The Economics of Ownership

[iankain]

1. Does anyone know of any detailed information that is in the public domain and which would give me an oveview of the economics of small plane ownership - ie. PA28, Robin, etc. ?

2. I'm puzzled why so many people seem to be going overseas to build hours when so many planes are sitting idle in hangars just waiting to be used. Surely, if I was to buy a plane and hire it out for a minimal rate then this would stem the exodus and help people achieve their goals at the same time. Or, am I missing something here?

If you have any thoughts on either of these two points, I would really like to hear from you.

Cheers,

:confused:

[iankain]

Sorry, I meant to write "how come the people who let their planes sit idle in a hangar don't hire them out to hours builders..."

[Chilli Monster]

ian

Aircraft ownership can be likened to owning a cherished car (or any other item) - you lavish love and attention on it and wouldn't let just anybody drive.

I'm in a syndicate of 5, we all get on well, we've all got quite a few hours and we know the aeroplane. If we were to let an outsider in to fly it on a fee paying basis and he caused damage then we would lose the use of it through somebody else's misfortune. If someone in the group does it then fine, that contingency is covered in the group rules. But if an hours builder did it we'd be left to sort out the problem whilst they went onto the next 'victim'.

So - that's the reason why. Anyone wants to hours build, then rent or buy themselves. No ham fisted newbie is getting their hands on my pride and joy ;)

That's the personal view, now the practicality view. In the UK to do the above the aircraft would have to be on a Public Transport CofA, with the commensurate cost of the additional maintenance. Also the insurance costs would possibly be higher.

Let's be honest - the vast majority of aircraft owners or part owners don't have to or want to rent out their aircraft, because they've got it for their enjoyment, not to make money out of it - let's face it if you can afford to own or part own you don't need any supplemental useage and income.

CM

[I have control]

Generally, flying for fun is an affair of the heart not of accounts and cost-benefit-analysis.

That being said there was a good article in the last-but-one Popular Flying from a guy with a Jodel who had kept a very detailed record of his expenses over about 3 years.

Group ownership is an excellent way to go in my opinion, for affordability & often keeping the thing flying a decent number of hours a year. Also variety. I think I'd rather have shares in 3 different types of plane than own a single one.

[Monocock]

I subscribe entirely to Chilli Monsters point.

The planes might be sat idle in the hangars but the majority of a/c owners would rather have that situation when they are busy doing other things than worrying about a stranger bashing around the countryside "hours building".

When you own a plane you make every endeavour to look after it as not only do you rely on it to keep you in the air, you also try to minimise those annual and six monthly bills.

Once a "hirer" has finished with a plane is he going to clean the bugs off, leave it as tidy as the owner would inside, fill it with fuel, check for any signs of leaks etc etc?

I doubt it.

I know a person who was recently approached by an hours builder who wanted to rack up some hours in his Saratoga. The a/c owner took the request almost as an insult and politely explained that £500 per hour would just about be enough to stop him worrying himself sick when he knew that his plane was in the air with someone else at the controls.

[BRL]

It would be like hiring a car i suppose, and we all know how hire cars get thrashed......... Point being is there are people out there who would treat the plane like there own and there are people who wouldn't be bothered a bit about how they treat it as 'not mine' if you get what i mean.

[A and C]

The economics are you must fly about 80 hours a year to break even over club prices but this is only good if the aircraft is well looked after by the pilots who fly it and this is why I wont rent out my personal aircraft.

To make renting an economic proposition the aircraft has to fly at least 200 hours a year , if you can get the hours up around 300-400 then the cost per hour starts to fall fast and this is what i aim for with the aircraft i rent.

[Flyin'Dutch']

Hi A en C,

What aircraft do you own. Interested to see you maths and compare them to the ones I did when setting up my syndicate on the Robin.

[QNH 1013]

The answer to your question is that there are people who let others fly their aircraft and in some cases it is to get the hours up and therefore help with the cost of ownership. To rent the aircraft out for hire it has to be on a public transport C of A and not on a private C of A.
I hire a very nice 4-seater from a lady who charges about the same as club rates, but it is a much nicer aircraft, and you can take it away for the weekend without paying any minimum hours (so long as she doesn't want it herself of course).
I also feel very honoured to have been added to the insurance policies of a couple of friends who own aircraft. However, I think I worry more than they do about returning the aircraft in pristine condition.

[foxmoth]

A & C
If you are breaking even on 80 hrs pa you are doing AMAZINGLY well, I have worked it out before and reconed 200 - 300 hrs is nearer the mark if you include things such as depreciation and engine replacement costs.
Add up your Fixed costs:- depreciation, insurance, parking, hangarage, and fixed maintainance, divide by your expected hours and you will arrive a your FIXED operating costs, for something like a PA28 I would be surprised if this was less than £5000pa, which on 80 hrs pa = about £80/hr, then add in your D.O.C.s (Direct Operating Costs) :- engine replacement costs on schedule, fuel, oil, maintainance (if you go above 50hrs) and you are getting to about £120/hr and have allowed NOTHING for any additional maintainance snags. (I can hire a pa28 for £85/hr)
You can of course reduce this if you have a freindly farmer who will lend you a field, but I still think 80 hrs would work out far to low to break even.
nb. if you are getting reasonable utilisation it is now not much more expensive to operate on public transport than on private.

[A and C]

The robin that i run i think breaks even because i would not be able to hire a club robin as well equiped and so would have to hire something more expencive to have a genuine airways equiped aircraft.

It is also an engineers toy so the maintenance costs are low.
Keeping control of your costs is what it is all about this is why i can rent out a Cessna 152 at £48/hr wet make money as long as the thing flys over 300 hours a year.

[foxmoth]

A & C,
Still think you are doing amazingly well, and this could not be achieved by most people with normal engineering costs. Where do you keep your aircraft? I think this would also put costs up above your figures for many.
N.B. the Pa28- 161 I hire is also Airways equiped (not at present though as the DME is out for repair)

[Final 3 Greens]

We run a Pup 100 with a mixed group of weekend flyers and hours buliders.

We maintain her well and try to keep utilisation up.

Bottom line, £2.5K for 1/8 share, £50 pcm and £40 per hour wet - not bad value if you intend to fly many hours.

We have a share available presently, but to say anymore would be bad form. Anyone is welcome to mail if they'd like more info.

F3G

[Keef]

You can be lucky, and you can be unlucky. We run an Arrow III for six group members at £100 a month and £50 an hour, plus the engine accrual. Engine accrual is high because we only started doing it at 1600 hours.

In a good year, I don't have to ask the group members for any more money. In a bad year, it can be £2,500 a person. That was for two new pots and a new prop, which we hope won't happen again for a few years.

Average use is 200 hours a year for the total group, which makes the all-up cost with no surprises very close to £100 an hour.

Add in the "surprises" and you're at £125 an hour, which is about what you'll pay to hire an Arrow III at a club round here. But ours is a much nicer Arrow III.

Of course, if you fly another hour, it only costs you £50 (plus engine acc) because the fixed charges don't go up.

Unless someone's keeping proper books (as I do for our group) it's easy to kid yourself that your flying is a lot cheaper than it really is...

An old friend of mine at work reckoned he flew his Auster for £30 an hour - till I asked him some questions. We ended up at something like £120 an hour. He didn't fly many hours.

It's fine for those who want to kid themselves, I suppose, but misleading for folks contemplating ownership or forming a group and concerned about the real costs.

[A and C]

I keep control of my engineering costs because i do almost all of the maintenance myself on the robin and is not costed as it is my toy but the Cessna maintenance is costed at £30/hr as this is the going rate in the south ,its the high usage that keeps the costs down on this aircraft.

[foxmoth]

Where is the Cessna based? I (and probably others reading this) may be interested in helping you keep up the utilisation at this price! - If you have room for more people flying it.;)

[foghorn]

I fly in a group of six with an airways equipped FM immune 180hp Grumman AA5B Tiger.

With the fixed costs factored in* I pay about £75-80ph wet (obviously depends on utilisation), compared to £129.25ph + £12pm 'membership' ** to hire one from Cabair at my home field, Biggin Hill.

Add into that the convenience of being able to take the aircraft away for long periods of time, good availability, plus the fact that the aircraft is much nicer inside and does not get bashed around by students, it makes ownership an easy choice - the best move IMHO.

There's a share available at £8,500 if anyone's interested - e-mail me for more info (sorry for the blatant plug!)

cheers!
foggy.

*(£50ph wet, £120pm fixed, based on ~50 hours per year, hourly rate includes very generous engine and maintenance fund to help smooth out any surprises)

** this does not have any associated costs of Cabair's (and other clubs') currency requirements factored in.

[A and C]

I have had a telling off in the past from the moderators for posts that are to near to being adverts in the opinion of the pprune management and so as I wish to stay on the right side of the managment so I wont say more on this forum but feel free to e mail me.

[FlyingForFun]

Another way of reducing the cost is to fly something a little different.

I'm always amazed at the prices of some single seaters. I've seen a few shares for sale (none recently, but then I haven't been looking at For Sale boards recently) for under a thousand pounds, with monthly fixed costs of around £10, and around £10/hour wet to fly.

If you don't want a single-seater, it's still worth looking at PFA aircraft, which are often cheaper to run due to reduced cost of being able to maintain them yourself, and better fuel economy due to more "interesting" designs. My 2-seat Europa, for example, cost me £6500 for a 1/6th share. I pay £50/month, and £15/hour dry, which works out at around £22/hour wet at 100kts cruise (10 litres of MoGas per hour) or £25/hour at 125kts (15 litres per hour). Compared to the price I was paying to rent a Super Cub before, that's a bargain!

FFF
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[Rob_L]

Cost is not the only issue, not many groups will let you have the aircraft for a 2 week jaunt to Spain or similar. Same applies to rented aircraft. If they will allow it minimum numbers of hours apply. A friend of mine just took his aircraft to Spain for six weeks, try that with a rental.

[A and C]

you are quite right most groups would not let you take the aircraft away for too long afterall you have to let the other group members fly the thing.

As for rental aircraft the way that I keep the cost per hour down is to keep the flying hours high and so spread the fixed costs (hangarage ,insurance,annual maintenance) over as meny flying hours as possable.

The fact is that one of the reasons that flying in northern europe is expencive is that we dont do enough flying.

[Who has control?]

And the reason we don't do enough flying is...because its so expensive.


OK, the weather has a lot to do with it, but when its CAVOK, most of us would like to fly for twice as long as we can afford.

Its a vicious circle.

[Rob_L]

Somewhere there is probably a break even figure. I remember that for a turbine helicopter (corporate use) they reckoned that unless you flew more than 600 hours a year it was cheaper to rent.

[Rob_L]

One of the major costs is maintenance, would it be cheaper if private cat light aircraft were maintained under the PFA scheme or similar? We always hear about public safety but how much of a risk are light aeroplanes to the general public? In the 30 years up to 1999 (UK only) two members of the public were killed in off airfield accidents when a light aircraft hit a boat. In effect the risk from all causes has been negligable. Surely an attempt could be made to reduce the maintenance burden without increasing the risk to the public.

[foxmoth]

Why so expensive?
A lot is to do with CAA approval for parts, many years ago a friend of mine had a Pup150, brake pads cost £60. These were EXACTLY the same pads as fitted to a Jaguar car, even down to the box and part no. only difference the CAA stamp and the price - £6 (as I said, many years ago). with parts costing x 10 what they should do it is no wonder maintainance is so expensive! :( :rolleyes: :eek:

[Hairyplane]

I operate a year old Robin and shudder to think what my 200 hours a year costs me. However, I would shudder even more at the thought of anybody else flying it on a hire basis.

Whilst several people fly it, it invariably costs them nothing or just the fuel.

200 hours later, the aircraft is still in brand new condition. Not a single scratch on the perspex etc.

Operating an aircraft exclusively does indeed carry with it an expensicve feelgood factor.

However, I know that in 4 years time, based on the prices of Robins over the past 30 years, I am very likely to get what I paid for it. So, whilst depreciating now, the curve is already starting to level off.

Additionaly, the maintenance costs of a new aircraft are not only low, you can invariably obtain firm quotations for the work. THe first year or more is covered under warranty anyway so no nasty surprises there either.

Owning a brand new Robin Regent is tremendous. I know that when I take the covers off I will see what I did when I put it to bed. That is worth money too.

No pockets in a shroud - some staggeringly good finance deals around - I have a baloon payment at the end and manageable payments now. I can easily refinance in 4 years if I want.

Now, operating my 3 old planes is another story entirely. Sense of humour definately required!

[englishal]

Another avenue is to import yourself an N-Reg. Because they are on the N-reg, they are not subject to the same maintenance requirements and inspections as a G-reg. For example, the CoA of an N reg aircraft is valid indefinitely; there are no 50 / 100 hr checks due unless it is going to be used for flight tuition.
Annual inspections can be carried out in this country, and I know of at least 1 organisation which can undertake FAA maintenance, and can also keep your aircraft on the N register for around £300 / year. Under the FAA regs you can carry out more basic maintenance yourself, and IFR requirements are easier and cheaper....

Oh and if you buy the aircraft yourself in the US, you'll get a better deal on it, and if you're prepared to fly it back yourself, you'll have an excellent trip.

Of course you have to fly it on an FAA licence, but this is not really a problem.

Rgds
EA
:)

[A and C]

On the whole the mantenance costs of an american registered aircraft are the same in the UK as with a british one.

The FAA expect you to maintain the aircraft to the makers maintenance schedule and so dependant on type 50 or 100 hour checks are required ,the price of parts is no diferent if you are buying from a reputable sorce and these parts will have a FAA form 8130-3 with them you can of course fit "yellow tagged" parts but the sorce of these is not allways the most reputable (but its only your life that hangs on them).

The CAA Cof A renewal costs are about the same as the cost of running an american trust company so this offers no real money saving.

The place that the american register will save you a lot of money is if you want to do an IR and I suspect that it is the JAA licence requirments that are driving most people to paint "N" on the side of there aircraft.

[englishal]

I'm not saying that dodgey parts be fitted, I wouldn't like to fly in a badly maintained aircraft..:) There are organisations out there which will put your aircraft under an American trust company for as little as £350 per year, which I would suspect is still cheaper than a CAA CofA every 3 years.

You're right in saying that most people will want to be on the N register to take advantage of the FAA licencing benefits.

If I were going to buy (or when) an aeroplane in the US, I would buy one close to major overhaul time, get the aircraft overhauled in the US, new / reconditioned engines fitted, new avionics stack and then bring it home.....With the "£ for $ exchange" rate this would save some serious money.........

Cheers
EA;)

[A and C]

What you have is quite a good plan but i would get yourself an american rep to keep an eye on the project as people are a bit more carefull if they think that the new owner of an aircraft living in the next town and not the other side of the atlantic.

as for yellow tagged parts the quality seems to vary remarkably depending on the company involved and i would be very carefull about fitting them if i did not know the reputation of the supplyer however fitting them to an american aircraft is perfectly leagal but may prove expencive in the long run.

[Rob_L]

Remember you get what you pay for, not that many years ago a UK company imported a fully overhauled Hiller UH12E from the USA at a very good price. For UK C of A an internal main tranmission inspection was mandated. It failed, it was then realised that all the other components on the aircraft had been overhauled by the same outfit including the engine. The whole lot had to be re-overhauled. For cheap read v expensive.

[englishal]

For UK C of A an internal main tranmission inspection was mandated

Although you do not need a UK CofA on an N registered aircraft.

Its up to the owner or prospective buyer to ensure they get any work carried out by a reputable company, and all I can say is its tough luck if you decide to go with the cheapest, without seeking any advice or third party inspections....

Cheers
EA:)

[nonradio]

Example: small classic american 2 seater 50 + years old
insurance - about £750 p.a.
Annual inspection/ permit renewal/ PFA membership - £225
Oil - 50p per hour
Petrol - £15 per hour
Labour for maintenance/rectification - £0
Loan over 7 years to buy about £200 a month (it's all mine now)
cost to buy £13500

It IS affordable. I have no idea what the hourly rate is; on a purely marginal basis I can fly for an hour in a delightful classic aeroplane for less than £20. And if somebody else comes along then it's a tenner or less for me, sharing costs!

Why is the "true" hourly rate irrelevant? Because I honestly don't feel it in the wallet - if something breaks then the 50 quid or whatever comes out of the 'housekeeping' and I fix it. I simply couldn't afford to go flying at club rates as much as I do now. If I look out of the window and the sun is shining I can go flying, it's as simple as that......

OK I haven't been completely honest because I pay nothing for hangarage (it lives outside) or the use of a grass airstrip (the farmer flies it - not very often - free of charge but puts his own petrol and oil in)

[Rob_L]

UK hangarage could be £1200, insurance following Sept11 for a 150/152 another £1200 per annum.