Leasing an aircraft to a school or private rental? [Archive]

IO540

19th Apr 2004, 15:37

1. Is is possible to lease an N reg aircraft to a school and have them rent it out to customers for you?

You can rent out an N-reg aircraft, under an arrangement called a Dry Lease. If you speak to the various N-reg registration agents (adverts in the back of the usual mags) they will be able to tell you more. This is standard for ltd. co. owned N-reg planes because even a 100% shareholder of the same company will be renting the plane from the company.

Whether the renter can rent it back out again I don't know.

2. If this is possible, what rate would you be likely to achieve for a DA42 twin star (full glass cockpit) - assuming the fuel, insurance and maintenance were included in the rate to the school / club.

What sort of customers can you dig up in your area? People pay say £250/hr for a 30 year old dog of a twin with bicycle patches on the boots :O It would appear that they should pay more for something of better quality but due to the nature of the UK GA scene (most participants don't have deep pockets) this doesn't necessarily follow. I am aware of people who bought a brand new plane like this, have tried to build a group around it, and haven't found it very easy. Personally I doubt you could charge more than the 30 year old dog going rate.

But you are talking about renting to a school/club. From what I've seen, twins tend to be used by schools largely for IR training. There is VERY little PPL/IR training in the UK. Is your proposed school a successful commercial (ATPL) training outfit? I ask this because I got conned a few years ago on this very subject, by a fast talking CFI/school owner. Also this area is very price sensitive; people want to do their ME IR in the min 55 hrs and then perhaps build hours at the lowest poss rate.

3. Is it best to include fuel, insurance and maintenance in the rate or let the club manage this directly (particularly insurance)

If the school is going to put a lot of hours on it, and you are prepared to say goodbye to the plane and have it wrecked by all and sundry (which is pretty well the choice if renting a plane to a school; without exception from what I've seen) then you will probably benefit from their lower insurance rates.

There are issues which boil down to trust. The plane will have a flowmeter, with a settable FOB figure. This makes it possible to tamper with the "fuel used" and you WILL find this happens. Some instructors do it (I've seen it). Bogus flight times are also known, and if you have an engine monitor you will discover this. If you rent wet, there is no incentive for anyone to manipulate the fuel used, but some will then fly at max power to cover the distance in the least time. Same applies to charging for airborne time, or total time. I do the former; the latter encourages stupidity on the ground. A school will love to rent a plane in on airborne time and rent it back out on total time.

4. Is private rental (e.g. advert in the back of Flyer and renting by the hour with checkout) likely to be a better option for this type of aircraft, and do you think there would be sufficient private interest?

Definitely, if you can find the customers. If I was renting out that sort of spaceship I would look for working ATPLs, nothing less. Or a very current IR, if you can find one. Your average PPL/ME (of which there are some about) don't have the knowledge to operate it in the way you would want them to. Do you really want somebody who does 10hrs/year, flying this £300k machine with a stopwatch, looking for Hengisbury Head and calling 121.50 when "uncertain of position"? :O And landing it at Stapleford on the grass? It will take you 10 hrs to teach an intelligent PPL-level pilot just to operate the avionics.

5. If renting privately what rate would consider appropriate for this type of aircraft?

Same as a 30 year old twin :O Unless you can build a group around it of well off, experienced pilots who fly abroad a lot and are willing to pay for exclusivity e.g. being able to take it away to France for a week or two.

I don't know if you can train for any JAR license or a rating in an N-reg, in the UK. And to fly it abroad with IR privileges, people will need an FAA license and an IR. This narrows the candidates drastically.

I've never done this with an N-reg DA42 but have done it with a G-reg plane of similar cost and quality, in recent years. It's pretty hard. Very few people in the UK GA scene have any money, but plenty of people will try to get their hands on it, and will promise you lots of rental just to get the keys... I would never rent to a school of any kind again (not even for "IR training" unless I knew the instructor personally), but a "group" (which can be you owning the plane 100% via a ltd. co. and renting it out) is feasible. The N-reg fractional ownerships do basically that, with some frills.

The problem with renting for IR training is that there will be few takers if you don't permit solo flight afterwards. If you do allow it, you will get people who have done the minimum ME diff training, flying it solo. And you will have no control; you won't even know who the P1 is, and who-ever it is can legally fly it P1 with very minimal diff training.

If you want a DA42 mainly for yourself and you are looking for some rental, to recover some of the fixed costs, and to get enough of a commercial element to get VAT back on it, that's a different scenario. You can find a few suitable ATPL pilots for that, especially if it is a glass cockpit version. But a free for all, no way (IMHO).

It would be different if there were many IMC Rated pilots who fly IFR a lot, but that isn't the case. You will get approached by a lot of them, mostly with expired ratings, but most have poor currency. If the IMC Rating was properly taught, to people with adequate solvency and adequate currency, and wasn't slagged off by so many old farts, building groups around today's great new planes would be a cinch. Instead, it's hard work.

Just my view based on similar experience - a few things for you to think about.