Advice on Group Ownership

[Bellerophon]

Having not flown in anything remotely interesting for several months now, my interest in light aircraft flying was recently rekindled when I was taken up for a flight by a friend who owns a part share in the aircraft concerned.

It so happens that a share in this syndicate may well be coming up for sale, and if it does, then I am sorely tempted to make an offer for it.

I have no previous experience of being part of a syndicate, but I imagine there are several on this forum who do.

I was wondering if any of you who have experience of owning a share in an aircraft might be kind enough to offer me some advice about joining a syndicate.

I'm not really asking for financial advice; though that is always welcome; rather I'm looking for advice on what distinguishes a good syndicate from a poor one, how a good syndicate is structured, what sort of rules are necessary, how many members should there be, what experience levels should they have, how should the aircraft be booked, and particularly what unexpected problems you may have encountered.

All the things that you, with the benefit of hindsight and experience, would now look for, if you were to buy into another syndicate.

In other words, the advice you wish someone had given you before you bought into your first syndicate!

Regards

Bellerophon

[Fuji Abound]

Financial

Is there a fund for engine prop. replacement? If not, even though you are not concerned about the financial aspect, an engine o/h just after joining could be a costly surprise.

Is their a treasurer to look after the finances, ensure members pay on time, keep the rate under review, etc.

Availability

What’s the availability of the aircraft like? How does the booking work and is the system easy.

Rules

Does the group have rules concerning group currency and at least a policy on keeping the aircraft clean, refuelled, maintained, etc.

These should be the key features of a well run group - be suspicious if not.

[Genghis the Engineer]

Firstly, although any advice I give on here is free - I have been thinking for a while about possibly writing a book about aircraft syndicates, how to pick them, start them and run them. This isn't advertising, since I've not put pen to paper at-all, but if anybody has any views on whether I should pull my finger out and write such a tome, and if so what should be in it, I'd be very interested.


Anyhow, the subject in hand - joining a syndicate. Questions I'd be asking:-

(1) What are the availability / booking rules, and do they suit the way I want to do my flying ?

(2) Comparing the monthly and hourly costs, and my projected annual flying rate, how does this compare to renting something similar (if I can).

(3) What are YOUR duties to be within the syndicate? These groups are just that, it's not cheap rental - are whatever jobs are expected of you things that your time and skills can cope with?

(4) What are the currency / checkout / use rules - is there anything there that'll give you a big problem?

(5) How much time has it spent stuck on the ground in maintenance over, say, the last 3 years. If the answer is "none" either somebody is lying to you, or they're storing up problems. If it's "lots", then find out why - is it routinely chronically unreliable, or has it simply had some big jobs done that won't need doing again?

(6) What is your personal liability if you bend it?

(7) Are there any nasty personality clashes or internal disputes going on that will interfere with your enjoyment of the aircraft?

(8) Look at the diary - where are the gaps at the moment? If you went to book now, would you get the aircraft reasonably when you want it?

(9) Is the type genuinely within your personal experience and capabilities? (For example, if you've no aerobatic background, buying into a Pitts might be a bit premature.)

I'm sure I'll think of something else, but those should be a good starting point.

G

[tb10er]

All groups will operate differently but as other respondants have mentioned, the things to consider are (in no particular order).

1. Initial purchase cost
2. Monthly and hourly rates
3. Avaialability and access to booking system - we use
www.e-allocator.com
4. What ownership entails ie. the aircraft, cash in bank (or o/d), subscriptions eg. AOPA, life rafts/jackets, IFR manuals, etc.
5. Your duties - most groups share the jobs around.
6. Flying buddies - our group is great if you want someone to lfy with - this also means that availability is much better - it is not unusual for 4 members to fly a 4 leg journey.
7. Be prepared to dig deep. Aircraft can be expensive with maintenance. The checks required are: 50hr/62 days, Annual, and Star Annual (the biggy) every 3 years. To give an idea, our 50hrs cost from £300-£800, annuals £1000-£2000, and Star Annual - just done £6000 - ouch. Fortunately we had a tidy sum of cash built up. As was mentioned, an engine fund is a must - expect it to be £12k-£18k - and needed after approx 2000 hrs (although this can be extended).
8. and finally - the one-upmanship - certainily is a head turner in the pub when you say you own a plane (you then say that you share it with your mates).

As for me, I wouldn't swap my share to go back to hiring a plane from the local club.

[IO540]

I would also add that the prospective share buyer needs to ask what sort of flying they want to do and how it fits in with that of the other members.

All here seem to assume that he/she will just want to potter around in perfect VFR and therefore any old plane will do.

But let's say he wants to go places. In the UK that pretty well means the IMC Rating as a minimum. For European flying that could well lead to an IR, which in practice means the FAA IR and a N-reg plane. One needs a well equipped plane for that, owned by people who have a spare penny or two when it's needed.

Lots of people have joined a syndicate because the plane was maintained to legal IFR standards, only to find that of the 10 members 8 are VFR-only and when something "not essential for VFR" packs up the 8 won't want to pay for it, so it doesn't get fixed. Gradually the plane falls apart, and adverts for shares start to appear in the back of Flyer :O

[bookworm]

Only thing I'd add is that if you're the joint owner of an aircraft, you pay your share of the costs, which is not necessarily the same as the "monthly rate".

So in looking at the budget, check that the total group income from hourly and monthly charges stacks up against the costs. Some groups build up funds for the inevitable contingencies (higher monthly rate) while others have a whip round when something goes wrong (lower monthly rate). Don't discriminate against the former for prudent financial management -- you pay the same in the end.

[IO540]

You pay the share of the costs unless you can jump ship before having to pay it :O Which is usually possible unless the defect is enough to ground the aircraft.

It is possible because the newcomer to the group cannot always rely on the existing members to disclose past and ongoing disagreements regarding maintenance. It's a bit like when you buy a house, the vendor isn't likely to be up front about having argued with a neighbour about something.

Of the several syndicates I had looked at a couple of years ago, all had problems like that, with several people trying to sell their shares ASAP, but my enquiries revealed nothing at the time. OTOH I do know of several syndicates without major problems, though they all seem to have a lot of members (20+).

It's a bit of a minefield, and I don't know of a simple solution. Unless one just wants to get airborne as cheaply as possible, in anything, in which case a legally airworthy plane is a legally airworthy plane...

[mazzy1026]

So it seems that a syndicate is the way forward however, due to all the possible costs that may pop up (maintenance, repairs etc) would the cost be more or less the same if I one were to hire the club aircraft and pay for a block of hours?

Would it be a good idea for the hour builder to invest in the share, do the hours then sell the share.

Regards

Maz

[Genghis the Engineer]

Most syndicates are rather resistant to hours-builders, on the grounds that they tend to take more from the syndicate than they put back in. IMHO, an hours-builder is better-off buying a cheap permit single seater, then selling it when they've got the hours.

G

[IO540]

mazzy1026

The case obviously depends on the # of hours you want to do per year. If you want to build hours "cheap", go to Florida.

Also shares can take a long time to sell. A year doesn't seem unusual, and during that time you have to pay the monthly contribution. Syndicate membership is for the longer term, and you've got to check out the other members face to face, as well as the aircraft.

[Fuji Abound]

From my experience look at it this way assuming a Group is flying something over a hundred hours the cost of running the average light aircraft doesnt really change significantly as the number of hours flown increases BUT a commercial operation needs to make a profit so the trade offs are usually less cosmetically well maintained aircraft, less interesting types and not hangared. All in all Groups are probably not therefore a "cheap" option compared with the average club rates BUT the aircraft are more enjoyable to fly. Clubs are also often reluectant to let you take the aircraft "away" for any length of time - Groups are more likely to be accomodating.

[GTOTO]

We have operated a group as a limited company since 1972 so have experienced most of the problems and agree with all the statements being made. Being in a syndicate is really not about saving money, more to do with flexibility, in control and pride of ownership.

Our company has 15 members, which may sound high, but if the members have variable work patterns and are team players, then it works very well and when it breaks, as it will the costs are spread. There is nearly always someone to go flying with, if you want to. We also find people do tend to fly in bursts.

We operate with a higher monthly and hourly charge to reduce the surprises, as Mr Lycoming and Cessna have trouble building reliable products, even from new, but they are very damage tolerant.

The first question we ask of any prospective share holder is how do they want to use the aircraft, no good if someone wants to go to the South of France every weekend or do lots of business trips. We run it for social, domestic and pleasure, with occasional business use and members have the right to take it on holiday for up to 7 to 10 days once a year. In all the years the rules have stood up well.

We have teeth in the rules but have rarely had to use them over the years, but you must build them in just in case.

I think we could write a book also on group ownership, don`t know if ours is the best way, but the company has survived through thick and thin for 32 years. Please have a look at our web site http://www.horizonflyers.co.uk/

If you have any questions please feel free to ask.

PS. We do have one share up for sale and a year is about right on how long they take to change hands.

[Dewdrop]

TOTO. What a brilliant web site, obviously a professionally run group.

[Bellerophon]

Many thanks for all the helpful replies and e-mails.

Several points have been raised that I now need to consider in greater depth and one horror story to dwell on as well.

I suppose there never will be an "ideal syndicate" that just happens to have a share for sale, and that it is always going to be a bit of a compromise in the end, however it does appear that some syndicates are run in a more professional manner than others.

Oddly enough, the calm and measured response from the syndicate I am thinking of joining; as opposed to the rather over-eager invitation to sign up immediately from one or two others; is a very positive sign in my view.

Amongst other things, they have yet to decide if they want me for a member, which reminds me a little of something Groucho Marx (might have) said.

Would I really want to join any syndicate that would have me for a member!


Regards

Bellerophon