In 2018, a mid-sized private aviation brokerage operating out of London and Dubai ceased trading with approximately 72 hours notice to its client base. The firm had, by all external appearances, been a credible operation — a reasonable fleet of operator relationships, a professional website, a team of brokers who communicated promptly and quoted competitively.
What it had not disclosed was that its financial architecture was built on a float model — collecting client payments for charter flights and holding them against future operator invoices rather than segregating them in protected client accounts. When a sequence of operator disputes and client refund demands arrived simultaneously, the float collapsed.
The clients who had paid deposits on upcoming flights lost those deposits. Several lost significantly more. The principals affected included family offices who had used the broker for years without any indication of structural risk.
The aviation industry’s response was, characteristically, to note that this was an isolated incident and that reputable operators maintain proper financial controls.
It was not an isolated incident. Versions of it have happened before and after, at varying scales and with varying degrees of visibility.
The structural vulnerability nobody discusses
The private aviation brokerage model, as it operates across most of the market, contains a financial vulnerability that is almost never discussed in client-facing communications because discussing it honestly would require brokers to explain that the protections most clients assume exist do not, in many cases, actually exist.
Client funds paid to a broker are, in the majority of brokerage arrangements, not legally protected against the broker’s insolvency. They are not held in escrow. They are not insured against brokerage failure. They are, in the plain commercial sense of the term, unsecured creditor positions in an entity that may or may not have the financial strength to honour them.
The principals who understand this — and whose family office legal and financial teams have applied proper scrutiny to their aviation arrangements — structure their bookings accordingly. Direct operator relationships where the payment goes to the entity that owns and operates the aircraft. Escrow arrangements where intermediaries are involved. Credit card payments where chargebacks are available. Contractual terms that specify client money handling and provide audit rights.
These protections are available. They are not standard. And the broker who is asked to accommodate them and declines is providing useful information about why they should not be trusted with the booking.
What due diligence actually looks like
The family offices that manage aviation programmes for active principals at the highest level do not evaluate brokers on the quality of their pitch or the responsiveness of their communication. They evaluate them on four specific dimensions that most clients never think to examine.
Financial strength — specifically, whether the entity is capitalised sufficiently to withstand a period of operational disruption without client funds being affected. This requires asking for financial statements, not accepting a confident answer to a politely phrased question.
Client money handling — specifically, whether client payments are segregated, how, and what the contractual protection is in the event of brokerage insolvency. The answer to this question is available in the terms and conditions of every brokerage agreement. Most clients sign those agreements without reading the relevant clauses.
Operator relationships — specifically, whether the broker has direct contractual relationships with the operators they place, or whether they are sub-broking through another intermediary, creating a chain of principals and agents in which the client is the furthest from the aircraft and the last to know when something goes wrong.
Claims history — specifically, whether the broker has a documented history of service failures, client disputes, or regulatory attention. This information is not volunteered. It is discoverable.
The lesson that the industry has not learned
The private aviation industry’s response to every brokerage failure follows the same pattern: acknowledge the specific incident, attribute it to the specific firm’s specific failures, and reaffirm the general integrity of the sector.
What it does not do is examine the structural conditions that make these failures possible and recurring — the lack of mandatory client money protection, the absence of meaningful financial disclosure requirements, the regulatory framework that is calibrated for safety rather than commercial integrity.
Those structural conditions remain unchanged.
The principals who protect themselves are the ones who have stopped assuming that a professional appearance and a premium rate are evidence of operational and financial soundness.
They verify. They document. They structure the relationship to protect against the failure mode before it occurs.
In ultra-luxury aviation, as in every other domain where significant capital is at stake, trust is the starting point of the relationship.
It is not a substitute for due diligence.
Curated by: Hype Luxury
