Tuesday, June 1, 2004
Buy Your 1st Bird
Low time, any time could be the best time to own an airplane
Fractional Ownership: This is a variation on ownership that has transformed the business and personal jet market, and is making its way into general aviation as well. The idea is simple: If you’re not going to use the whole airplane, why not let others help you pay for it? Because there’s a buy-in fee for your share of the aircraft, and pilots also can expect a monthly management fee, plus a maintenance and engine reserve, the hourly cost of flying is frequently more expensive than a straight rental. Fractionally owned aircraft, however, are usually brand-new, often state of the art and more available for long periods of time. And when it’s time for the fractional management company to sell the aircraft, proceeds are divided among the owners.
FBO & Flight School Leasebacks: These are the aviation equivalents of a long-distance romance. Sure, she’s yours, but who knows what’s happening when you’re not around? On the upside, a good leaseback can create a positive cash flow that offsets most of the aircraft’s maintenance and debt service. On the downside, it may be so popular that you can’t even fly her, since you’re sharing the airplane with so many pilots.
If you think you need a solid contract for a partnership, that goes double for a leaseback arrangement. Spell out everything in detail and never accept a handshake for anything other than hello.
Time For The Fun Part
Which airplane is right for you? Like every pilot, you’re lusting after all kinds of airplanes. You scan the magazine ads and anxiously await the next issue of Trade-A-Plane. Choosing the right airplane is critical to making ownership an enjoyable experience. “The most expensive airplane is the one that sits in the hangar unused,” says Warren.
The first step is to determine just what kind of flying you’re going to do. Are you satisfied searching for the ultimate $100 hamburger, or will you be using your airplane for business trips? (Before you jump up and shout “business!” take a minute to consider how much you can really count on using your airplane without having your instrument ticket.)
The best place to start your search is in your own logbook. Since you earned your private, what kind of flying have you done? Most likely, 70% of the type of flying you’ve done in the past will determine what you’ll do when you own an airplane.
“If you know you’re routinely going to be flying two or three passengers on business or pleasure trips, then buying an airplane that’s too small or slow is inefficient,” explains Fred Ahles, president of Premier Aircraft Sales. “The lack of speed and/or comfort will definitely become an issue.”
“If you have enough hours and enough need, why buy a Piper Archer when what you really should have is a Piper Saratoga,” he continues, “especially if the next airplane up the ladder is something you can be trained in to fly yourself in a reasonable amount of time?”
Right about now, we can hear all of you collectively saying, “Wait a minute! I just finished my private. I don’t want to jump right back into training. I want to fly myself.”
If you’re happy buying an airplane that fits your skill level, you’re home free. If you want something that’s a lot more complex, you’re entering into an area of the buying process where a lot of low-time pilots get in trouble: Their logbook says 100-hour private, but their egos say 10,000-hour ATP.
“Low-time, first-time buyers fall into one of two categories,” says Sherman. “The first group is rather conservative and will want to buy an airplane with which they’re familiar. The other group just launches right into buying a high-performance airplane, like a Mooney or a Bonanza.”
Baumgartner is a classic example of the first group. He did the majority of his flight training in an Archer, so he was very familiar and comfortable with the type. He knew what he wanted; he was just looking for the right one.
On the other hand, Tom Whyatt took the leap from an Archer right into a Cherokee Six-300. “The Cherokee Six was a lot more airplane than I was used to, so I spent extra time with my instructor until I was really comfortable with it,” he says.
“The biggest mistake any first-time, low-time buyer can make is buying too much airplane too early,” explains Brent Anderson, representative of CS&A Aviation Insurance. ”Low time and high performance is a bad combination.”
Page 2 of 3