Share ownership vs Full ownership and hiring out.

[Rupert S]

Really from those with experience of both, can anyone explain the pros and cons of each? Obviously the main advantage of a share is the reduced capital outlay where full ownership means one has an aircraft to fly where ever and when ever the owner wants. Is it reasonable to assume that as an owner, when not wishing to fly, one could find a couple of induviduals who will fly the aircraft for a number of hours per year to help justify the running costs who will look after the aircraft properly?

[Speedtape]

Good luck in finding people to fly the aircraft in whom you can trust to treat it properly. I've found that unless there is some sort of financial interest in the aircraft, people just seem to treat it in the same sort of manner as a hertz rental car cos if it breaks, it's not going to hit them in the pocket:rolleyes:

Oh and if it does break whilst they are using it, some of them refuse to pay for using it or even demand their money back:mad:

[tonyhalsall]

Hi Rupert,

The first response is a absolute justification for renting (from the renters perspective!!).

I rent 8-10 hours a year in a Cessna 150 and it is very convenient for those limited hours just to stay current and a bit more. I am not overly confident in the aircraft and I occasionally bounce it on landing, but I pay my money and go home with no financial attachment whatsoever to the aircraft even if I had bent it or broke it (never have - touch wood!).

The decision to change from renting to owning is a question of you being honest with yourself about how many hours you think you will fly and what type of flying you will do ie local, x country, europe etc etc
Assuming that you are not one of the fortunate few where many is no object, your choice of part (shared) ownership or personal outright ownership will come down to an equation of affordability based on anticipated use.

I own a microlight which was previously a three way syndicate but I bought out the other two and now solely own it. The syndicate was loosely formed and the idea was that everyone would chip in and sort out maintenance issues etc. The reality was a bit like this but in fact I probably took on the main share of organising permits, maintenance and the like.

Syndicating (or sharing) does make for much cheaper flying because even if you only have one other person in your group you are effectively halving your costs. If you think that you will fly every Summer evening and every Saturday and Sunday then sharing is not for you, but if like most people you have other things in life as well as flying then joining a syndicated group is a good way to get more affordable flying and if it means you have to plan a little - so what, it is a tiny compromise for the more affordable cost.

I have bought my flying partners out because they lost interest after our a/c was grounded last year pending a new undercarriage. It is not that much more expensive to run now because I have reduced the insurance cover to third party and ground cover as opposed to fully comp and paying a premium for the low hours of my flying partners. I would not hesitate to re-form a small group again, but having had this aircraft now for three years I fancy a change and I am selling it for something different.

Really Rupert, from my point of view I would just suggest that you be absolutely honest with yourself about how much flying you expect to do and then let logic make your decision for you. If it is group ownership then shop around the groups as you would shop around for an aircraft and look at the 'attitudes' of the group members and whether you would fit in. A well run and friendly group is a gem to buy into but unfortunately there are a few around that have inner cliques and outdated, unreasonable attitudes. Best to avoid these really!!

Good luck

Tony

[helicopter-redeye]

The difference is capital and risk.

If you are renting to others you can make (or loose) a lot of money (NB I experienced worse than the 'Hertz rentacar' attitude).

Have a good contract and risk management process. Only rent to people you have checked out very well and have an adequate supervisory system in place to check on usage and document routine non A check (owner) inspections weekly.

Then, like an auditor, take out your pen and sign the contract because there is nothing more you can do ...

h-r:)

[Confabulous]

Rupert,

The differences are fairly substanial, and like the guys have mentioned are based on capital outlay and trust, but mainly on how many hours you expect to fly - if it's less then 50, don't bother with a share unless it's something fairly cheap.

From what I've seen about this in PF (a search would come up with a lot more information), the pros and cons are:

Renting
Pros: No maintenance, hangarage, insurance or general costs, no capital outlay.

Cons: Unknow/potentially unsafe flying characteristics (poor overhauling, maintenance, bad landings, avionics etc), high hourly costs (especially if you fly over roughly 50 hours per year), less availability etc.

Shared ownership
Pros: Better maintenance (because you value your life more than the aero club does), lower hourly cost, much cheaper then owning outright (depending on a/c type), very good availability.

Cons: Possible group dynamic issues, unexpected costs for new engine or prop, initial capital outlay, cashflow problems (not everyone has the money available to replace the knackered engine after a year or so), and finally the need to fly more to get your value for money (not a con, but costs more in the long term).

I've probably left out a lot, but that's my take on it.

If it were me, I'd buy/build a Europa/Ban-Bi - cheaper then the old technolgies, far more reliable, faster, fuel efficent, and best of all it's on a Permit. Even better, the a/c can be trailered, with no hangarage costs.

Confab

[Rupert S]

Can I just clarify at this point. I'm not considering hiring a club aircraft as an option. I'm considering buying an aircraft and hiring it out to two or three others to help justify the cost.

[Speedtape]

I think we all understood that (well I did at least):rolleyes:
Bear in mind that if you do decide to let others (with a non capital share) fly the aircraft and you charge them for it, it'll have to have a Transport C of A and be maintained and insured accordingly (expensive):) The CAA (and your insurance company no doubt) are taking extra interest in all the dodgy "cost sharing schemes" floating around at the moment:suspect: You have been warned:uhoh:

[IO540]

Speedtape

Can you provide more details of (or a reference for) the dodgy cost sharing schemes you are referring to? Such statements need to be supported.

As far as the CAA goes, one can freely rent out a Transport CofA G-reg. What one must not do is breach the ANO when it comes to aerial work. Renting itself isn't aerial work though; it's what people do with it, and whether any pilot exceeds the ANO exemption for maximum permitted compensation (PPL Cost Sharing).

Re insurance, with just a few pilots one can go for "named pilots" and provided all are suitably qualified, there is little of any increase in the premium over a single pilot. This also covers continuation training - it is expected that pilots will get such training and it is seen as improving safety anyway. With named pilots, the insurer will allow both a formal syndicate and an informal group who rent the plane from the owner.

With more than a few, and if anyone will be training for new licenses or ratings in it, one needs to go for "club use" which might cost some 50% more, IME.

I've done this; ask your broker for details.

Other issues are the Inland Revenue and Customs & Excise (the latter if one is claiming back any VAT). But they are nothing to do with the CAA. They affect how one does the invoicing, for example.

[Cessna 210 Heavy]

I let a good friend of mine fly the C210. He has lots of experience on 210’s and I completely trust him. He covers 95% of the hourly cost, running at a 5% lose is easy justification for keeping the aeroplane in use a few hours a month.

[Speedtape]

IO540

A word in my ear from a friend in the business ;) Apparently, the burgeoning increase in non equity schemes has prompted further investigation into the way such groups are funded and managed to make sure that they are in compliance with the ANO. I personally don't know what that entails, but you apparently, do.

[IO540]

Speedtape

Actually I really don't know what it might entail ;)

By "non equity group" do you mean an informal syndicate where somebody owns the plane, and others just rent it? That's 100% legal with a Transport CofA plane. That's what your local school does. Anybody can do it.

If somebody is doing it with a Private CofA plane that breaches the ANO - nothing new about that.

Even people who have the Private CofA plane in a limited company and have the company rent it to themselves and nobody else (the company invoices the pilot; a common arrangement, done for taxation clarity) are technically in breach.

What the CAA really hate is somebody doing stuff that needs an AOC - they get really good fees for those, and loads of pressure from AOC holders who have paid the money and are being undercut. But I've never heard of a relationship between this and renting out a plane for private flying.

It would be good to know what (if anything) the CAA are digging at here. It doesn't help anybody if a possible breach of the ANO, or a sudden enforcement of something that was previously not enforced, or even known to be illegal, is taking place.

It's like the Article 115 stuff; everybody quite reasonably thought it would never be enforced (because it wasn't), and then suddenly the CAA jumps on somebody, and in the court case it comes out the DfT have been issuing training permissions quite happily all along - but they didn't publicise it (probably intentionally) so everybody thought they wouldn't get one even if they applied.

Not a good way to run policy, especially with the ANO being such a mess.