Aircraft owners love their planes as a group. But ownership can be dauntingly expensive and risky from a cost perspective. How does one mitigate this cost hurdle? One way is through partnership. By sharing costs and raising utilization of the airframe, you can potentially make the endeavor financially possible. But there are downsides, and we’ll explore them. I have had two partnerships in aircraft, one genuinely an excellent experience, and the other really bad. You can read more here about the details of N1165G and N223X, the good and bad, respectively.
From these experiences, I can reflect on what I learned to help you think about a partnership.
Pro’s in Partnership
I guess I am a glass half full person so let’s start with the “pro,” which centers around cost and utilization. In no particular order…
Utilization
The nemesis for any airframe is corrosion; one of the best ways to prevent corrosion is to fly the plane. Doing so drives moisture from the engine, minimizing corrosion there. Flying drives moisture from the airframe helping to reduce corrosion there. Flying is the best thing that you can do for an airframe.
But let’s look at FAA estimates for 2017 below. They show that on average, single-engine piston aircraft are utilized 93 hours per year and multi-engine piston only slightly more, 117 hours. That leaves a lot of hours for the plane to be sitting waiting for their master, corroding.
A partnership might very well allow the airframe to be utilized more!
Sharing Costs
Sharing the cost of the airplane is an obvious win for each partner (more on the downside later, lest you get too enamored). The simplest way is to add all the ownership costs and divide by the number of partners. The agreement between partners to identify, capture, track and share the costs can be a bit complicated; after all, it’s not just the cost of AVGAS/Jet A. Things that need to be considered include:
- Cost of the money tied up in the purchase of the plane
- Hangar
- Insurance
- Fuel
- Consumable maintenance
- Annual / 100-hour Baseline expectation
- Hourly oil changes
- Unanticipated maintenance
- Engine Reserve
- Data licenses for electronics
- Software tools for scheduling
Once you identify the costs, you must consider how you will account for, share, and pay them. A very straightforward way is to develop an idea of how many hours you will fly as a partnership per year and divide that into the sum of the estimated annual costs to get an hourly rate. Then, each partner contributes their hourly dollars into a joint account for each hour flown, and the joint account pays the expenses. At the end of each year, sum up the actual costs, true up the account and develop the number for the following year, rinse, and repeat.
The “X-factor”
There are other factors that you can consider as “Pros.” These include:
- Comradery: Working together with another human who is passionate about the same thing you are can be very rewarding.
- Sharing workload: Whether it’s washing the plane, hangar maintenance, updating software, shepherding the aircraft through its annual or one of any number of tasks in owning a plane, having someone to share the load with can be beneficial.
- Safety pilot: For you Instrument Rated pilots out there, you know the value of a readily available safety pilot. For those who don’t know, there are currency requirements that drive the need to fly some number of instrument approaches within six months. These requirements might often be met using another pilot as your “right seat safety pilot.” Your partner might be a qualified victim.
Con’s in Partnership
There is no free lunch in this world. A partnership can be viewed as a marriage. This includes a prenup, dealing with conflict, and, sadly, possibly a divorce.
Sharing or Scheduling
One of the things that you will run into is the possibility of scheduling conflicts. A cool, calm, clear Saturday morning after a month of soggy, overcast, icy, windy days will bring all the critters out of the woodwork to hit the fuel pumps. How do you resolve this? Who has priority? These must be discussed and put into the agreement before entering the contract.
Or, you have the plane scheduled for a Saturday leisure flight, and your partner has an emergency meeting and desperately needs the plan. How will you handle that?
Conflict
Beyond scheduling conflict, there will be conflicts in maintenance philosophy, expense priority, upgrade desires, theory of operations, and so forth. You must be ready for these, and like in a marriage, be prepared to address them, talk them through and have a base understanding of how your partner is likely to view situations. In other words, you are no longer single and don’t just get to decide what you are doing in a vacuum.
Dissolution
At some point, the partnership will end. Death, a transfer from work, financial situation changes, loss of a medical, the list goes on. And so, you need to be ready for this.
The “X-factor”
There is an “X-factor” in the con realm also. It involves knowing that you can get along, how the chemistry rides, and how you resolve the inevitable tensions and conflicts. Do you basically get along with your potential partner? As we all know, it will be hard if you don’t have fundamental chemistry with your mate.
Putting it all together
A partnership can work well. It can halve (or more) the cost of ownership, can reduce workload, and provide comradery. But you must develop the partnership carefully with a like-minded person on how to fly, maintain, prioritize expenditures, and handle operations. If you don’t think alike, the conflict will sour the whole endeavor.
If you would like to speak to a financial advisor about your aircraft ownership dreams, schedule your free consultation.