Latest / VREF | The Truth About the Aviation Market / Who Watches The Middle Man? | EP 62
Transcript
- Episode 62 pt 1 1080p: If you want to sell a house in the state of Illinois, you need a license. You take a course, you pass an exam, the state even checks your background, and if you take a client's earnest money, it goes into an escrow account the state can audit. If you want to sell a used yacht in Florida, you need a license too. Fingerprints, a criminal background check, a twenty five thousand dollar bond, and that's in place before the state lets you sell anything. If you want to sell a $35 million business jet in the United States, you need a phone. In the last 12 months, VREF tracked roughly 4,000 retail sales of business jets and turboprops in this country. More than 500 different companies show up as the broker or dealer on those deals. About half of them did exactly one. Not one a month, but one all year. With no license, no exam, no bond, no background check. No rule about where the deposit goes. The airplane is one of the most regulated objects on Earth. The pilot is regulated. The mechanic is regulated. The operator is regulated. But the people standing in the middle, holding the money, setting the price, arranging the lease, selling that jet card. Almost none of them answer to anybody. And look at the last two years. You got an Oklahoma City escrow agent sentenced to sixteen years in federal prison for a scheme built on fake airplane sales. That she collected escrow fees on. You got jet card companies pausing every flight with an estimated $150 million of customer money on the books. You got 11 charter operators hit with the FAA enforcement in little over two years. 13 of 14 single pilot exemption holders gone. So here's the question. And it's the most polarizing one I've ever put on this show. Is it time you regulate business aviation, the brokers, the resale market, charter leasing, the whole enchilada? I'm not going to tell you the answer. I'm going to make both cases as hard as I can make them. And then you're going to tell me. Welcome back to the truth about the aviation market. I'm Jason Zilberbrand. I'm president of VREF, the aircraft valuation reference for the banks, the insurance companies, brokers, buyers, and the courts that run on them. We publish the values. We do about 3,000 appraisals a year, and I'm an accredited senior appraiser with the American Society appraisers. And before that, I was an aircraft dealer, where I bought and sold airplanes with my own money and with a bank's floor plan. And I did it in good markets, and I also did it in one of the worst this industry ever saw. So I've sat on both sides of today's argument. As a dealer with 28 jets on a floor plan line, I would have fought a licensing board with everything I had. As the appraiser who gets the call after the wire went to the wrong account, I've seen exactly what no licensing board costs people. I've been the guy who beregulated, and the guy who cleans up when nobody is. Two things before we start. Because this episode doesn't work without them. First, the standing statement, and today it matters more than usual. It's very important that you realize V ref is not an aircraft broker, we're not an aircraft dealer. We don't charter anything, we don't operate anything, we don't lease anything, and we certainly don't escrow anything. But I'm not gonna pretend I'm neutral. Some versions of regulation would be good for my business. If a rule required an independent value in every deal, I'd sell more of them. So when I make the case for regulation, remember who's talking. And when I make the case against, remember that too. Second, nobody licenses me either. There is no license to appraise an airplane in this country. My accreditation is voluntary. So when I ask who should answer to whom, I'm not pointing at the brokers from a safe distance. I'm in that room as well. And here's how this goes. I'll show you who's regulated today and who isn't. I'll show you the three ways you could change that and who'd be holding the clipboard. I'll take you into cabotage, the oldest rule in this business, and ask the question it raises. Then I'll make both cases as hard as they can be made, show you where other industries got this right. and where they got it wrong, and I'm gonna hand you a menu. So you pick, and then you tell me, because I'm gonna count. So before we argue about adding rules, you need to know what's already there because most people in this industry, including a lot of people who work in it, have never laid it out side by side. So let's talk about the airplane first, because it's heavily regulated. You got a type certificate, airworthiness, maintenance, inspections, all of it. Then you got the pilot, heavily regulated. Certificates, ratings, medicals, training, currency. And as we just saw with the single pilot exemptions, when the training system breaks, the FAA will eventually act. And then you got the charter operator. They're regulated too, because if you fly people for money, you need a Part 135 certificate, with qualified managers, with a training program, with approved maintenance. The FAA has proposed fines against 11 charter operators from March of 2024 through June of this year. Did you know roughly a million and a half dollars in proposed penalties, plus certificate actions, mostly for records, a lot of qualifications, and some botched inspections. The charter broker. Well, they're lightly regulated. And they've only been lightly regulated since 2019. The Department of Transportation's broker rule took effect in February of 2019. It's a disclosure rule. A broker has to say clearly that it's a broker, that's not an airline. And has to tell you who's actually operating your flight. That's most of it. There's no license, there's no capital requirement, there's certainly no bond, and there's nothing that says where your deposit has to sit legally. Check cards and memberships, mostly whatever the contract says, that's your regulation. Your prepaid balance is usually an unsecured promise from a private company. Compare that to private charters. The tour package flights sold to general public. You got public charters, then you got federal rules that have required those operators to protect passenger money with escrow or a bond for decades. But on the private side, the private jet customer, the one writing the bigger check, gets less protection than the guy on the Cancun package flight. Explain that to me. Does anybody understand this? What about aircraft sales brokers? And what about dealers? There's no federal license. There's no state license that I know of. There's no exam, no bond, no trust account rule. There's voluntary trade association accreditation, and some of it is serious, but it is voluntary. And here's the part that surprised me. In VREF's analysis of the last 12 months, only about a third of retailed sales even had a broker or a dealer on the record. That doesn't mean that the other two thirds had no broker, but it means nobody recorded one. Okay, what about escrow and title agents? Are they regulated? No, and there's no federal licensing for aircraft escrow, did you know that? The FA registry records documents. It doesn't vet the people filing them, and it doesn't watch the money and it doesn't care. What about owner trustees? Well, there's a little teeth there. The FA has citizenship rules for trustees, and in January, it invalidated every registration issued through one foreign-based trustee. Those airplanes were effectively grounded until they were re registered. Leasing companies. Well, they have a real rule on paper. On large aircraft, the lease has to carry a truth and leasing clause, naming who has operational control. And then a copy goes to the FAA when 24 hours, and the local flight standards office gets notice forty-eight hours before the first flight. The problem isn't the rule, it's that illegal charter is routinely dressed up as a lease, and the FAA usually finds out about it after the fact. So The picture is this. The closer you are to the airplane, the more you get regulated. The closer you are to the money, the less you get regulated. So before anybody argues for or against, you have to know what regulate would actually mean. There are really only three ways to do it in this country, and each one puts a different referee on the field. So let's talk about them. So here's the first one. A federal agency writes the rules. And who would it be? Well Probably the FAA or the Department of Transportation, and they're not the same thing. The FAA regulates safety, which is the airplane, the pilot, the operator, the registry. The DOT regulates the economics and the consumer. See, it wrote the charter broker rule. It protects public charter passengers' money. And as you'll hear in a minute, it owns cabotage. If you wanted to regulate aircraft brokers or jet card deposits federally, It would almost certainly be the DOT, not the FAA. It's about money and consumers and not airworthiness. What's the upside? Well, you'd have one national rule book for a market that crosses state lines every day. And the downside? It's really slow and it needs Congress or years of rulemaking and it lands on agencies that are already short of people. So what's the second way? Well, that would be state licensing boards. It's the same model as real estate in every state. and also as yacht brokers in the state of Florida. They take an exam, they do a background check, they're bonded, their complaint process is serious, and they have the power to pull a license. And the upside is that it's a proven model and it works. And we know states move faster than Washington. But the downside is that an airplane listed in Texas, owned by a Delaware LLC, sold to a guy in Illinois, closing in Oklahoma City. Well, whose license would apply then? Fifty rule books for a market that doesn't care about state lines. And then there's a third way. And that's the self-regulatory organization. The best known example is Wall Street. Stockbrokers are licensed, examined, and disciplined by an industry funded body, which in turn answers to the Securities and Exchange Commission. See, the industry runs the exams and pays for it, the government holds the leash. And the upside is that the people writing the rules actually understand the business, and the taxpayer doesn't fund it. But the downside is serious. The Fox is design is designing the hen house, and we know the biggest firms in our industry are going to get the biggest say. There is a fourth lever, though. The one Washington already polls without calling it regulation, and you know what it is? It's the tax code. In February of 2024, the IRS announced audits of how companies and executives split business and personal use of corporate jets, paid for with new enforcement money. And in 1990, Congress tried a luxury tax on airplanes and boats, and we'll get to how that went. The point is: if you think business aviation is unregulated, I believe the IRS would strongly disagree with you. It regulates through the deduction. Okay. Now here's the part almost nobody in this business thinks about. And I think it's the most interesting question in the whole episode. And it's called cabotage. It's an old shipping word. In aviation, it means one thing carrying paying passengers or cargo between two points inside the same country. As an example, Dallas to Denver, or Peterborough to Palm Beach. In the United States, a foreign aircraft isn't allowed to do it. Federal law bars a foreign registered aircraft from carrying passengers or cargo for compensation between two U.S. points. A foreign charter operator can fly you to the country and fly you out. It can move the passengers who arrived on that airplane between U.S. cities on the way through. But what it can't do is pick up a new paying passenger in Miami and then say drop them off in New York. See, private non-revenue flights are a different story. The rule is about selling the seat. It isn't just the airplane either. To be a US airline, the law says the company has to be under the actual control of you guess it, US citizens, at least 75% of the voting interest, the president, and two thirds of the board and managing officers. And guys, that rule goes back to nineteen thirty eight. And to put an N number on an airplane at all, the owner has to qualify as a US citizen. Or use as a US trustee, you Which is why the FAA just voided entire foreign trustees' registrations back in January. So who enforces all this? Well, the DOT writes the cabotage rules and is the only one who can grant an exemption, which is almost never. The Customs and Border Protection enforces them at the airport. Every US leg of a foreign charter needs a permit to proceed, and CPB can refuse to let a passenger board. Fines are counted per passenger. Okay, here's the question all of you are asking. So why do we care? Four reasons, and you'll hear all of them from different people. Protect the domestic market. See, that's really what this is all about. U.S. airlines and charter operators don't have to compete inside the country with foreign carriers that play by different rules and different labor costs. Every major aviation country does the same thing. It also protects US jobs. It protects US pilots and mechanics. and even dispatchers. See, cabotage is as much a labor rule as a trade rule, and the pilot unions defend it very, very hard. Then there's oversight. A US operator answers to the FAA, a foreign operator answers to its home regulator. Cabotage keeps the people flying Americans around America under the agency that can actually inspect them. And then the last one, which is a biggie today, and it's security See who controls the airplanes and the airlines inside your borders really does matter. That's why the ownership rule exists at all. And if you've been paying attention, you saw the fly Dubai flight. It's important, guys. So now flip it. We care so much about who flies the airplane that a foreign operator gets fined per passenger for one illegal leg inside this country. We care so much about who owns the airplane that a foreign trustee can lose every registration it ever filed. And look at who's actually buying. In V ref's analysis of the last 12 months, almost six in ten buyers were not a person or an operating company. They were an LLC or a trust or an owner trustee. And about 8% of the sales were exports or went to a buyer outside the United States. And who can sell you that airplane? Anyone, any nationality, any background, no license? Who can hold your deposit? Anyone, who can broker your charter, take your money for a jet card, arrange your lease. Anyone. And as long as somebody else with a certificate actually flies it. So does it matter now? See, here's the case that it does. The worst escrow case this industry's ever seen involved registering airplanes that ended up in the hands of drug dealers since 2022. The Commerce Department has been publicly listing US built aircraft flown in violation of the Russia export controls. Money and control. Move through the middle of these deals, not through the cockpit. If the reason we protect the cockpit is security and oversight, the middle is where the security risk actually lives. And here's the case that it doesn't. Capotage is about operating. It's not about selling. Safety lives in the operation. And we already regulate that. Ownership is already controlled at the registry. The US is the biggest exporter of business jets in the world, and the market for them is global by nature. Put nationality or licensing rules on who can sell an airplane, and the first people you hurt are American dealers selling American airplanes to the rest of the world. I'll put it to you the way I keep putting it to myself. If we care who flies it, do we care who sells it? Hold that thought. We're gonna come back to it. So let me make the case for regulation the way its strongest supporters would make it, not a straw man. The real one. Argument one. The money is the problem and nobody watches the money. Every failure we've covered on this show in the last year has the same shape. Somebody held other people's money and nobody checked. The escrow case, a federal jury convicted in Oklahoma City escrow and trust executive in 23, and she was sentenced in November of 24 to 16 years. Prosecutors described a scheme of up to a hundred fake airplane sales, and she was collecting escrow fees on fake deals. And then what about the jet card collapses? One company filed Chapter 7 last October, owing about $10.5 million in jet card balances to 81 customers. Another one paused every flight on September 15th, with an estimated 150 million in prepaid value outstanding. And those lawsuits have been piling in ever since. The flight schools from episode 59, students prepaid, the tuition, and it's gone. Same shape every time. Argument two. We already regulate middlemen in every other high dollar market. Guys, I need you to seriously think about this. Real estate agents are licensed in every state. Security brokers are registered and audited. Florida licenses yacht brokers with fingerprints and a bond. Even the public charter tour operator has to protect passenger money. Why is a jet which costs more than any of those, including any of these homes that they people live in? Why is that the exception? Argument three. The market just can't see the risk. A buyer can't check a broker's license because there isn't one. He can't check a complaint history because nobody keeps one. He can't tell whether a jet card company is solvent because it doesn't have to tell him. Disclosure works when there's something to disclose. Right now there isn't. On roughly two out of three aircraft sales in the last year, there isn't even a record of who sold. The airplane, and it gets worse when you try to follow an airplane through a fast deal. When we went looking for back-to-back sales, airplanes bought and resold the same day. The transaction data could show us the airplane changing hands, but it couldn't reliably tell us who owned the airplane in between. For that, you'd have to go to the FA's paper one bill of sale at a time. If the people whose job is tracking this market can't see who held a $30 million airplane for a day, How is a buyer supposed to? Argument four. Safety and money aren't separate. The FAA alleged one operator flew about fourteen hundred charter flights without a certificate. Most of them after the agency told the owner he needed one. Another allegedly flew paying charters after it had surrendered its certificate. Illegal charter is a money problem first. Somebody sold a seat, they had no right to sell, and the passenger had no way to know. Argument five. Self regulation already failed. Guys thirteen or fourteen single pilot exemption holders lost their authority. That was an industry running training system with FAA paper on top of it. If that's what self-regulation looks like, the case for outside rules writes itself. That's the case, and it's a strong one. Before I argue the other side, I want to stop on something. Because it's the thread running through every case I just gave you. Every one of those failures started with a number that nobody could check, a sales price on an airplane that doesn't exist, a jet card balance, a lease rate. How about a broker's assurance that the deal was fair? Or that the money went first? The number was checked never, and by the time anybody looked, the money was gone. What happens in Washington? There is one number in the business that doesn't come from somebody who gets paid when you sign. It's an independent value. That's what VREF is. We don't broker, we don't take a commission, we don't care about whether you buy or sell. Episode 62 pt 2 1080p: We work from closings. We work with real money that actually changes hands, with real serial numbers and the logbooks, not from asking prices on a listing site. Every value we publish is one I'd sign my name to in front of a judge because I do that for a living. So here's the one thing you can do today, with no new law at all. Before you wire a deposit, before you sign a lease or you buy into a program, go pull the VRA value. Go VREF it. Go to VREF.com. If the number you're being shown doesn't line up with what closing support, you just learned something nobody on that deal was going to tell you. And if it's a big one, like a fleet, a loan, a lawsuit, call us for an appraisal, because that's my job. Okay, I made the case for regulation. Now let me make the case against, and I'm gonna make it just as hard. Now let me let me make the case against regulation clear. And I want to be as hard as its strongest supporters would make it. Same rules, no straw man. Argument one. Every one of those failures was already illegal. We had drug trafficking, money laundering, and wire frauds, and those are crimes. And flying paying passengers without a certificate is already a violation. Running a Ponzi scheme is already a crime. A broker license wouldn't have stopped someone willing to launder money for the cartels. The problem wasn't missing rules, it was missing enforcement. And you don't fix weak enforcement by writing more rules for the same people to not enforce. Argument two This is a market of sophisticated buyers. The person buying a Gulf Stream has lawyers, tax advisors, a management company, a bank doing due diligence. He's not a first time home buyer. Consumer protection regimes are built for people who can't protect themselves. This market mostly can. And the people who got hurt usually skip steps that already exist. And look at the actual numbers. Only a third of sales have a broker or dealer on the record at all. And the deals where a dealer took title and flipped the airplane inside the same year, about 3%. 128 transactions out of roughly 4,000. So Regulate brokers and dealers, and you're writing a rule book for a minority of the market to fix a problem. That by the numbers is smaller than most people think. I bet you didn't know that. I really bet you guys did not know that only 3% of aircraft transactions represents the total for business jet dealers, which is very low, a lot lower than I thought. So here's argument three. The FAA can't do what it already has. The agency is short of controllers. We all know it. They're behind on everything. They're behind on enforcement. Lawmakers are arguing right now about tens of billions of dollars just to fix air traffic control, and that's been broken for how many decades? So do we really want to hand that same agency a licensing board for brokers and dealers? And what you get is a backlog, not a safer market? Argument four licensing protects incumbents. Ask who would love a licensing requirement. Go ahead. It's gonna be the biggest dealers and brokers. A license is a moat. It keeps out the new guy. It keeps the small independent shop out of the market. Every licensing regime in America gets lobbied by the people already inside it. Be careful who's cheering, guys. That should tell you a lot. Argument five. The market already built its own fixes, ensure title and escrow companies exist. Serious accreditation programs exist. Pre-buy inspections, independent appraisals. And good contracts. The DOT broker rule shows that a light disclosure rule can work without strangling anybody. The answer is to use the tools we already have, not to build a bureaucracy. Argument six. This is a global market. Make US registration and US transactions expensive enough, and deals will just go offshore to other registries and other jurisdictions with much less oversight. We just watched the FAA invalidate a whole trustee's registrations because of it. Those airplanes didn't disappear. They just found another flag to fly. That's the case against. Guys, and it's a strong one too. And arguing in the abstract only gets you so far. So let's look at some other industries that sell expensive things through middlemen that have already run this experiment. So let's look at three where regulation worked and exactly how, and then let's look at three where it failed and exactly why. So let's look first at where it worked. Number one, and I think it's obvious car dealers. You can't sell more than a handful of cars a year in most states in the United States without a dealer license. In California, it's five. And every licensed dealer has to post a $50,000 surety bond. That bond isn't for the dealer, it's for you. See, if a dealer commits fraud or botches your title, Or doesn't pay for your a car, you can make a claim against the bond. On top of that, federal rules put a buyer's guide in the window of every used car on the lot. It says in plain English, whether the car is sold as is or with a warranty, and it becomes part of your contract. And when ownership changes hands, the mileage has to be disclosed in writing by federal law. How it works a license you can lose, a bond that pays the customer. And it's a disclosure at the point of sale and a paper trail on the title. None of it stops people from selling cars. None of it. It stops them from walking away with your money. Where at work number two? Yacht brokers. This is the closest cousin we have to aircraft brokers. High dollars. They're mobile. They're sold across state lines and borders, often financed, often owned through companies. Florida licenses yacht brokers and salespeople. And this is the third time I'm saying it now on this episode. They fingerprint these brokers, they run a criminal background check on them, they have a $25,000 broker bond before you can sell anything. Did you know California licenses them as well with its own bond? And the state inspects brokers' trust accounts there, the accounts where buyers' deposits sit. So how it works, and notice what's exempt in Florida. You can sell your own boat. An attorney can act as an attorney. New boats sold by the builder don't need it. Floor foreclosures don't need it. Somebody buying a used boat for resale in his own name doesn't need it. They licensed the middleman. They didn't license the market. And the boat business, despite what everybody thought was going to happen, it didn't collapse. And to this day it's one of the biggest marine markets in the world. And for the brokers wondering why they'd want it, well, did you know that the commissions are fixed? So There's a big one right there. You don't have to negotiate. It's already predetermined. So let's talk about where it worked number three. Real estate. Every state licenses real estate brokers, every single one. And the part that matters for us isn't the exam. It's the earnest money. When you put down a deposit on a house, the broker can put it in his operating account. It goes into a trust or escrow account. It's kept separate. It's segregated. And the state gets to audit it. If you mix client money with your own, you're going to lose your license. Period. That's just how it works. So the deposit rule is the whole lesson here. The single most common way people lose money in our business is through a deposit wired to the wrong account. It's the exact thing real estate solved decades ago. So let's look at the three where it failed now. Let's talk about Wall Street. Let's talk about a guy we haven't talked about in quite some time, and his name was Bernie Madoff. This one wasn't unregulated. Madoff's firm was registered with the Securities and Exchange Commission. The industry had licensing, they had exams and a federal regulator. And according to the SCC's own inspector general, the agency received six substantive complaints about Madoff's operation between nineteen ninety two and two thousand eight, including a detailed one in two thousand five, and they never properly examined whether his trades were real. Tens of billions of dollars on paper were gone. Why it failed is because registration is an oversight. Just because there's a license on the wall telling investors someone was watching, well, it didn't really fix the fact that nobody was. And if the people who want to regulate aviation think that a license on their wall is going to fix the problem, this is the case they'd have to answer. And what about the mortgage brokers before 2008, before the financial crisis? Mortgage originators were licensed state by state, if at all, under different rules in every single state. Some of these guys had criminal records. When a regulator caught a bad actor, he could move to the next state and start over because nobody shared the information. You know how that ended. So it failed because of the patchwork. 50 rule books, no shared record. And here's the honest postscript. In 2008, the states built a single national registry. And Congress passed the SAFE Act. Every loan officer now has to be licensed or registered in one system. They gotta pass a national test. They gotta take an FBI background check. And the public can look up enforcement actions. Today that registry covers more than 600,000 loan officers. Let that number sink in. So a failure produced a fix. If you license people, you need one national record that follows them. So where did it fail? Well, number three, the luxury tax. In 1990, Congress decided to make the rich pay. And you hear a lot of rumblings about this again today, with a 10% tax on expensive boats, airplanes, cars, jewelry, even fur coats. And the rich didn't pay? You know what they did? They stopped buying. A congressional joint economic committee studied estimated about 7,600 jobs lost in boating. And about 1,470 in airplanes. And the tax brought in roughly half of what was projected in its first year. Congress repealed it on boats and aircraft in 93. To be fair, it did hit during a recession, and people still argue about how much of that was the tax versus the recession, but nobody argues that it worked. So it failed because it punished the buyer instead of protecting them. It was aimed at a market, not at a problem. So line them up. What worked had three things in common a bond or a trust account that protects the customer's money, a written disclosure at the point of sale, and a license someone can actually lose. What failed had three things in common too. Paper with nobody looking behind it, a patchwork that bad actors could step around, and rules aimed at punishing a market instead of fixing a specific harm. That's not an argument for regulating business aviation or against it. It's just a blueprint. For how to do it if you're going to. And a list of exactly how to screw it up. So let me lay out the options from lightest to heaviest. I'm not picking one. I want you guys to. Option one disclosure for aircraft sales brokers, the way charter brokers already have it. Who do you represent? Are you representing both sides? What are you being paid? And by who? Do you own the airplane you're selling or have financial interest in it? Write it down, hand it to the buyer before the LOI. Option two, client money goes into real escrow. De deposits held by an independent insured title and escrow company, never a broker or dealer's operating account. If you remember the listener story from episode sixty, the seller who wanted the money wired to his company account and wanted to skip the title company. This is the rule that ends that. Option three protect Jack Card and membership deposits the way public charter deposits are already protected. I guys, this is just a no brainer. An escrow account or a surety bond covering customer balances with disclosure of how much is covered. I, for the life of me, have no idea why this already isn't law. Option 4. License and bond the escrow and trust agents. Again, this is a no-brainer. Guys, they hold the most money. For the shortest time, with the least amount of oversight, why isn't there a bond requirement? Why isn't there a background check for the people taking eight-figure wires? I just don't understand. What are we waiting for? Option five, full licensing for aircraft brokers and dealers. And this would be something that would be done outside of some self governing organization, where you'd have an exam, where you'd have a legitimate background check, where you'd really have to post a bond, where you'd really have to complete education, and you'd have a complaint process with teeth, not sending a complaint to somebody of a That gets paid to look out for its members. See, it's the yacht model applied to jets. Each one up that list costs more and protects more, and each one up that list has more people lobbying to write it in their favor. And remember the three referees. Options are through three and natural DOT jobs. Option four could be the states. Option five could be the states or an industry body. With a federal agency over it, the Wall Street model, here's the part I want you to sit with. Options one through four don't require anyone to get a license to sell an airplane. They're just about the money. Option five is about the people. And that's the cabotage question again. We decided long ago that it matters who flies. The only question left is whether it matters who sells them or just who holds the money. That's the menu, and this is The one episode where I don't get the last word, you do. Tell me two things. First, if we care who flies it, do we care who sells it? Yes or no? Easy question. Second, where do you draw the line? Option one through five, none of them, or something I didn't think of. And tell me who you are. Guys, if you're an owner, a buyer, a broker, a dealer, an operator, a lender, or a lawyer, will you please put it in the comments or email us at the sh at info at v ref.com. I'm going to read the best arguments from both sides on a future episode, and I'm gonna publish the count. Brokers and dealers, I especially want to hear from you. You're the ones who'd live under it, and you're the ones who know where the bodies are. Do me a favor. Pick up the phone. I know you guys hate emailing. Give me a call. Let me know what your thoughts are. And while you're there, follow the show, subscribe, leave me a review. This argument only works if both sides are in the room. Send this episode to a person at your airport who has the loudest opinion about it, and you already know who that guy is. Now, whichever way you vote, Washington is yours away. So here's what protects you this week. Six things. None of them need a law. One, never wire a deposit to a broker's or seller's operating account. Use an independent insure title and escrow company and call it on a number you found yourself, not one in an email. Guys, Fraud is rampant through emails. I get a dozen a day from escrow companies. Please stop sending stuff an email, pick up the phone and call them. Two, ask every broker in writing who they represent. Real simple. Whether they represent both sides, how they get paid, and whether they own or have interest in the aircraft you're looking to purchase. Three, before you buy a jet card or a membership, ask where your money's gonna be. Is it going to be sitting in a segregated account? Do you get to put in an escrow? Are they bonded? Or the company is just going to throw it in their general funds. And if they won't give you an answer, that is the answer. Four. On a charter, ask for the operator's name and the certificate number and then check it. Don't just ask for it and stick it in your pocket. Absolutely check it. The broker rule says they have to tell you who's flying you. Make them. Keep them honest. Five. On a lease, make sure the truth and leasing clause is there. The copy went to the FAA and you know who has operational control. Guys, if it's a lease that walks and talks like a charter, it probably is one, and I'll do it in a future episode. The gray market charter's hurting everybody. Six. Get an independent value before you sign anything. Not from anybody who gets paid on the deal. So let me leave you with what I keep coming back. To. In this business, we regulate the machine almost perfectly. You can't change a screw on an airplane without a signature. But you can take somebody's eight-figure wire with nothing but a website and a phone number, and that gap is real, guys. Both sides of this argument agree on that much. Where they disagree is what to do about it. One side says the gap is the problem. Put rules where the money is. The other side says the rules we have aren't enforced, and more paper just protects the big players. And drives deals somewhere darker. We already decided back in nineteen thirty eight that it matters who flies. Every country did that. What this industry has never decided is whether it matters who sells, who holds the money, and who arranges the deal. I've been the dealer who would have fought a license. I've been the appraiser called in after the money disappeared. I can argue both, I just did. So I'm planting the seed, you decide, and then tell me, because I'm gonna count it. So that's the episode today. Who answers to whom? Three ways to change it. Cabotage, the case for, the case against, where it worked, and where it failed, five options, and six things you can do Monday morning without anyone's permission. Guys, the vote is open. Comments or email. I'll count everyone and I'll read the best of them on the air, including the ones that tell me I'm wrong, especially those. This has been the truth about the aviation market. I'm Jason Zilberbrand. We'll see you next week. Until then, fly safe and stay smart.