Tuesday, October 21, 2008
Co-Ownership: Navigating Airplane Partnerships
Buying an airplane with a partner opens up ownership to any pilot. Do it right the first time
Paying For It
The main reason for co-ownership is to save money, but it might not be much. Based on how many hours you fly, you may find that you’re only saving a little over renting. But as a co-owner, you’ll enjoy a flexibility and peace of mind. The big benefit is that you’ll be splitting the fixed costs, which include hangar rental, taxes, insurance and annual inspections, all paid monthly as a fixed amount. Your only ongoing expenses are the variable costs, such as fuel, oil, an engine-overhaul reserve fund and oil changes. If you join an existing group, you’ll pay an amount to join that represents a percent share of the airplane. In a new co-ownership, each member is responsible for coming up with his or her share of the purchase amount.
Being an aircraft owner with a group of people you know and respect is one of aviation’s true pleasures. Cost benefits aside, the joy of flying an airplane that you’re intimately familiar with and that you have a personal stake in is a great pleasure.
|Fractional Ownership |
Luxury and convenience at a fraction of the cost
Fractional ownership is a term used to describe shared ownership of an expensive asset. When applied to aviation, fractional ownership usually involves a larger group of people than co-ownership and a more expensive aircraft, like a business jet or other high-performance airplane. The fractional owner purchases (or leases) a specific share amount of the airplane based on the number of hours the person flies in a year. There are additional cost components depending on the fractional ownership company. Most charge a monthly management fee that covers fixed, indirect operating costs like pilot training, hangars, etc. When occupying the aircraft, you usually pay an “occupied hourly fee” that covers direct costs like fuel, maintenance and catering. The fractional ownership company is responsible for hiring the pilots, maintaining the aircraft, handling all scheduling and logistics, and maintaining safety programs. The fractional owners get to enjoy the luxury, delay-free travel, convenience and safety of a private aircraft without any of the hassles, and at a fraction of the cost of sole ownership.
|Fractional Providers |
Generally, fractional members buy partial interest in an aircraft that’s operated by a company as part of its fleet. Fractional ownership initially became popular for jet planes, but it now includes smaller, single-engine aircraft.
|Company ||What It Offers |
|AirShares Elite |
|Shared ownership in a Cirrus SR22. |
|Fractional shares in the Piaggio Avanti P.180. |
|Shared ownership of Cessna Citation Bravo, CJ3, XLS and Sovereign jets. |
|New fleet of Lear and Challenger jets. |
|A “cooperative” of LSA, Mooney, Liberty and Cirrus models. |
|A fleet of luxury jets from Cessna Citations to Gulfstreams and the BBJ. |
|Fractional ownership in the Cirrus SR22-GTS, Cessna 182T and Eclipse 500 VLJ |
|Equity ownership in a Cirrus SR22-G3 Turbo. |
|A Father/Son Co-Ownership |
An airplane becomes a family affair
By Bill Cox
Father Don Stephens and son Bill have maintained a co-ownership on their 1981 Mooney 201 for more than 20 years in Orange County, Calif. “The Mooney is an ideal co-ownership airplane,” says Bill, general manager of Cerritos Infiniti in Cerritos, Calif. “My dad and I rented a variety of airplanes for several years out of Fullerton Airport while we were considering buying our own. We considered the Grumman Tiger and the Piper Archer and Dakota, but the Mooney kept coming up way ahead in virtually every parameter—speed, climb, depreciation, economy, range, cabin room and everything else. It was also quite a bit more expensive, but with co-ownership, that was less of a problem.”
The two co-owners had basically the same philosophy regarding maintenance, an important consideration for any joint purchase. “Dad and I are in total agreement on that point,” says Bill, “and that’s something that should be established in every co-ownership. Nothing less than mechanical perfection should be acceptable. Some people tend to let things slide a little, but we insist that every system and every radio work all the time, or we won’t fly the airplane.”
Don and Bill purchased the Mooney for $59,000 in 1986 with 1,100 hours on the engine, and Bill says he has insisted on participating in all the annual inspections, and has learned quite a bit in the process of helping the A&P through the various annual maintenance items. The father/son team has also repainted and reupholstered the airplane in the last few years, bringing it to near-new appearance and comfort.
The two men fly the Mooney about 250 hours a year, but only Bill uses the airplane for business. “I’ll sometimes fly to auto auctions around the southwestern U.S., California, Oregon, Arizona and Nevada, and the airplane usually allows me to save an overnight stay,” he says. “I can fly to Oakland or Reno or some other location, spend the day there, buy a dozen or more cars and be back home the same evening.”
Bill feels that the most common conflict scenario of co-ownership rarely arises. There have been few instances when both owners wanted to use the airplane at the same time. “I’ll bet there haven’t been even a half-dozen instances in 20 years when we both wanted to use the airplane for different trips, and those have been easy to resolve,” comments the younger Stephens.
“For our purposes, the 201 is practically the perfect airplane,” he continues. “It’s relatively inexpensive to buy and own. Maintenance with the little 200 hp engine isn’t too bad, and most systems are fairly simple. Performance is also more than adequate for our purposes. Our 201 is an early model with the shorter wings, so it offers a consistent 160 knots [184 mph] on 11 gph.
Even at today’s prices, that’s fairly efficient, typically worth 17 smpg in automotive terms. It makes an excellent transport for two people plus all the baggage you can stuff aboard, the way most people fly four-place airplanes anyway. The standard 64-gallon tanks provide five hours of endurance. That’s longer than most of us are willing to sit in any airplane.”
Bill says he and his dad have never bothered to figure the hourly cost of their shared Mooney 201, not because they’d just as soon not know, but because it’s not that significant a number. “Keeping the airplane in the family obviously gives us some advantages over other co-ownerships, but we try to maintain a very businesslike attitude about all aspects of the Mooney’s operation,” he says. Don and Bill are so content with the economics of their current co-ownership, they have no plans to upgrade airplanes anytime soon. “The 201 is exactly the right airplane for us,” says Bill. “It’s more than fast enough for our missions, carries what we need to carry and, most important of all, it’s within our respective budgets.” [For more, see our web-exclusive story, "Mooney 201: The Airplane That Saved A Company," at the end of this article.]
Page 3 of 4
Get 11 Issues of Plane & Pilot for only $14.97! That's 77% off the cover price!