Leasing Privately Owned Aircraft

In the long term, I'm planning on getting into a partnership on a single engine
plane capable of carriyng 4 adults + luggage for a 500 mile trip. Before I get
all the way into a partial ownership situation, I'd really like to spend some
time flying some of the potential aircraft I'm interested in, to see if they
really match what I'm looking for.

Since the short list of planes is: A-36 Bonanza, Cessna 210, and Piper
Saratoga; I'm not able to find them available for rental anywhere nearby (very
few FBOs rent these anyway). I was thinking of trying to find a local (Toledo,
OH; Detroit, MI, or Ann Arbor, MI) owner with an under-utilized plane, who is
willing to lease time on their plane for 4-6 months so I could use it for some
trips totalling 40-60 hours. My questions to the group a has anyone done
something like this, and what are the potential pitfalls (insurance, liability,
availability, etc...) that I should be concerned with?

I'm Commercial, Instrument, Single Engine rated with 500+ hours and 100+
complex, 100+ high perf so I'm assuming that becoming a named-insured pilot on
the policy won't be much of an issue after a 5 hour checkout.

Thanks in advance,
Eric

"Bartscher" wrote in message
...
In the long term, I'm planning on getting into a partnership on a single
engine
plane capable of carriyng 4 adults + luggage for a 500 mile trip. Before I
get
all the way into a partial ownership situation, I'd really like to spend
some
time flying some of the potential aircraft I'm interested in, to see if
they
really match what I'm looking for.

Since the short list of planes is: A-36 Bonanza, Cessna 210, and Piper
Saratoga; I'm not able to find them available for rental anywhere nearby
(very
few FBOs rent these anyway). I was thinking of trying to find a local
(Toledo,
OH; Detroit, MI, or Ann Arbor, MI) owner with an under-utilized plane, who
is
willing to lease time on their plane for 4-6 months so I could use it for
some
trips totalling 40-60 hours. My questions to the group a has anyone
done
something like this, and what are the potential pitfalls (insurance,
liability,
availability, etc...) that I should be concerned with?

I'm Commercial, Instrument, Single Engine rated with 500+ hours and 100+
complex, 100+ high perf so I'm assuming that becoming a named-insured
pilot on
the policy won't be much of an issue after a 5 hour checkout.

Thanks in advance,
Eric

The open-pilot clause in my Saratoga insurance policy requires instrument
rating, 750 hours PIC, 50 of which are in exact make and model. The policy
also prohibits charging anyone for using the airplane, other than
reimbursement of operating expenses. If you become a named insured and you
fall short of the open-pilot clause requirrements, the premium may go up and
you will have to reimburse the owners for that. But the big thing in this
policy is not being able to charge for use of the airplane. I sure wouldn't
let someone use mine just for operating expenses.


Stan

The open-pilot clause in my Saratoga insurance policy requires instrument
rating, 750 hours PIC, 50 of which are in exact make and model. The policy
also prohibits charging anyone for using the airplane, other than
reimbursement of operating expenses. If you become a named insured and you
fall short of the open-pilot clause requirrements, the premium may go up and
you will have to reimburse the owners for that. But the big thing in this
policy is not being able to charge for use of the airplane. I sure wouldn't
let someone use mine just for operating expenses.


Stan


Thanks for the information. I was assuming the insurance would increase with me
as a named insured on the policy and I would definitly have to cover that cost
as a part of leasing the plane. However, I wasn't thinking of the issue of the
insurance not allowing the owner to charge for the plane.

Does anyone know if it would be possible to form a "temporary" partnership of
some sort to get around this? I may need to call one of the aviation insurance
underwriters to discuss if there is an acceptable way to structure something
like this in their eyes.

Thanks,
Eric

The problem I come up with is that it is difficult to quantify
the actual amount to charge because you don't know what maintenance
issues you will have to deal with after the plane is used for "X"
amount of hours by another individual. For instance, what if something
serious happens to the airplane on one of these "trips"? The owner
gets stuck with flying out to wherever it is and dealing with it
right then and there while the renter just goes away?

Someone approached me with an idea like that and after pondering it
I rejected it. For me, anything short of a 50/50 ownership commitment
is just too much of an unknown. Perhaps if one were quite wealthy
or had more than one airplane at their disposal they would be less
worried about things like that.

"Bartscher" wrote in message
...

Thanks for the information. I was assuming the insurance would increase
with me
as a named insured on the policy and I would definitly have to cover that
cost
as a part of leasing the plane. However, I wasn't thinking of the issue of
the
insurance not allowing the owner to charge for the plane.

Does anyone know if it would be possible to form a "temporary" partnership
of
some sort to get around this? I may need to call one of the aviation
insurance
underwriters to discuss if there is an acceptable way to structure
something
like this in their eyes.


However that gets worked out, you can expect to have to share the costs of
ownership, which are as much as or more than operating expenses.

Here are the real numbers.

We have three partners in our reasonably well-maintained 1980 fixed gear
Turbo Saratoga PA32-301T. We each pay $460/month into the holding company
to cover non-usage-based expenses (hangar, insurance, maintenance, parts and
supplies, taxes, etc.). That's just to keep the airplane available for use.
Then we pay $100/hr wet for use. That covers the fuel, oxygen, transient
hangar or tiedown, and other nonpersonal fees normally incurred at FBOs. The
hourly rate also includes accrual for the major recurring usage-based
expenses of engine/prop overhaul, paint, and interior refurbishment.

These numbers are based on historical actual expenses, reviewed and adjusted
quarterly.

All this is separate from what it takes to buy a share in the airplane. And
it does not include avionics replacement or upgrade, which are handled by
member assessments.

If you were to use my airplane for $100/hr, you would just be paying for
what you used up and getting a free ride on the rest of the costs. If the
airplane is used 200 hrs per year (billable), the fixed cost of ownership
represents an additional $82.80/hr (not counting any assessments) of cost.
If you wanted to have a 50-hour trial fling with my airplane, I would have
to charge you at least $180/hr, even if insurance would let us.

Just some data to think about.

Stan

On 09 Jan 2005 01:55:17 GMT, (Bartscher) wrote:

Thanks for the information. I was assuming the insurance would increase with me
as a named insured on the policy and I would definitly have to cover that cost
as a part of leasing the plane. However, I wasn't thinking of the issue of the
insurance not allowing the owner to charge for the plane.

Does anyone know if it would be possible to form a "temporary" partnership of
some sort to get around this?

I think this is going to be an uphill battle:

Unless you have a good friend who has a plane, it will be damn near
impossible to find any owner willing to take on a short term partner
just so the plane flies more. This is especially so on the higher
performance singles, as people who own these typically have enough
money that they don't care about the costs.

Regarding insurance, no matter how you structure it - what you are
trying to perform is a commercial operation (rental) under a insurance
policy that does not cover it. Policies that cover rental have
dramatically higher premiums (3-5x) than standard policies.

I have no idea how well the insurance industry enforces their
policies, but if they have a $50k hull claim from a gear up, when the
non-owner pilot was flying, I bet they do their homework before paying
the check. Again, I don't know if they can subpoena bank records or
the like, but if they can, it would not take much digging to find out
that the partnership is not a partnership, but is really a rental
situation.

Now flip yourself to the owner side of the equation, and ask if you
want to be involved in the risk. I would not.

-Nathan

Myself and 2 partners leased a 182RG for about 4 months last summer from a
local FBO that is in the business of leasing aircraft. He set the insurance
requirements, we got the insurance and named him as an additionally insured.
We had exclusive use of the plane but let him "borrow" it for the occasional
flight test, he's a DE. Insurance was no higher than if we had owned the
aircraft. We dealt with Aviation Resources Inc. at http://www.air-pros.com/
When we bought our Aztec, we turned in the 182RG and cancelled the
insurance. We got an insurance refund minus 10% for the remaining period.

Find an FBO with a lot of airplanes sitting idle. Talk to them. Our lease
required us to pay for 20 hours flight time per month at $50 per hour dry,
if we went over 20 hours, we paid the same $50 per hour and were allowed to
"bank" the extra hours to apply to a month that we didn't fly the minimum.
We also had to have it hangered and pay for the hanger rent. The owner did
all maintenance includeing oil changes and inspections. It really worked
well for us and he leases a lot of planes this way because he owns so many
and realizes that it's an additional income source and a way to keep his
airplanes flying and maintained.

Jim

Myself and 2 partners leased a 182RG for about 4 months last summer from a
local FBO that is in the business of leasing aircraft. He set the insurance
requirements, we got the insurance and named him as an additionally insured.
We had exclusive use of the plane but let him "borrow" it for the occasional
flight test, he's a DE. Insurance was no higher than if we had owned the
aircraft. We dealt with Aviation Resources Inc. at http://www.air-pros.com/
When we bought our Aztec, we turned in the 182RG and cancelled the
insurance. We got an insurance refund minus 10% for the remaining period.

Find an FBO with a lot of airplanes sitting idle. Talk to them. Our lease
required us to pay for 20 hours flight time per month at $50 per hour dry,
if we went over 20 hours, we paid the same $50 per hour and were allowed to
"bank" the extra hours to apply to a month that we didn't fly the minimum.
We also had to have it hangered and pay for the hanger rent. The owner did
all maintenance includeing oil changes and inspections. It really worked
well for us and he leases a lot of planes this way because he owns so many
and realizes that it's an additional income source and a way to keep his
airplanes flying and maintained.

Jim


Thanks for the information. This might work for me if I can find an FBO nearby
with one of the planes I'm interested in.

Was there a standard lease contract that you used for the 182RG lease?

Thanks,
Eric

It was "standard" to this particular FBO as he uses it with everybody he
leases planes to. I don't know of an "industry" standard lease.

I outlined pretty much everything in the lease, but there was one more item.
What ever the plane came with for avionics, it was expected that it be
returned with the same or improved avionics. If you wanted to upgrade
something, the FBO would pay for 1/2 of the cost including install, if your
request was reasonable. I'm pretty sure they wouldn't let you put color
radar in a 172 and foot 1/2 the bill. But if you had any maintenance or
repair issues with ANY of the avionics, you paid for that. That was the
only maintenance issue that was not covered by the FBO.
Jim


Was there a standard lease contract that you used for the 182RG lease?

Thanks,
Eric