Thinking about an aircraft partnership

"Can we start a dialog? "

Sure. I'll be at the plane this Sunday giving Boy Scout rides. You
could stop by after the Boy Scouts around 3PMish if you'd like. Give me
a call at the house and we can talk more details.

-Robert
916 984 3448

On 2-Sep-2005, Mark Hansen wrote:

I'm thinking about getting into an airplane partnership (or co-ownership)
and have a few questions.

When people say that you can't really save money with ownership over
renting, does that include partnerships as well? I would think that
with a 4-way partnership, the operating costs would be reduced to
a level such that it would be cheaper than renting.


This may give you some idea.

I am in a 3-way co-ownership of a '79 Arrow IV. Between the three of us, we
average about 175 hrs/year. About a year ago we calculated what it cost us
to fly per hour, including both direct and indirect costs. The figure we
cam up with was around $95/hr. At the time, hourly rent for a similar
airplane in our area was well over $100/hr. The only maintenance we do
ourselves is oil changes, cleaning, and a bit of interior refurbishment. We
do not scrimp on required shop work. We have an enclosed hangar and carry
$1 million "smooth" liability insurance as well as full hull coverage.

With much higher avgas prices, our total hourly cost these days is probably
closer to $105.

The partnership works extremely well for us.

--
-Elliott Drucker

Yeah, it "works out" for a house because there is an army of
inspections, insurance, and other safety nets to keep you (really the
bank) out of trouble.

An airplane is NOTHING like a house when it comes to purchase risk.

Buying an airplane is a delicate balance between taking the time for
adequate due diligence, and losing out because some fool with more money
than brains buys the thing up from under you with absolutely NO
investigation.

Good Luck,
Mike


To do this right, I really should take a few months and read the
'how to buy' books, but then I felt this way before I bought my
first house, and that process turned out to be relatively easy.

wrote in message
news:YUwSe.12838$B34.10230@trnddc09...

On 2-Sep-2005, Mark Hansen wrote:

I'm thinking about getting into an airplane partnership (or co-ownership)
and have a few questions.

When people say that you can't really save money with ownership over
renting, does that include partnerships as well? I would think that
with a 4-way partnership, the operating costs would be reduced to
a level such that it would be cheaper than renting.


This may give you some idea.

I am in a 3-way co-ownership of a '79 Arrow IV. Between the three of us,
we
average about 175 hrs/year. About a year ago we calculated what it cost
us
to fly per hour, including both direct and indirect costs. The figure we
cam up with was around $95/hr. At the time, hourly rent for a similar
airplane in our area was well over $100/hr. The only maintenance we do
ourselves is oil changes, cleaning, and a bit of interior refurbishment.
We
do not scrimp on required shop work. We have an enclosed hangar and carry
$1 million "smooth" liability insurance as well as full hull coverage.

With much higher avgas prices, our total hourly cost these days is
probably
closer to $105.

The partnership works extremely well for us.

So what would those costs be per hour if you owned it by yourself?

The problem with partnerships is what do you do if one partner can't
pay his share? I suggest that you collect the TBO and build cash
reserves in a bank account. I know someone with a 3 way partnership in
a 182 and it works well. The plane is available almost any time he
wants it. They each have a weekend, but frequently the person with the
weekend doesn't use it. They each get two weeks with it in the summer.
They have an airplane credit card and they use it. One guy keeps the
books and bills each partner every month. The costs a
Hangar 200/month
Insuran 100/month
Annual 100/month (1200 per year)

Fuel 36 per hour
Maint 15 per hour
Reserves 15 per hour

So they get billed 167 a month plus 66 per hour for each hour they fly.
They collectively fly the plane about 250 hours a year, which comes to
about 90 per hour. If any partner doesn't pay his monthly (it hasn't
happened), the monthly comes out of his share of the reserve and his
share is put up for sale. They have the paperwork to force a sale of
his share without his signature (very important). One nice thing, since
the plane is in an LLC, there is no sales tax when one partner sells
out and another buys in. They have a good mechanic (very important). So
far no accidents and things are working very well. Again, if one
partner doesn't pay, they have recourse because they have his reserves
and they can sell his share of the plane. He gets the proceeds from the
sale (minus the reserves used) but doesn't have a say so in who buys or
even how much. It is a great incentive for partners to pony up. IF they
dont, they LOOSE. If they do, they WIN.

On 4-Sep-2005, "John Doe" wrote:

So what would those costs be per hour if you owned it by yourself?


That's pretty easy to figure, since the three of us fly the plane roughly
the same number of hours each year on average.

Of the $105/hr total, about $50 covers direct operating costs (fuel, oil,
engine/prop reserve). The remaining $55 would be tripled if I owned the
plane myself and flew the same number of hours I do now. Total per hour
costs would then be $215/hr -- more than twice as much.

--
-Elliott Drucker

Mark Hansen wrote:
I'm thinking about getting into an airplane partnership (or co-ownership)
and have a few questions.
Hehe...I knew it would happen eventually. Welcome to the club...well,
um...almost. It's only a matter of time now.

When people say that you can't really save money with ownership over
renting, does that include partnerships as well? I would think that
with a 4-way partnership, the operating costs would be reduced to
a level such that it would be cheaper than renting.
For me (and just looking at the per-hour costs plus my monthly fixed
costs) it's cheaper than renting. Currently, two of us fly a ton and
one doesn't fly much. If I fly 10 hours a month (and I've been doing
way more), I figure it costs me 1/2 of the going rental rate for an Arrow.

One plane I'm looking at shows a monthly cost of around $50 with
an hourly rate of about $58/wet. This seems pretty good
....um...ya, that does seem pretty cheap for a Mooney...but I'm not up to
speed on their cost figures nor familiar with the particular plane.

Before buying into an existing partnership would you still suggest
a full pre-purchase inspection? I would think at a minimum I would
want someone to go over the logs and make sure the partners are not
looking for a way to defray some of the costs of some looming expenditure.
If it was me, I'd buy a couple hours worth of an A&Ps time and go
through the logs. If the opinion was that it's a well maintained plane
and I felt comfortable with the partners, I'd skip the pre-buy. If it
would make me sleep better at night having the pre-buy done, I'd do it.

Oh, and one more thing Mark. Be ready to walk away if anything goes
South or just starts not to feel right.


--
Jack Allison
PP-ASEL-IA Student
Arrow N2104T

"When once you have tasted flight, you will forever walk the Earth
with your eyes turned skyward, for there you have been, and there
you will always long to return"
- Leonardo Da Vinci

(Remove the obvious from address to reply via e-mail)