbishing older aircraft.

Consequences: Successful refurbishment increases the resale value of aircraft. On the other hand, unforeseen technical events can increase costs and reduce profitability.

Sales strategies and international negotiations

Once the aircraft are ready for sale, effective sales strategies must be put in place to reach potential buyers.

Marketing and promotion

Marketing in the military sector is often based on established relationships and technical demonstrations. Participating in international air shows such as the Paris Air Show is crucial in demonstrating the capabilities of refurbished aircraft. Flight demonstrations and practical trials are also effective promotional tools.

Negotiations and sales contracts

Negotiations with potential buyers must take into account legal, financial and technical aspects. It is essential to propose clear contracts that define the terms of the sale, the guarantees offered, and after-sales services. For example, a contract for the sale of a Mirage III to an African country could include a clause for the training of pilots and maintenance personnel.

Advantages: A well-developed sales strategy and successful negotiations can maximise profits and establish lasting relationships with customers.

Disadvantages: International negotiations can be complex and time-consuming. Cultural and regulatory differences can also pose challenges.

Consequences: Successful sales enhance the company’s reputation and open up opportunities for future business. Poorly managed negotiations can lead to disputes and financial losses.

Financing and risk management

Selling used military aircraft requires substantial investment and rigorous risk management.

Sources of finance

Financing can come from equity, bank loans or partnerships with private investors. Government support programmes, such as export credits, can also be used to reduce financial costs.

Risk management

The main risks include exchange rate fluctuations, delivery delays and geopolitical risks. Proactive management of financial and operational risks is crucial. For example, using fixed price contracts and hedging against currency fluctuations can help to limit risks.

Benefits: Adequate financing makes it possible to carry out ambitious projects and secure transactions. Good risk management ensures financial and operational stability.

Disadvantages : Financing can be expensive and difficult to obtain. Geopolitical and financial risks are difficult to predict and manage.

Consequences: Insufficient funding or poor risk management can lead to project failures and financial losses. Rigorous management can minimise these risks and maximise the chances of success.

Getting into the business of selling used military aircraft is a complex undertaking that requires technical and commercial expertise, thorough market research, rigorous management of acquisitions and upgrades, and well-defined sales and financing strategies. With careful planning and effective execution, it is possible to turn this business into a lucrative opportunity while meeting the defence needs of developing countries.

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