Efficiency: Buy or rent?

Choose the smart training option

May 1, 2013

Illustration by A.J. Garces

Illustration

If you want to save money on flight training, buy an airplane. This common bit of advice comes up often during the inevitable conversation about how to save money in aviation. But is this really true? Can buying really be more cost effective than renting?

Based on conversations with owners who have bought to train—and comparing various rental rates and purchase prices around the country—the short answer is: It depends.

Matthew Peacock owns a 1973 Cessna 150L. He purchased it in late 2007, about 16 hours into his private pilot training. Peacock lives in Canton, New York, near the Canadian border so his expenses are less than what they would be for an owner living in or near an urban area. By keeping his airplane purchase reasonable and his expenses low, Peacock unquestionably saved money between the time he bought the airplane and the time he earned a private pilot certificate. Not including the purchase price of the airplane, he saved around $700.

The best part about the strategy is that the more you fly, and the earlier you buy, the more you save. Aircraft ownership costs generally are split in to two categories: fixed costs, such as hangar, insurance, and annual inspection; and variable costs, such as fuel, oil, and engine reserve. Because the fixed costs need to be paid regardless of the number of hours flown, the per-hour flight cost goes down as flight time goes up. In Peacock’s case, he would have saved $1,600 had he purchased in the beginning of his training.

The “it depends” aspect of this finding results from a few variables. First, to save money you have to be conservative on the purchase. For example, buying a new Cessna 172 will never be as cheap as renting one during the typical training cycle. When doing the math, it’s always best to compare like airplanes. Peacock’s available rental airplane was a very comparable Cessna 150, so his example is easy to compute. Regardless of the purchase price and aircraft type, aircraft depreciation and financing costs aren’t factored in. Peacock purchased his 150 for $22,000, about what it would be worth today. Like starter houses, starter airplanes will always be in demand. For other models, the market is too hard to predict. In general, an older light single-engine will retain most of its value over the time it takes to earn a pilot certificate. Peacock also paid cash, thus saving the financing fee. Even if he had financed—at, say, 5.5 percent for 15 years with a 15-percent down payment, the monthly payment would be only $153.79, or $1,845 a year.

There are many other variables, some of which the owner has little control over. Unscheduled maintenance is a big one. “I’ve been lucky,” says Peacock. “The biggest expense I had was replacing a magneto.”

The fact that he purchased the airplane sight unseen on eBay makes him even luckier. A solid prepurchase inspection can help prevent surprises, but something can always crop up. If that does happen, you have to work at controlling costs. Peacock’s mechanic is a friend, and Peacock sometimes helps with the work. He also controls his fixed costs. Hangar rent is $100 a month and his annual and insurance are about $600 each. Keeping the airplane in a hangar in other parts of the country could add another $400 or $500 a month. Tiedowns often are less expensive, and shopping around for maintenance, performing an owner-assisted annual, and all sorts of other tricks can add up to save a lot each year.

The irony of all this is that money didn’t matter to Peacock. That’s not to say he could have purchased anything he wanted. Working as a nurse and being a single dad resulted in certain constraints. Buying was much more about access to the airplane than it was the prospect of saving money. “I liked the idea of flying my own airplane and flying it when I wanted to fly it,” he says. That, combined with the state of his available rental airplane, convinced Peacock to buy. He now uses the 150 to fly all around the country, including when he travels around the region for his job.

Shari Meyer didn’t have many rental options when she purchased her first airplane 23 years ago. Meyer bought a Mooney 252 with exactly one hour in her logbook. Today she owns a very light jet. “I did not feel rental was an option as I was taking lessons at a very small, Podunk airport that only had a 152 and 172 to rent,” she says. “They were extremely old and I didn’t feel safe in either. Besides, I felt if I spent money on an airplane, that would guarantee I would stick to the entire flying goal.”

Money may be the root of all evil, but saving it is the route to a better training aircraft, a stronger connection to aviation—and in many cases, some advanced training.

Email ian.twombly@aopa.org.

Comparing operating costs

Matthew Peacock’s Cessna 150L: Rental aircraft: $100 an hour (wet)
Fixed costs
Hangar | $1,200 a year
Insurance | $600 a year
Annual | $600 a year

Variable costs
Fuel | $33 an hour
Oil | $1 an hour
Engine reserve | $8 an hour

Own: Total cost for 70 hours over a year | $5,340* Rent: Total cost of 70 hours of rental | $7,000
Own: Total cost for 100 hours over a year | $6,600* Rent: Total cost of 100 hours of rental | $10,000
* presumes no opportunity or financing costs under the assumption that an airplane such as a Cessna 150 can be sold within a year for about what it was bought for if used for about 80 hours of flight training time.

The Educated Owner

“Aircraft Maintenance from the Educated Owner” is a series of how-to tips from A&P mechanic Jeff Simon.

AOPA can help

Visit the AOPA website and click on the “Aircraft & Ownership” tab for information on taxes, maintenance, and more. Join the AOPA forums to learn from and share information with other aircraft owners—and potential owners. Take the ASI online course on aging aircraft. News for prospective owners is also available online.