Making It Work
15 ways to cut the costs of learning, renting, and owning
There is at least one expected (and apparently accepted) response to nearly every question about why we don’t (a) learn to fly, (b) don’t rent airplanes more often, or (c) don’t own an airplane. At this point we can hear a chorus across the nation saying, “Because I can’t afford it.”
Money can be the universal excuse. At the same time, if you look at them closely, financial excuses often seem just a little contrived. There are a million obstacles that actually can’t be removed from our path, like “My vision is 20:1,200,” or our all-time most rational response, “I don’t want to.” With a little creativity, however, the money issue can be overcome.
Here are 15 ways to reduce the cost of learning, renting, and owning, loosely grouped into those three categories, and presented in no particular order. Pick the method that best fits you and your situation, beginning with ways to help beat the cost of learning to fly:
1. Work for flying time. Working for flying time is one of the most traditional and very best ways for a young aviator to get flying time at a less expensive rate. And, working around a flight training operation will teach you life lessons you can’t get elsewhere. It’ll also put you in contact with other pilots and aviation professionals on a daily basis, and that kind of networking will help in your future. Everyone respects a young person who works for flight time. It’s a rite of passage in aviation circles.
2. Form a “learning club.” If the sole purpose of a flying club is to learn to fly, member scheduling is a more routine matter than with many flying clubs. Form a corporation or LLC and, along with purchasing an aircraft, put a flight instructor on the payroll full time. A freelance CFI can be put on retainer to get you started, but if he is an employee and making a living wage, it will work better for him and the members.
As soon as an individual gains his or her certificate, that person moves out of the company—or, if enough earn their certificates, a second airplane can purchased for the purpose of renting. (This may sound like a lot of work—and it is—but if there are enough like-minded people in the area, especially if training isn’t available locally, it could be your best bet.)
3. Increase your learning efficiency through financing. If flying lessons are spaced too far apart, learning loses much of its efficiency because the student spends too much of each session reviewing the last lesson. The ideal learning situation is to commit to the project and fly at least twice a week. This cuts at least 10 to 20 percent off the total number of hours required, which results in noticeable savings. The savings realized by maximizing the lesson frequency more than offsets the interest cost of getting a bank loan just for the purpose of learning to fly.
4. Buy an airplane to learn, then sell. If a quality airplane is purchased (note we said quality airplane) for the sole purpose of learning to fly, there is a very high probability that the airplane can be resold at the end of the learning period for at least as much as was paid for it, and maybe more if it’s a model that really holds value well (do your homework!). This concept works best if the airplane is in such good condition that it needs absolutely no major maintenance during the 60 to 70 hours it’s flown in training. In addition, the learning period should be compressed as much as practical to keep storage and tiedown expenses to a minimum.
5. Buy an airplane and put it on leaseback. In this scenario, the airplane is purchased, as above, and with the same caveats about its condition, but leased back to the flight school. The disadvantage to this is that the airplane will be subjected to much more use and abuse and is viewed as a long-term operating investment, rather than a quick turnaround program that yields your private certificate. Fuel and reduced instructor rates should be written into the leaseback documentation.
The next five ideas focus on reducing your aircraft rental expenses.
6. Form a renting syndicate. Rather than forming a club that buys and owns an airplane, form a club that uses its combined purchasing power to buy huge blocks of rental time from a fixed-base operator—for example, buy 500- to 1,000-hour blocks at significantly reduced rates. This would make many FBOs happy. Make sure the maintenance and fuel issues are properly addressed in the agreement, and analyze them carefully.
7. Rent dry and buy bulk fuel. Renting dry—that is, without the cost of fuel included—and buying bulk fuel could be done as an individual, but would work best with a number of individuals. It doesn’t have to be a club, but an operating agreement between the purchasers is advisable. In this scenario, buying power is combined to approach an independent fueling operation about getting a sizeable discount in return for purchasing a large enough quantity of fuel. You might even work out an arrangement with a local fuel supplier to purchase fuel and lease storage space in his fuel farm for it.
8. Create a financing syndicate for an FBO fleet. A number of financially stable individuals could form a lending pool that would help an FBO to finance a number of aircraft for its fleet. Part of the finance agreement would be negotiated rates on aircraft and instructors that are attractive to the financing members. It would help if one of the members was a lawyer to reduce costs of forming the organization and drawing up the paperwork.
9. Rent light sport aircraft. Although we are just starting to see sport pilot training operations develop, it is assumed the rental rates will be attractive, although those operating new Light Sport aircraft (rather than classics that qualify) will be affected by the high cost of acquiring some of those aircraft. We may see the return of some older aircraft that qualify for the Light Sport category, such as Aeronca Champs or certain Ercoupes, which are less expensive to acquire and operate and should offer attractive rental rates.
10. Trade services for rental. Let’s say you’re a lawyer, an accountant, a building contractor, or any one of the different trades that a flight school operator does business with on a regular basis. Chances are your per-hour rate in your profession is similar to the aircraft rental rate. The operator might be willing to work a trade with you that benefits both. However, don’t forget that under tax laws these kinds of agreements constitute barter and taxes apply.
Finally, consider these ideas to help reduce the cost of owning an airplane. The most obvious way to reduce ownership costs is to split that cost several ways.
11. Form an aircraft partnership. The concept of partnerships is as old as airplanes themselves; however, the concept isn’t without pitfalls, most of which are of a personality nature. Pick partners as if you’d be willing to have them live in your house for six months, because you want financially responsible, considerate, friendly people—not individuals who are going to cause heartburn. Have a very clear do’s-and-don’ts segment in the partnership papers along with a very clear buy-out agreement. Partnerships are especially workable on specialty aircraft such as antiques and aerobatic airplanes, because few want to use the airplane for long periods of time.
12. Create a club. The difference between a club and a partnership is primarily one of size. Insurance companies often set limits on the number of partners who can own an airplane before they consider it a club and the rates change (a common limit is five owners in a partnership; if more people want to share ownership, forming a club may be your only option). A club should be viewed and operated as if it is a small business, with all the accounting and legal ramifications that a corporation entails. There should be rules of conduct and flight training requirements so that no one can jump in an airplane without being current. A club should have an arrangement with at least one instructor and should have an organization similar to any flight operation including safety, maintenance, et cetera. The good news is that there are hundreds of very successful flying clubs of many sizes that can be studied and copied. Some are so good that FBOs and corporate flight operation companies could learn from them.
13. Enter into a long-term leaseback. Buying an airplane and leasing it to a commercial operation can be the best and the worse of both worlds, depending very much on the operator to which it is leased and the agreement that’s in place. You could even lose money doing it. Rental airplanes are seldom profit generators, if nothing else because they aren’t flown enough—or, if they are flown a lot (more than 50 hours a month), they will require increased maintenance, and they’re subject to the wear and tear of any rental or training aircraft. Then, to make matters more aggravating, as the owner you still have to compete with others for flying slots. Tax benefits are often the real carrot in this kind of arrangement, but they have to be investigated up front.
14. Rebuild a less-expensive airplane. The dream of finding a “cheap” airplane and bringing it up to spiffy condition with nothing more than the investment of some elbow grease is largely a myth—but it’s not impossible. The key is finding an airplane with the right combination of needs that allow you to do much of the work but don’t require major injection of capital for parts or outside labor. This means the engine is excellent and the airframe is free of corrosion or damage. The perfect airplane might be a 1958 Cessna 182 with a good engine that needs everything you can see on the outside replaced, including paint, windows, interior, et cetera. You’ll want to find an airframe and powerplant mechanic who is willing to look over your shoulder, offer advice, and sign off on any work that actually requires it.
15. Form an aircraft-flipping partnership. This is similar to a regular partnership, but the goal is to find and buy aircraft that can be resold for a modest profit, thereby helping to support everyone’s flying habit. All members pool their money and come up with a buying strategy in terms of what types of aircraft they’ll focus on. Maybe they’ll specialize in older square-tail Cessna 172s or Piper Cubs, or maybe aerobatic airplanes. They’ll determine a focus, buy an airplane, keep it for a given period of time—probably three to six months—then offer it for sale at a high enough price to make a worthwhile profit. At the same time, partners will look for other aircraft, and they may go through several airplanes a year. Again, select a model that can easily be resold, and choose one unlikely to need major maintenance.
These ideas won’t work for everyone, and this list is not complete—we’re sure there are other concepts that can be utilized. The important thing is to think outside the box and come up with innovative ways to minimize costs and maximize aerial utility and enjoyment.
Budd Davisson is an aviation writer/photographer and magazine editor who has written approximately 2,200 articles and has flown more than 300 different types of aircraft. A CFI since 1967, he teaches about 30 hours a month in his Pitts S-2A Special. Visit his Web site.
As originally published in August 2008 edition of Flight Training magazine.