Group Flying - cost model
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Group Flying - cost model
Hi All,
Does anyone have a good model for producing realisitc monthly and hourly rates for a group sharing an aircraft such as a C172?
The way we have always done it no longer seems to work, and I'm wondering how other people apportion the fixed and variable costs, before coming to the magic figures of £xx per month and £xx per hour, wet.
Any advice would be greatly appreciated.
DW
Does anyone have a good model for producing realisitc monthly and hourly rates for a group sharing an aircraft such as a C172?
The way we have always done it no longer seems to work, and I'm wondering how other people apportion the fixed and variable costs, before coming to the magic figures of £xx per month and £xx per hour, wet.
Any advice would be greatly appreciated.
DW
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My simple thoughts follow:
I start from the proposition that Fixed costs are what it would cost you to have a legal aircraft in the hangar, even if it was never flown. That figure is then divided by the number of Group members and again by 12 for individual monthly rate. Groups I've been in will round this up to the nearest £5 or £10 to cover contingencies.
Includes: Insurance; Engine fund*; hangarage; radio licence fee; CAA fees (e.g. CofA , divided appropriately) etc.
Hourly rate is then whatever it actually costs to be come airborne - fuel; oil; realistic proportion of estimated check costs & fee etc. Includes an estimate of consumables (oil, plugs etc). This list and the one above are not comprehensive.
This philosophy attempts to spread costs fairly, so that if yoou have a Group member who never flies, (s)he still pays for upkeep of ther asset. Those who fly a lot pay a commensurate amount to reflect the wear and tear they put onto the aircraft.
Hopefully that helps.
* You may wish to include this - or a proportion of it - in the hourly rate if engine is lifed.
I start from the proposition that Fixed costs are what it would cost you to have a legal aircraft in the hangar, even if it was never flown. That figure is then divided by the number of Group members and again by 12 for individual monthly rate. Groups I've been in will round this up to the nearest £5 or £10 to cover contingencies.
Includes: Insurance; Engine fund*; hangarage; radio licence fee; CAA fees (e.g. CofA , divided appropriately) etc.
Hourly rate is then whatever it actually costs to be come airborne - fuel; oil; realistic proportion of estimated check costs & fee etc. Includes an estimate of consumables (oil, plugs etc). This list and the one above are not comprehensive.
This philosophy attempts to spread costs fairly, so that if yoou have a Group member who never flies, (s)he still pays for upkeep of ther asset. Those who fly a lot pay a commensurate amount to reflect the wear and tear they put onto the aircraft.
Hopefully that helps.
* You may wish to include this - or a proportion of it - in the hourly rate if engine is lifed.
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Originally Posted by DaveW
My simple thoughts follow:
I start from the proposition that Fixed costs are what it would cost you to have a legal aircraft in the hangar, even if it was never flown. That figure is then divided by the number of Group members and again by 12 for individual monthly rate. Groups I've been in will round this up to the nearest £5 or £10 to cover contingencies.
Includes: Insurance; Engine fund*; hangarage; radio licence fee; CAA fees (e.g. CofA , divided appropriately) etc.
I start from the proposition that Fixed costs are what it would cost you to have a legal aircraft in the hangar, even if it was never flown. That figure is then divided by the number of Group members and again by 12 for individual monthly rate. Groups I've been in will round this up to the nearest £5 or £10 to cover contingencies.
Includes: Insurance; Engine fund*; hangarage; radio licence fee; CAA fees (e.g. CofA , divided appropriately) etc.
It has had 2 effects:
1) The airborne time pays for the fuel and oil and engine fund, and a proportion of the maintenance, so being low encourages flying
2) Once the standing order for fixed costs is set up, people tend to discount it. It hurt initially, but then we got used to it
Having seen too many 'hangar queens' in my time, I want our baby to be flying as much as possible.
Other groups take the view that rather than planning in advance for major expense, they agree to pay out for large bills by a levy. That can work, but can also be risky, when someone has a change in circumstances. Just as a backstop, we also put in a deposit on joining which is enough to help cover unexpected bills. It is returnable once a share has been sold and the new member joins
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I was in a group with a 172 recently. Costs were:
£80 per month (Hangerage and insurance)
£25 per hour dry (£5 engine fund & towards maintenance)
The first payment was on D/D and the second was billed according to hours flown when the bill was due for 50hr & annual checks
Capital equipment (new radios, respray etc) were simply split equally between the members
£80 per month (Hangerage and insurance)
£25 per hour dry (£5 engine fund & towards maintenance)
The first payment was on D/D and the second was billed according to hours flown when the bill was due for 50hr & annual checks
Capital equipment (new radios, respray etc) were simply split equally between the members
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Oh and a good site for on-line booking of plane is www.e-allocator.com
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I tend to go with Robins suggestion of a higher monthly cost, we have our (PFA type) on a £85/month between 5, this covers all the fixed costs including (hopefully a bit more than) that needed for maintainance and engine fund (even if not lifed you will still get to the stage it needs replacing). all we then need to do is put fuel in (about£25/hr) and pay the landing fees. With a non PFA type you probably do need to have an hourly rate to cover the intermediate checks.
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Foxmoth & Robin (good aircraft choices, BTW), I may not have made myself sufficiently clear - a common complaint.
My proposal was (and is) that at least every cost that the group would encounter anyway, regardless of hours flown, is built into the monthly fixed rate.
No estimates of usage are made when this figure is arrived at - any costs related to usage "lie where they fall" i.e. in the hourly rate.
That will inevitably result in the hourly rate being substantially lower, and will ensure that group members who don't fly much, but do have access to the aircraft with all the advantages that entails, still pay their fair whack.
Conversely, the velcro-gloved fiends who are never out of the thing
need also, as well as the fuel it takes to bore skyholes, to pay their element of the costs associated with requiring (e.g.) additional checks in any calendar period than would otherwise be necessary.
There will always be a balance to be struck, and it will likely depend (amongst other things) on the characteristics of the aircraft type (e.g. a Yak with a fairly low-lifed engine - which I presume is still the case - should ISTM logically have an element of the cost of refurbishment built into the hourly rate, rather than the monthly rate, so that he who gets the advantage pays for it).
Ultimately, I agree that the running costs should be kept as low as possible, but remain fair to all. If they aren't, friction amongst group members can easily arise and fester IME.
My proposal was (and is) that at least every cost that the group would encounter anyway, regardless of hours flown, is built into the monthly fixed rate.
No estimates of usage are made when this figure is arrived at - any costs related to usage "lie where they fall" i.e. in the hourly rate.
That will inevitably result in the hourly rate being substantially lower, and will ensure that group members who don't fly much, but do have access to the aircraft with all the advantages that entails, still pay their fair whack.
Conversely, the velcro-gloved fiends who are never out of the thing
need also, as well as the fuel it takes to bore skyholes, to pay their element of the costs associated with requiring (e.g.) additional checks in any calendar period than would otherwise be necessary.There will always be a balance to be struck, and it will likely depend (amongst other things) on the characteristics of the aircraft type (e.g. a Yak with a fairly low-lifed engine - which I presume is still the case - should ISTM logically have an element of the cost of refurbishment built into the hourly rate, rather than the monthly rate, so that he who gets the advantage pays for it).
Ultimately, I agree that the running costs should be kept as low as possible, but remain fair to all. If they aren't, friction amongst group members can easily arise and fester IME.
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DaveW,
I Never had any problem with your way of doing things, but it is not the only way and IMHO Robin and I were just giving an alternative to your way. We are fortunate in that our maintenance is low being PFA and much of our work is done "in house" but as I say with non PFA you do need charge more hourly, putting more on monthlies does encourage higher usage, which may or may not be a good thing depending on the group.
I Never had any problem with your way of doing things, but it is not the only way and IMHO Robin and I were just giving an alternative to your way. We are fortunate in that our maintenance is low being PFA and much of our work is done "in house" but as I say with non PFA you do need charge more hourly, putting more on monthlies does encourage higher usage, which may or may not be a good thing depending on the group.
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I'd hoped that my choice of words made it obvious that I was proffering advice and expressing a personal view based on experience, and most certainly was not attempting to state that "my" way was the only way. It clearly isn't.
Indeed, I tried to take pains to make that clear.
Failed again.
There will be as many ways of agreeing cost-sharing amongst groups members as there are Groups. (Or, more likely, as there are Group members). However, the way to reduce the potential for problems in the future, I am convinced, is to agree a philosophy from the outset as opposed to a hidebound process.
It's only an opinion!
Indeed, I tried to take pains to make that clear.
Failed again.
There will be as many ways of agreeing cost-sharing amongst groups members as there are Groups. (Or, more likely, as there are Group members). However, the way to reduce the potential for problems in the future, I am convinced, is to agree a philosophy from the outset as opposed to a hidebound process.
It's only an opinion!
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Originally Posted by dwshimoda
Hi All,
The way we have always done it no longer seems to work,
DW
The way we have always done it no longer seems to work,
DW
I've always worked on the 4*fuel cost basis as a reasonable all in hourly average. However as has been pointed out this leads to hangar queens so ironically this leads to the velcro glove favouring high monthly plus marginal hourly cost. Except that I've never seen a group plane that suffers from over useage.
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Originally Posted by DaveW
Failed again.
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Quite right, foxmoth.
I'd be the last person to say my ideas were right and others were wrong. I'm still trying to refine our costing mechanism on the basis of the last 2 years experience and a very painful one from a previous group -one day the story of that one will be told!!!
So far we haven't fallen out over the costing method, but I know others have better and more robust accounts - they just wouldn't suit us, at the moment.
I like threads like this, as there is always something to learn from other people's experiences and knowledge
I'd be the last person to say my ideas were right and others were wrong. I'm still trying to refine our costing mechanism on the basis of the last 2 years experience and a very painful one from a previous group -one day the story of that one will be told!!!
So far we haven't fallen out over the costing method, but I know others have better and more robust accounts - they just wouldn't suit us, at the moment.
I like threads like this, as there is always something to learn from other people's experiences and knowledge
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Thankfully it is a while since I was in a group - so you'll guess my view is a little jaundiced!
In the first group I was in we had 20 members and monthly payments that covered all the standing costs. The hourly rates covered fuel, engine hours and an element of the maintenance. An arrangment that you would think is pretty fair. At that time it meant the monthly costs were between 1 and 2 hours worth of flying. I did around 30 hours a year and was about the 3rd highest user. The amount of complaining over the rates had to be experienced to be believed! The largely non-flyers, believed their monthly rates should be cut because the aircraft was flying! The users (only about 7 of the 20) thought the costs were fine but wanted a better radio etc - which of course the non-users did not want to pay for.
Thankfully we had a strong chairman and through his efforts it all stayed together. But the sniping and general resentment had to be experienced to be believed.
Latter I shared an aircraft with 2 others. Here we simply split all the costs 3 ways (except aircraft upgrades where the owner asked for contributions and fuel and landings). It worked pretty well - but we were (and still are) friends and probably it could not work with a larger group. It relied on us doing the 50 hrs checks and an element of the annual work under supervision - again something that whilst it works with a small group probably would not with a larger one - where of course only the core people actually do the work.
On reflection the model where monthly costs cover the majority of expediture are probably the way to go - along with a robust set of rules. Hopefully you will never need the rules but unfortunately there always seems to be someone trying to take advantage...
In the first group I was in we had 20 members and monthly payments that covered all the standing costs. The hourly rates covered fuel, engine hours and an element of the maintenance. An arrangment that you would think is pretty fair. At that time it meant the monthly costs were between 1 and 2 hours worth of flying. I did around 30 hours a year and was about the 3rd highest user. The amount of complaining over the rates had to be experienced to be believed! The largely non-flyers, believed their monthly rates should be cut because the aircraft was flying! The users (only about 7 of the 20) thought the costs were fine but wanted a better radio etc - which of course the non-users did not want to pay for.
Thankfully we had a strong chairman and through his efforts it all stayed together. But the sniping and general resentment had to be experienced to be believed.
Latter I shared an aircraft with 2 others. Here we simply split all the costs 3 ways (except aircraft upgrades where the owner asked for contributions and fuel and landings). It worked pretty well - but we were (and still are) friends and probably it could not work with a larger group. It relied on us doing the 50 hrs checks and an element of the annual work under supervision - again something that whilst it works with a small group probably would not with a larger one - where of course only the core people actually do the work.
On reflection the model where monthly costs cover the majority of expediture are probably the way to go - along with a robust set of rules. Hopefully you will never need the rules but unfortunately there always seems to be someone trying to take advantage...
