A Piece of the Action

Logging time with owner-pilot shared partnerships

November 1, 2002

You're going on a business trip. Or you schedule an airplane for your weekend trip to the shore, or the lake, or the mountains — wherever you go to get away from Microsoft Outlook. You check the weather and file a flight plan before heading to the airport, but when you get there the late-model airplane is fueled and clean, keys are handed to you with a smile, and the charts and refreshments for your trip are neatly stowed — you're truly ready to go after you preflight.

When you return, you taxi in front of the FBO, shut down — and leave. No hangars, no tiedowns, no waiting for the fuel order to come through, and no polishing the bugs from every nook and cranny. You save your wardrobe and your back from the strains of aircraft ownership.

They're more than just fancy clubs — owner-pilot shared partnerships seek to gratify a silent desire among those to whom traditional aircraft ownership seems like more trouble than it's worth. Somewhere between the pilots who are satisfied renting airplanes and those who can afford a new airplane with a corresponding service staff lies the pilot sought by companies such as AirShares Elite, OurPlane, and single-location shared partnership providers such as SharePlus.

Fractional heritage

The fractional ownership business familiar to most pilots — corporate-style fractional shares of a professionally flown turboprop or business jet, otherwise known as fracs — continues to build. According to Air Inc., fracs hired 447 new pilots from January through April 2002, as compared to the 1,038 pilots hired in all of 2001. For the first four months of 2002, fracs hired 22.4 percent of the 1,990 new pilot hires — more than the 14 major airlines and right behind the 32 national carriers (hiring 264 and 503, respectively).

The fractional business is big business. But what allure does it hold for those who would rather fly themselves?

Tom Legg, an aircraft dealer and owner of TL Aircraft in Coldwater, Michigan, explored the middle ground between fractionals and owner-pilot partnerships asking that same question. Could a conscientious owner-pilot fly with a company-provided professional crewmember in a New Piper Meridian Jet Prop and make it work? The problem lies mainly in pairing the professional pilot with the owner-pilot. As an owner, flying under Part 91 rules, you take responsibility for your actions rather than adhere to structured rules that a crewmember under FAR Part 135 must follow. Mixing the two means that the owner-pilot must follow the Part (35 regs, including random drug testing, and "rugged individualist millionaires don't take to that sort of thing," says Legg.

With smaller aircraft, such as fixed-gear piston singles like the Cirrus SR22, a single pilot can operate safely and thus the crew question goes away. And a whole new territory opens up.

Many pilots cannot afford sole ownership of any airplane — and fewer still can afford a new airplane and take advantage of the latest avionics and safety features those aircraft provide. And some of those who can don't want to spend time with the airplane the way a typical sole owner should. If you are comfortable leasing a car, purchasing an owner-pilot share from a "general aviation service provider" may be the way to go.

In an effort to distinguish the owner-pilot shared ownership programs from traditional fractional ownership, AOPA has been vocal during the current rulemaking action defining fractionals. In a letter sent in November 2001, Andy Cebula, senior vice president of government and technical affairs, wrote, "An essential element is the protection against inadvertently applying new regulatory requirements for traditional 14 CFR Part 91 multiple aircraft ownership arrangements, such as flying clubs, co-ownership, and other forms of non-commercial multiple aircraft ownership." In the same letter, Cebula also clarified a vital aspect of owner-pilot shared partnership programs: The owner is the pilot. "Providing flight crew is an important distinction between a multiple-aircraft ownership arrangement versus a fractional ownership program." AOPA continues to monitor the development of what will be Subpart K of Part 91, "Regulation of Fractional Ownership Programs," with the intent that "Subpart K not alter the purity of Part 91 and its framework for noncommercial operations."

Paul Fiduccia, president of the Small Aircraft Manufacturers Association, has also closely followed the pending rulemaking defining fractionals. According to Fiduccia, a companion advisory circular (AC) is scheduled to come out along with the FAA's final rule on fractional ownership programs, which will lay out the differences between a frac and shared ownership. Most shared ownership programs offer initial checkouts and recurrent training with flight instructors employed by the company, and not the pilot. "At what point are you crossing the line on providing a flight crew?" The AC should make it clear, so that "all the rights we have today we can preserve," says Fiduccia.

In fact, shared ownership offers many potential benefits. "Shared ownership programs are a way of providing benefits to a much wider segment of the pilot community," says Fiduccia. Those benefits include safer aircraft and the latest avionics such as datalink traffic and weather. The programs also encourage pilots to better maintain currency, since most require an annual flight review, through the contractual agreement. "It's not an FAA requirement — it's voluntary," says Fiduccia, and pilots, being the rugged individualists they are — millionaire or not — take to self-imposed regulation better than to the long arm of the law.

Two companies — two directions

On the surface, two existing shared ownership companies propose similar plans. OurPlane, based in Toronto, Ontario, offers single-engine, fixed-gear airplanes in several locations to owner-pilots who each hold 8 to 14 percent of the aircraft in question. AirShares Elite, based in Atlanta, also has airplanes available in several locations, and pilots can purchase one-eighth or one-quarter shares of a given aircraft. But the means by which each company accomplishes this goal — and its development strategies — diverge substantially.

"Who owns the airplane?" A prospective shared owner needs to consider this question carefully.

AirShares Elite models its ownership scheme on the same structure used by traditional fractional programs. Each owner has his or her name (or a corporation's name) on a specific aircraft registration certificate. In this sense, the ownership of a particular N number is similar to that of a more traditional aircraft partnership. If your aircraft isn't available, with AirShares Elite, you may be dispatched "someone else's" identical airplane; but you own a concrete piece of the pie — in this case, a Cirrus SR22.

OurPlane approaches the process a little differently. Instead of purchasing part of an airplane, your "share" purchases a lien on a given airplane equal to a percentage of that aircraft. The two systems work the same way when it comes to buying and selling your share, according to company officials at OurPlane. You may still register depreciation of the business asset, if you use your share for this purpose, or alternately deduct the amount you use for business purposes. OurPlane currently offers Cessna 182s, Cirrus SR20s, and a Piper Archer. Both companies have plans to upgrade their fleets to higher-performance aircraft as customer demand develops.

AirShares Elite works in cooperation with Cirrus, as a member of Cirrus' Preferred program, allowing the owner-pilot partnership company access to the manufacturer's training systems and, in the future, a seamless progressive maintenance program. OurPlane already has a shared ownership cooperative agreement in place with Raytheon, which debuted on August 29, for adding new Beechcraft Bonanzas and, possibly, Barons to its roster — and the company presents itself as the shared ownership partner for Cessna.

Whether you own a portion of the physical airplane, or a lien, each offers you a set amount of flight time per calendar year for that share. An eighth share of an SR22 through AirShares Elite costs $50,000, which entitles the shared partnership owner to 75 hours in that airplane annually. An hourly fee of $55 covers fuel and oil costs, and initial training in the Cirrus with instructors steeped in the aircraft manufacturer's client training program costs $1,850 a person. AOPA membership is included in AirShares' fees.

Also, AirShares' Chief Executive Officer David Lee and other employees are proud participants in the Angel Flight program, which brings patients to long-distance medical care via private aircraft. To further this mission, AirShares allows each shareowner five hours of time each year to devote to Angel Flight missions, and these hours are not deducted from the owners' allotted time.

Lee got his introduction to the possibilities of business aircraft while working as a sales rep for a plastics manufacturing company. He used the company's Piper Malibu to grow business in satellite locations. "It made us feel like a local company, and I saw the success of that," says Lee.

Some AirShares members have opted to move up, as has Mike Neal, managing partner of Staubach Retail Services and a commercial real estate broker. His first share was an eighth-share purchased in spring 2000. He moved up to owning a full SR22 in December 2001. "I blew through 150 hours," says Neal, easily using up twice the hours allotted to him for the price of the eighth-share. With a thriving business across the Southeast, "I quickly realized I was a 300- to 450-hour-a-year pilot." AirShares allowed him to trade in his share at the original value — $50,000 — and roll that into the price of a full airplane — purchased from AirShares. But why make the purchase through AirShares? "AirShares had a number of airplanes in their pipeline in the shock after September 11," so it was easier to take advantage of their delivery position than to wait. And Neal needed more than ever to fly GA because of increasing hassles flying commercially to places like Knoxville, Tennessee. "Atlanta to Knoxville is a 20-minute [airline] flight and an $800 ticket. For me to fly my Cirrus costs $400, and I can take three people."

Other AirShares members have taken advantage of the company's flight instructors beyond the required checkout and annual currency flights. Chuck Winstead, president of a construction group in the Atlanta area, is a 300-hour private pilot and makes a habit of engaging an AirShares pilot to accompany him for additional training on the business trips he makes in the SR22. Neal does as well; he's almost finished with his instrument rating as a result. Neal feels the training will ease his transition from practice to real-world IFR. "I've got more actual than most IFR students now. When I finish getting my ticket I'll have no problem hopscotching down to Florida or up north on business trips." Because the owner is hiring the flight instructor to give dual instruction on the flights, the additional pilot does not fall under company-provided crewmember criteria and blur the line between Part 91 and Part 135.

OurPlane approaches the division of shares from another angle. While AirShares customers pay the same amount down with varying monthly rates for service, OurPlane down payments vary along with the monthly and hourly rates commensurate with the airplane's home base, levels of service, and scheduling priority. Bronze-level users (owning roughly 8-percent shares) can schedule weekend trips up to two weeks in advance, Silver (10-percent shares) users up to one month, Gold (about 12-percent shares) users up to two months. Weekdays can be scheduled anytime, and a 72-hour cancellation fee applies to these levels. To combat reservation misuse, a small fee applies to each hour scheduled, up to $21 a day for each nonflying hour that the aircraft is reserved. Platinum (roughly a 14-percent share, according to OurPlane) is the ultimate: Weekend trips may be booked three months in advance, flights can be canceled without penalty up to the moment of proposed departure, and pilots can schedule to their heart's content without cancellation or nonflying hourly charges.

Those interviewed for this story reported figures for OurPlane's Silver level ranging from as little as $25,000 Canadian for a one-eighth share of a 2000 Cessna 182T (purchased in February 2001) to $35,500 for a 10-percent share of a 2001 182 (purchased in May 2001; based in Palo Alto, California). Monthly fixed costs run about $340 at the Silver level, covering hangar, insurance and GPS update costs. Hourly fees of $109 take care of fuel — fuel credit cards are supplied with each aircraft. OurPlane projects that its share prices for the Cirrus SR20 will be from $27,900 at the Bronze level to $42,900 at the Platinum level, with monthly fixed costs between $317 and $635 and hourly costs of $109.

OurPlane co-founder Graham Casson sees the foundation of the concept based on the juxtaposition between reality and intention. The typical pilot seeking aircraft ownership thinks he or she is going to fly 200 hours a year, but in reality only flies 50 hours. And with those numbers, the $300,000 to $500,000 capital investment for a new aircraft doesn't stack up against the $30,000 to $50,000 share price that OurPlane currently offers, he argues. "Don't buy on intention," says Casson. "The reality is that we provide all you need."

Rick Zabrodski is a physician in Calgary, Alberta, and though he has owned racing sailplanes in the past, his only prior experience with powered aircraft was renting. "Flying 20-year-old [Cessna] 172s and [Piper] Comanches with ancient interiors and avionics was not my cup of tea." Zabrodski bought in as the sole Platinum owner on a 2000 Cessna 182 for about $20,000 U.S. in December 2000. "It equates to 9 percent of the resale value after five years," according to Zabrodski, with a $400 monthly and $70 hourly fee for usage that he says is "guaranteed up to 200 hours per year."

Zabrodski relates good experiences with the local FBO managing the program at the Springbank Airport, a GA reliever for Calgary. "Scheduling is tight in the summer months. No problem booking a vacation week or weekend several months in advance, but the chances of waking up on a sunny Sunday morning (May through September) and finding the plane available on short notice is virtually zero." The Springbank base has two OurPlane 182s available to owners. Therefore, the system works well for those who like to plan ahead — but holds a similar drawback to rental operations and other flying clubs: You can't always get the airplane when you want it.

Currently, AirShares Elite has an all-Cirrus SR22 fleet. At the home base at Atlanta's Dekalb-Peachtree Airport, there are nine Cirrus SR22s with plans to increase the fleet to 15 airplanes. The company recently opened its base at Caldwell, New Jersey, with two airplanes, as well as a Birmingham, Alabama, base with two SR22s. A new operation at Chicago's Palwaukee airport opened on of August 19. A rental fleet at Peachtree supplements the fractional line there and bats clean up in case of scheduling mishaps. "One owner scheduled for the wrong week for the Thanksgiving holiday. We put him into an SR20 [from the rental fleet]," says Lisa Fallin, operations manager for AirShares. OurPlane has one Cessna 182 each at Oxford, Connecticut, and Montgomery Field in San Diego — in addition to two 182s at Springbank, four aircraft at Toronto (two 182s, a New Piper Archer, and an SR20), and two aircraft at Palo Alto (an SR20 and a 182). Other aircraft are on order for bases at White Plains, New York; Brampton, Ontario; and San Diego.

Another interpretation

SharePlus, the shared ownership arm of Trade Winds Aviation at San Jose, California's Reid-Hillview Airport, started selling shares of its first aircraft, a 2001 Cessna 172SP, just over a year ago. The program was popular enough to inspire SharePlus to add a Cessna 182S to its fleet, with an interest in acquiring a Cirrus SR22 or Cessna T206 in the near future. "Our pilots just wanted access — exclusive access — to new planes professionally managed and maintained without a lot of extra fees," says Alan Elpel of Trade Winds Aviation.

SharePlus sells one-eighth to one-half shares in its aircraft, with 12 pilots currently owning the 172SP and 182S. As an example, a one-quarter, six-year share in the 182S costs $14,000 down with an $850 monthly lease payment and a quarter-share of the tiedown fee. The quarter-share pilot/owner is also responsible for a $2,500 insurance and property tax payment, and the pilot is charged $38 hourly for fuel and oil. These figures are good for 150 hours a year for the one-quarter shareholder, and the owner can shift hours from one year to the next from this account. One-eighth shareholders get 75 hours; one-half shareowners get 300. Aircraft are sold after six years.

SharePlus' scheduling program uses "priority weeks" based on the share amount. A one-quarter share owner of the 182S is assigned priority every fourth week (one-eighth share every eight weeks; one-half share every two weeks). The member must reserve his or her priority week three weeks in advance, or forfeit the week to make it available for general scheduling among all owners. Like other owner-pilot shared partnership programs in this article, scheduling is online.

Owner Marc Boegner bought into the SharePlus fractional program in April 2001 when he purchased a one-eighth share of a 2001 Cessna 172SP for "about the same money as leasing a $50,000 car."

Elpel has a different perspective on growing the business. "Good aircraft management happens when the pilot knows the aircraft manager and the aircraft manager knows the pilot. There's a vested interest in providing top-quality service to customers." However, Elpel is interested in licensing the program to parties in other locations. And he echoes the sentiments of Lee and Casson when he surveys the current market. "There's a big gap between rentals and ownership. You're either going to fly a 25-year-old plane on rental or you'll look to shared ownership."

And the manufacturers?

Cirrus has worked with several owner-pilot shared partnership programs in order to sell its airplanes to a market that heretofore may have been untapped, though it engages in no joint marketing or exclusive agreements. Instead, it supports the growth of this segment as a whole. "We think that these companies have a great future, and our role as a progressive manufacturer will be enhanced by their efforts," says Ian Bentley, director of sales support for Cirrus.

According to various owner-pilot shared partnership companies interviewed, some manufacturers see the programs as competition. Traditionally, pilots buy entire aircraft, and there is worry out there that shared ownership may take away some whole aircraft sales.

But a separate market is there, according to busy professionals like Neal. "There is a matrix that people need to understand. Somewhere be.ween a recreational user and a business user — at about 150 to 200 hours" is where an owner-flown shared partnership makes sense, says Neal.

And fractionals have changed the way many business leaders and corporations think about business aircraft travel. Owner-pilot shared partnerships allow the same change in thinking — with a twist. "People want to be able to touch what they own," says Lee. And a pilot wants to fly it.

E-mail the author at [email protected].