November 2005

Shared Ownership of an Aircraft

It is pretty common for pilots to consider aircraft ownership at some point in time. We find it difficult to justify renting at close to $100 an hour, knowing that when it's over, there is nothing to show but another entry in our log book, and hopefully some good experience.

On the other hand, you've tallied all the costs involved in owning your plane, and that too exceeds the spare change in your pocket.

Another option is shared ownership, investing with a partner (or partners). Personally, I think it's a good compromise having personal experience of three similar situationis. Here is how we have been operating our present partnership. Although probably not entirely unique, this seems to be a fair and relatively inexpensive way to fly.

There are three of us who own a Cessna 150. The initial investment was split three ways, as was an engine overhaul. We share equally the hangar rental and insurance. Here's something very important we learned about insuring a shared aircraft. We found that we could buy full coverage, including hull insurance (Gold Wings policy) from Marsh Insurance through COPA for less than each of the three of us purchasing the Silver Wings policy. More coverage for less money when it's split three ways. The people at Marsh were helpful in pointing this out to us.

The maintenance and annuals are paid from a fund we build by charging ourselves an hourly rate. In this instance, that rate is $10 an hour. Since the 150 seems pretty consistent at burning $22 an hour for fuel, that puts the hourly cost at $32.

Naturally that is not the full cost of ownership. The hangar and insurance must be factored into that rate. In our case, if each pilot flies 60 hours a year, the hourly rate is about $52, or about half what we would pay on the rental market.

There is always the chance the annual maintenance costs could exceed $1800 that builds up in the fund when all partners fly 60 hours in the year. If it does, we will contribute equally to the overrun, and consider raising the rate we charge ourselves.

As for sharing the time on the airplane, any arrangement that works for your group is fine. We divide each month into three, designating a period of 10 days for each partner. We're flexible on that too, offering our unused time to the other fellows. We can request certain times of the month, and work around each other's schedules. Knowing we have our time written on a calendar though, we can at least plan an extended trip once a month.

This type of partnership can work, not just with airplanes, but with other toys like boats, motorhomes, even lawn and garden equipment. Basically, it's ownership where each individual takes responsibility for his particular share or time he uses the item. It's fair for the partner who may not make use of whatever the item is. I have seen this system work successfully with a group owning a wilderness cabin. They split the capital cost equally, then charge themselves a daily rate for the time they use it. For instance, a member who takes 3 friends to the cabin would pay his rate of $10 per person, per day. That would total $40 per day, $280 per week, which goes into the fund for maintenance and taxes. If a member has no time in a given year to get out there, he has no obligation to pay into that fund.

I have discussed partnerships with pilots who simply divide their annual costs equally between the partners. However it doesn't seem fair that the person who flies only 20 hours annually pays the same as the one who has 60 or 100 hours in the log book at the end of the year.

It's a "user pay" system, but can easily beat the cost of renting, and give the owners more flexibility in when and where they fly.

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