Aircraft leaseback

[drauk]

Anybody have any experience of buying a "simple" four-seater (an AA5B for example) and then availing themselves on the leaseback option offered by some flying schools? The argument about letting people with only a dozen hours experience fly it solo aren't so relevant because this wouldn't be used by PPL students.

Leaseback seems like one way of getting the aircraft's utilization up to make owning a little cheaper. Renting doesn't really work for me because I want to fly an aircraft at short notice, take it away on multi-day trips and have a good avionics fit. Group ownership is a possibility though I've not been able to find one available locally in an IMC capable plane with few enough owners to allow me the kind of access I've listed. Owning outright with no leaseback is an option, but as I would be unlikely to reach even 100 hours a year which makes it a more expensive proposition per hour flown.

As an alternative to leaseback, how feasible is renting out privately, assuming the plane is on a public certificate?

[tacpot]

I've seen comments on PPRuNe that suggests that leaseback will not give you that access you want - clubs need a certain amount of predictability in their access to the a/c.

I'd suggest that it would be worth tracking down a complex a/c (VP or Retractable) that you can rent in your area - and fly it as often as you can - even if a C152 would do for a particular trip. Reasons?

1. You are more likely to be current when you want to take a trip at short notice,
2. You will a "good customer" for the owner, who will be more inclined to allow you to take the a/c away for longer,
3. You will be safer flying your 'regular' aircraft than you will flying a 'hot-ship' that you only use once in a while.
4. A complex a/c is likely to be more available as fewer pilots will have the qualifications to fly it, and the a/c will tend to be used for touring anyway, so your requirement for access to it will be more normal.

By the time checkouts are paid for, flying a complex ship all the time, is not likely to cost alot more than flying a simple one based on a small number of hours.

[Flyin'Dutch']

Hi Drauk

Dont have any experience with leaseback but suspect from what you state the way forward for your flying will be to go into a syndicate.

Aircraft of your choice
Good availability

There are however plenty of options to hire your mount out if you have a PT C of A machine. Quite a lot of owners have formed a group around their aircraft and give people access to it if they have no need for it themselves.

And many clubs and schools will be happy to manage the hiring out of your mount as long as you are willing to let them have a cut of the takings and make good arrangements.

If you set the enterprise up as a proper business you can even make a small profit or loss. Some of this could be advantageous.

HTH

FD

[poetpilot]

I own a C172 which I leae back to my local flying club. But primarily I do it for business rather than making it available to me whenever i want it.

If I want it, I have to book it like any other club member. What's more, to keep Her Majesty's Esteemed (spit) Tax Inspectors off my back, I insist on paying club rates for it so I cannot be accused of getting a benefit in kind.

I've heard horror stories about that (like demands for £25k on the basis of an a/c being available to fly for so many hours a year - nothing to do with actual hours flown by the owner).

It works out OK - the aircraft is only available to PPLs with over 100 hrs experience (not because its a complex type but because it keeps my insurance bill manageable). This means it's not getting hammered every hour of the day, and when I want to book it it's usually available at a few day's notice.

It doesnt make me a fortune but it does pay for itself & it helps the club.

[drauk]

Thanks PoetPilot; the information you gave is useful to me. Given that it has been suggested to me that company ownership of the aircraft is the way to go I found your comments about paying your club the standard rate very interesting. Does anybody else have experience of this?

I appreciate the other people's comments, but with respect to them, I've given quite a lot of thought to what type I want to fly and why other methods of doing so aren't quite right for me at the present time. And I'd consider joining a group or syndicate if only I could find one that had the right plane available to me in the right place. I'm not going to warrant owning the plane outright on my own, so it is either leaseback, renting it out privately or forming my own small group around it once I've bought it seem like the best bets.

I get a sense that people think leaseback is a bad idea, but I've searched pprune and found nothing about it. Hence my questions.

[poetpilot]

Hi Drauk

Just to give a few more details, my 172 is owned by my VAT registered, Ltd company. It's not the only thing my company does by the way.

When I rent it for my own use, I am effectively putting some personal money back in the company, so in the big scheme of things I do effectively get it at a reduced rate (though there is the element of double taxation mixed up in there somewhere).

However, if you really want some good use yourself, I would still seriously consider grouping your a/c. At least you know who is flying it - I have no say on who can fly it, and a100+ hrs pilot could still treat my aircraft badly (I have a clause though, that says if bad treatment is ongoing, then I reserve the right to withdraw the a/c immediately).

There's pros & cons - my particular arrangement suits me and my aims in terms of where my company is going in the long term. Doesn't necessarily mean it will suit you!

Good luck.

[drauk]

Given that some people like the idea of a limited company owning the plane to limit liability (though the value of this is questionable in my mind, since the directors could still be pursued) I guess there is a small danger of the plane "bringing down" your company. Anyway, in my case the plane could be owned by an offshoot of my main company if this mattered.

The other question mark in my mind is still over taxation. I guess I need to talk to an account who has specific experience of this kind of thing (mine doesn't). For example, if one could get the inland revenue to agree to only tax you on the benefit you actually receive (rather than the idea is always available to you and you could therefore fly it X,000 hours each year) then it shouldn't make any difference if you pay for it or not - after all you have to pay tax on the money that you use to pay for the rental, which would be the same as the tax you'd pay on the benefit. If you see what I mean...

Also, presumably one could legitimately fly X hours per year for free, because one needs to "check the plane", "check potentital renters", etc. as an operative of the company that owns the plane. Perhaps for other reasons too?

[QNH 1013]

There are certainly people around who put their aircraft onto a Public Transport C of A and then hire it out. I have benefited from two aircraft hired out in this way.
The advantage to them is that they get income to help with the fixed costs plus they get to choose who they let fly their aircraft.

The advantage to me is I get the same availability as a group aircraft (in practice availability is slightly better) so I can take it away for trips, often at short notice. Although I pay more per hour than I would in a group, I don't have to find the capital expenditure, which for a share in an airways-equiped fast tourer is beyond my current means.

You have to keep your eyes and ears open; these opportunities are rarely advertised.

[poetpilot]

Being in the IT consultancy trade, I have read and heard a lot about talking to the Inland Revenue recently.

I would recommend NOT talking to them - it's akin to laying all your cards on the table. And whatever one of them might say or agree, another one can still investigate you and come up with their own judgements later.

They are a particularly dogged and obtuse bunch (take it from me, I've even worked for them for a while!) and none that I know of understand the ins and outs of aircraft operation. They also (generic view I know, and bigoted but there you go...) seem to envious of any self-employed person's success. Profit & growth seem to equate with dishonesty to them. This extends to the politicians who supposedly control them, who have placed some amazingly illogical and unworkable taxation policies in the last few years (known in the trade as "IR35").

You may be totally in the right legally and company operation-wise, but may still incur vast expense defending your position against their attentions. Best not to attract their attention in the first place (and I don't mean by doing anything illegal - I mean by trading totally straight and down the line, in accordance with UK legislation and accountant's help and advice),

The best I can suggest is that you (a) indeed talk to your accountant (maybe find one first that understands GA operations)and (b) hold as much supporting paperwork for both business and private use as you can, and if you want to be really pedantic but well covered, keep a diary of what you did and what the weather was every day.

I keep invoices for personal aircraft hire, but when I first bought the aircraft, I did about 10 hours ferrying around to get bits done on it for the public cat. I'm claiming those as legit flying expenses. But when I used it for a w/e trip to Wales with my wife, I invoiced myself and paid a hire amount to the company.

Believe me, the IR have tried to get people for the sheer availability of their aircraft over a tax year (eg "your areroplane was there for 365 days a year, with xxx hours of daylight, therefore you had potential use of it for xxxxx hrs, therefore, you owe us £yyy at an hourly benefit rate of £nn").

What really pXsses me off is the hordes of people who live in the black economy, claim benefits and grants but are never pursued by the IR or Govt because it's seen as politically incorrect to do so. My wife went on an IT training course last year - we paid £600 for it because I was earning so she wasn't eligible for a grant. No-one else in the class had to pay - they were all on benefits, and from what was said (by them), the majority were only doing the course so they could get their kids minded at nurseries and continue to claim benefit. Most of them were dripping with jewellery and had boyfriends who (of course) didnt live with them but seemed to be very cash rich.

But there - I'm just a old bigot and should be shot at dawn for daring to question the way this country runs. Rant mode off...