Cost of light aircraft ownership

[Busbo]

Before someone says so, I have done a search and the only threads I could find on this topic are years old so no doubt somewhat out of date.

I am looking into starting a no-equity flying scheme in Scotland and trying to crunch some numbers. Does anyone have any experience of such a thing? Just some ball-park figures for yearly costs for the ownership of light aircraft would be a great start.

I'm possibly looking at a small twin seater for hour-builders and maybe a four seater (C172, PA28 or Cirrus type) for the leisure user.

Any info and guidance would be much appreciated.

[flybymike]

It is a big question with many answers. Hangarage alone at Leeds Bradford is £7000pa, this, insurance and the annual inspection take up the majority of cost and that is before landing fees or anything going wrong with the aeroplane which may be expensive to fix (eg new engine) Certified aircraft will generally cost more to maintain than permit aircraft and LSA types significantly less still. Just to depress you, we reckon on expending about £20,000pa to run a 6 seater single out of a large airport and we do not clock up many hours either. A small LSA or permit aircraft based on a grass strip will be a fraction of this amount.

[Stephen Furner]

A good starting point is Dave Williams page this gives the costs of operating G-BSEP a Cessna 172.

Aircraft group ownership costs - David Williams flying homepage (http://www.dmjwilliams.co.uk/flying-costs.htm)

To this I would add at least £2k to cover the cost of engineer’s inspection reports on several aircraft. When you view an aircraft be prepared to walk away if you have any doubts; particularly, if you are looking at the budget end of the market.

Issues I would recommend having thought through in advance are how you are going to maintain the aircraft and where you are going to keep it. There may be some constraints or tradeoffs here. For example if you don’t have a hanger to keep your machine in then a spam can is typically going to be a better option than a rag and tube.

Talk to a few people who operate the specific model of aircraft you are interested in and build a simple financial model around your fixed and variable costs. Most people I’ve spoken to work out their cost of ownership based around the number of hours the aircraft will be used. Typically as you increase hours flown the cost per hour will drop. There will be a point at which the number of hours flown causes the cost per hour to drop below that of hiring from you local club. This tends to be what people are attempting to achieve for the aircraft they purchase for themselves or a group.

[Kiltie]

Replace my own guessed costs (C172) with your own local researched ones:

Fixed costs pa whether the aircraft flies or not:

Hangarage £1500
Insurance £2000
Annual check £2000
Radio Licence £20
Unforseen contingency £500
....split this lot as a monthly subscription by all your members


Hourly Costs incurred only when the aircraft flies:

Fuel 36L per hr £53
Oil £2 - it may not use that much though
Engine replacement fund (if 2000 hrs left) £7
Home base landing fee £10
50 hour check (or 6 months if you don't reach 50hrs) £7
.... to be paid by each individual when he/she flies

Remember you cannot "hire" your aircraft legally if the engine has exceeded 12 (?) years of age; if run privately it can run indefinitely to TBO on inspection of condition.

Please don't shoot me down with cries of how much less your own C172s cost to run; some are more predictable than others!

[411A]

Hourly costs, all in, for approximately 100 flying hours per year, type aircraft CE411A, $263/hr.

[Unusual Attitude]

Dont know the breakdown of costs but our C172 group has a wet rate of £55 per hr and a monthly of £60 between 12 members, you pay your own landing fees.

The group has been running for about 15 year and always has a good level of funds based on the above.

[Justiciar]

There are a limited number of ways to legally run a no equity group. The easiest is to run the aircraft through a company with the members of the group owning at least a 5% share of the company capital. The structure of a friendly society is often used for this as they are not permitted to distribute their capital to members on a winding up. In other words, ownership of a share is notional but enough to comply with the ANO, which would otherwise mean that the cost share would count as aerial work. The only other way is to have the aircraft on a public C of A, ie maintained to a pulic transport level as opposed to a private level.

[Unusual Attitude]

On the 5% thing, I actually know of one group based around the 20 shares (5% each) basis but when they sell you a share at £1000, your share value is £1 and the £999 difference is a non-refundable joining fee.

Not quite so sure of the legality of that however....lets just say that the group model relies on a high turnaround of members paying the non-refundable £999 to keep the finances workable and tends to have a lot of 'in-fighting'....

[waldopepper42]

Think of what you can afford.

Double it.

:sad:

[hatzflyer]

" a small twin seater"
Evans VP2.... £2000 LAA Permit aircraft
Rocket 2......£150000 " " " " " "

How long is a piece of string?

[Justiciar]

On the 5% thing, I actually know of one group based around the 20 shares (5% each) basis but when they sell you a share at £1000, your share value is £1 and the £999 difference is a non-refundable joining fee.

Not quite so sure of the legality of that however....

Perfectly possible legally, though usually the seller would dispose of his share on the open market as a company does not normally buy its own shares - there are quite detailed rules about when it can do so.

[Brooklands]

Think of what you can afford.

Double it.

Then put a nought on the end :}

Brooklands

[IO540]

and even then it is worth every penny :)

1) Maintenance to YOUR standards
2) Knowledge nobody else has pranged it and didn't own up
3) No group disputes
4) Total access
5) Ability to do long flying-away holidays on which the airborne time is just some hours
6) No need to worry about dodgy engine management by others (cracked cylinders discovered years after X has left the group)
7) No need to worry about forged flight times
8) No need to accept the cheapest quote for a job (which may come from a crap company)
etc
etc
etc

That said, a small syndicate has to be the best compromise between cost and the benefits, but you do have to choose the members carefully. And it's not that easy to do due diligence if you are joining an existing syndicate because they are not going to reveal past disputes over e.g. fixing some bit of avionics which some regards as unnecessary.

[gasax]

IO has some good points, but they apply more to ownership and small groups. Your plan of 'non-equity' shares and tiime builders captures the least caring and most cost driven part of the market.

So they will not look after it, they might 'flog' the log, they certainly will not operate the engine so it reaches tbo, clean it, worry if it gets scuffed about...

So the sort of costs people are giving you can be factored up by almost any amount. The group I was in many years ago had 2 'time builders' out of 20 members. Virtually every dispute and every technical glitch came as a direct result of them.

Bluntly it was not worth the blood pressure so we gave them the money for their shares and chucked them out - peace and tranquility returned...

From having to ask these questions you obviously do not have the experience of running an aircraft - that can be difficult enough, adding in 19 others who in most cases will not give a damn? A mugs game I'm afraid.

[IO540]

Your plan of 'non-equity' shares and tiime builders captures the least caring and most cost driven part of the market.I agree. IMHO this can be made to work only with a piece of wreckage. The non-equity groups around the nice Cirrus SR22s probably make it work by selling the hour-blocks for £loads, but they won't be attractive to hour builders.

[Human Factor]

Roughly (very!!) speaking:

If you fly up to 20 hours per year, hire.

Over 20 hours per year, syndicate.

Into the hundreds per year and ownership starts to make more sense.

[JW411]

I have a PA28 which is on a Public Transport C of A. My fixed costs are between £11000 and £12000 per annum.

[VictorGolf]

I own a Glos-Airtourer (low-wing 2-seater on a UK CAA Cof A) and it has cost me an average of £110 per hour for about 35-40 hours per annum over the last 6 years. Everything included, except cost of capital as it only cost me £5,500 23 years ago and I reckon I might get that back and a bit more. It's kept in a hangar on a grass strip and I use Joint Aviation for their Power by the Hour insurance. The main value is that it's always there when I want it.

[Justiciar]

I have a PA28 which is on a Public Transport C of A. My fixed costs are between £11000 and £12000 per annum.

I was treasurer of a PA28 group for several years and I have to say that our fixed costs were nothing like that! It was on a private C of A, but even so ....

I would be interested in a rough breakdown.

[Dr John Watson]

For what it's worth

PA28-140 Cherokee run as non commercial

Hangarage per year £1500
Insurance (1 Passenger) £ 734
Annual (estimate ) £2300

Full at cost.

Operate from a small grass strip as it's all a 140 needs.

[jezbowman]

Roughly (very!!) speaking:

If you fly up to 20 hours per year, hire.

Over 20 hours per year, syndicate.

Into the hundreds per year and ownership starts to make more sense.

Just to contrast that - I can justify the move to syndicate after just 8 hours per year. I.e. £100/hr for C152 hire or £40/mth £40/hr in our Jodel 1050 syndicate. The latter takes more time - i.e. maintainance, cleaning, etc but that's part of the fun in my mind.

[Justiciar]

that's part of the fun in my mind.

Hit the nail on the head :ok: You want to save money: don't take up flying. I love being involved in my Group; to think that the lovely Chipmunk sitting on the grass in the afternoon sun is mine (well ours, actually). We are particularly lucky in that we have no monthly, no capital contribution and just an annual membership fee :E But, even with a monthly charge it would be worth it. It is all a balance, but you can't value to pride of ownership. It is a world away from negotiating the huge hourly rental on a 40 year old spam can.

[Lister Noble]

That local club Chipmunk is good value,I was sorely tempted and still may be,but the L4 Cub beats it hands down for cost per hour.
Lister;)

[IO540]

You want to save money: don't take up flying

You want to save money: don't take up anything at all. You are certain to die rich :) And if you keep your trousers zipped up for good measure, you will die even richer :)

But it would be a very uninteresting life.

[hatzflyer]

Justicair, will be at Tibenham all weekend with the jodel. John

[JW411]

Justiciar:

Breakdown as follows:

Last CofA - £4600, Insurance - £3500, Parking - £1825, Last two 50-hour checks - £1800. That adds up to £11,725.

[IO540]

That's quite a lot but perhaps it reflects an older airframe. I know of a C150 which costs £7000 for the Annual.

On my 2002 N-reg TB20 I pay

Annual £2800 + VAT (I think that is really pricey; I know I am paying the G-reg, Part-M, rate... but the firm is organised and gets it done in 3 days.

Insurance £2500

Hangarage £5000 + VAT

50hr checks cost me:

£60 oil
£12 oil filter
Half a day's labour
A few other bits

Mind you, I haven't told you about Lyco's famous SB569A :yuk:

[JW411]

But the other side of the equation to be offset on the balance sheet is the lease income that I receive by dint of having the aircraft on a "Public Transport C of A". (That figure, however, is between me, my accountant and HMRC).

The fact that the aircraft is on an EASA ARC also makes it more saleable when the time comes (I hope)!

[dont overfil]

My 20 year old Archer cost £8000 per year doing 300+ hours/year with a flying club. No hangerage fees.
That was 10 years ago.
DO.

[Busbo]

Thanks everyone for their advice.

I'm looking at what aircraft type to use for the business and that all depends on the market here. I'm considering basing the aircraft somewhere around Edinburgh/Perth.

Other similar non-equity schemes south of the border use seem to use various cirrus models which despite their significant hourly cost work out economically to get places due to their speed. However if the core market here is the "sight-seeing with family and friends" type of pilot then although nice the cirrus isn't really ideal for and a trusty 172 would probably fit the bill.

There is of course the hour-builder market which I would imagine exists everywhere. I have however been told to be cautious of such pilots due to their inexperience, lack of care and tendency to incorrectly record hours!

If anyone has any views I'd be keen to hear them.

Also, does anyone know if its possible to find out numbers of flying license holders in a particular area?

[IO540]

I used to rent out a good quality IFR tourer (TB20) a few years ago. I've written about it here already 1-2 years ago but here's a few details:

Hard to find quality customers. Most good pilots are not renters; they are owners or part-owners already. Some renters are good but the % with scary attitudes to flying and life generally makes one's hair stand on end sometimes, and frustrates running a business around anything better than a piece of wreckage. This is why so many businesses have tough currency rules (which so many people moan about on pilot forums :) ).

This in turn makes it hard to find enough customers. If you are a pilot yourself and fly the said aircraft, this can result in you being a substantial (or the biggest) customer of the business, and this will attract HMRC attention. The tax inspectors are nowadays cynical crooks who are attracted to anything involving boats, planes, horses, prostitution, etc. (i.e. any business known for cash practices or more particularly known for instances where the proprietor gets a personal benefit from the business) knowing that any successful businessman will pay them off with a cheque regardless of any justice issues. This makes easy picking for an inspector wishing to maximise his promotion prospects.

I don't think it is possible to do this with good quality hardware unless one commits people big-time, by the purchase of hour blocks like the Cirrus businesses do.

Of course it can be done around wreckage - that is how most of the self fly hire business works. If you can eliminate the depreciation, life is a lot easier :) In this case, the way to minimise costs is to run a fleet of several identical planes which can be maintained together with parts bought together, mail order from the USA whenever possible, and the ultimate recipe is for the proprietor to be a CAA LAME who can do the maintenance :) I see several businesses doing exactly this and they all seem to do well. Around well maintained, very simple, very simply equipped in avionics terms, old wreckage...

[Justiciar]

JW411 That does seem very expensive even allowing for the public transport element of the C of A. Our last insurance, based on a hull value of £22k was around £1600! The other figures also generally look high, but then it is a function of usage.

Lister: Your would be welcome any time. The Cub was great but you can't turn it upside down:ok:

Hatzflyer: Sorry we keep missing each other. I have been away in the caravan over the weekend so unavailable for flying in this glorious weather :( My next couple of weekends are similarly spoken for. Perhaps we could meet one evening? I will buy the beer :E - after the flying of course;)

[princepilot]

Hi,

How would a microlight compare to this , if it was stored in your own hangar in your own land?

[Justiciar]

How would a microlight compare to this

The biggest single fixed cost is insurance after hangerage, so if you can take that out of the equation you are looking at cheap flying. I imagine microlights are similar to Permit aircraft, i.e. £300 to £400 a year for permit renewal, and say £100 (err on side of caution) for 25 hour oil change, etc. Insurance is the one you need to get a couple of quotes on; much of the premium is dictated by hull value.

[princepilot]

So say insurance was £750 and the yearly maintenance was say £250 thats only £1000

Add in say £10 per hour engine fund and the wet rate could be as low as £30 per hour (based on say 15lph fuel burn) with a £1000 fixed cost per year

Say you flew 6hrs a month , thats 72hrs at £30 which is £2160 +£1000 direct costs , with a total of £3160 equivalent to just over £60 per week costs. Man my wife could blow that on shoes , i will have to chop her feet off!


Now that is what i call cheap flying along with three axis microlights today are very advanced and in some ways better than the c152's of the sky.

Matt


Now thats what i call cheap flying!

[g21agoose]

The tax inspectors are nowadays cynical crooks who are attracted to anything involving boats, planes, horses, prostitution,Boats, planes, horses and prostitution....................aahh.... my retirement plans..................

[Justiciar]

Now that is what i call cheap flying

Many people have come to the same conclusion of late, which is why you are seeing a lot of old iron advertised at significantly less than two years ago. I think people have had enough of expensive over regulated C of A aeroplanes.

I recently did some number crunching using a cheap single seater permit aircraft as a model and the figures for 40 hours a year come out at less than £50 per hours all in (including a quote of £350 for insurance :D). In the expensive south east they will be higher, but up in sunny flat East Anglia they are achievable :ok:

[Big Pistons Forever]

Busbo

It would be helpfull to understand your motivation for structuring this venture as a no equity group? Is it to make a profit, or subsidise your own flying ?
A fellow at my home airport tried this with a C 150 a few years ago. It was a complete disaster as most of the guys flying it were one of two types

1) Complete F**** ups who had been severly restricted or in one case, even banned by the 2 schools on the field, or

2) Young time builders who wanted the cheapest possible flying and cut every corner.

The result was 8 months into the venture at the airplanes first annual inspection the aircraft was declared "not economically repairable" due to nose wheel and firewall damage from probable multiple heavy landings, a wind damaged rudder, and all 4 cylinders U/S due to severe overheating due to probable frequent and massive over leaning, and a basically destroyed interior.

The cheapest way to fly for most pilots is to rent. The best way to fly is in your own airplane. The best compromise between the two IMHO is a equity group of around 4 partners. This is small enough that you have good availabilty and lower possibilty of interpilot strife and yet fixed cost are spread around enough to achieve real savings.

[Busbo]

Big Pistons,

Thanks for your reply. In answer to your question my motivation is to make a profitable business out of it, hopefully building a collection of aeroplanes at various locations.

I first thought of the basic idea whereby people paid a lump sum at the start of the year and bought a set number of hours with nothing else to pay. However I quickly found out that similar schemes are already being run in the south of England but their members pay on a monthly basis which seemed much more sensible considering one of the main advantages overgroup ownership is not needing a lump sum up-front. That combined with the set-fees and nothing more.

I've been trying to figure out what, if any, market exists in my area. Your comment is not the first I've had along those lines and while I had first thought a cheap bit of wreckage for hour-builders might be a great way to get the business started I'm starting to change my mind. Perhaps the more expensive "IFR tourer" might be the way to go. Hopefully that would put off virtually all hour-builders and get pilots of a slightly higher caliber. However I do realise that a pilot's ability isn't necessarily proportional to his wallet size.

I was hoping I wouldn't need to go down that road as that's obviously a much more pricey set-up but then again it would set me apart from the schools up here operating and hiring the usual 172s and PA28s.

[Justiciar]

In answer to your question my motivation is to make a profitable business out of it

The old joke about "how do you make a small fortune in aviation?" comes to mind: start with a large fortune and buy an aircraft :{

Presumably you have carried out some in depth research into the market for what you want to do. Certainly you will want to do this before spending a penny on an aircraft. My feeling is, certainly in the area where I live, that the market for an IFR tourer is very small indeed. I can think of very few people who tour long distances IFR (or VFR for that matter) and those that do tend to be owners already, as IO540 pointed out a while ago. Those that do tour and who don't have their own aircraft may go for say a week to ten days a year, which when you apply this across the very small market means that you risk the aircraft spending most of its time in the hanger. There are a number of IFR type aircraft in my area for sale either out right or for shares which have been on the market a very long time, including a PA28 180 and a couple of Arrows. I would suggest doing a trawl through adverts to see what is already available in your area and for how long it has been on the market. That shoudl give you some guide as to what interest there is in the type of set up you are proposing.