There's gotta be a way, right?
If one person can easily afford to own a Cessna 152, does that mean two can operate a Cessna 172 just as inexpensively? That recent question from a reader triggered this article.
No need to make you wade through a lot of verbiage for the answer: Anecdotally, the answer is yes. But — you knew that word was coming — the financial aspects work out well in this case only because of the similarity of the 172 and 152. And — here we go again — the path to co-ownership is pockmarked with personal-relationship chuckholes.
"Pick your co-owners carefully," advises AOPA Aircraft Insurance Agency Manager Dave Carney. "It can turn out nasty. A co-ownership is almost like a marriage. Trust is the key. Some co-owners end up suing each other."
And while we're worrying about legalities, stop saying partnership. Partnerships are for-profit business agreements, while co-ownerships are not-for-profit. Most of us say partnership when we mean co-ownership. Now back to the issue at hand — happy unions for affordable flying.
Tale of two airplanes
There are good marriages, of course. Sam Legard and his co-owner, Stanley Caulkins — both of Leesburg, Virginia — have been together in airplane ownership since 1958. There have been several airplanes over the years, but currently they own a 1966 Cessna 172. The number of co-owners has varied as well, but never goes above four. Currently there are three, a jeweler, an insurance agent, and a college professor, who recently joined the group. "It's like a business marriage," Legard said. "Apply the golden rule."
With a deep trust between the co-owners, Legard and Caulkins are able to be somewhat casual as to rules governing airplane use and financial arrangements. Legard is the most active pilot of the three — putting up to 100 hours a year on the aircraft — and simply cancels his plans when others want to fly. The three take turns paying the monthly $350 hangar bill.
So how much does it cost Legard and his co-owners? They don't have precise records; it's a hobby, and they don't necessarily want to know. But Legard estimated he may be paying $75 an hour given his high usage, while Caulkins pays much more since he flies only 15 to 20 hours per year. (We know the dollar amount, but let's not spoil things for Caulkins.)
There can be one-time heavy cash outlays in airplane ownership, but there are co-owners to share the load. Legard said he and his co-owners recently shared a $28,000 bill for paint and improvements. There are no monthly dues. Still, he sees a co-ownership as having advantages over flying clubs, and it is still less expensive over time than renting from an FBO.
First among the advantages is pride of ownership. It's yours. There are few limitations on overnight use and no minimum-hour usage rules such as are often found in the rental world. Second, it is a business tool for Legard, the insurance agent. That means a tax break. Third, there are fewer people using it and scheduling is easier.
"In a flying club, the schedule would work out 50 percent of the time," Legard estimated. "I never want to be with more than four people — it gets crowded."
Not far from where Legard's airplane is located is another Cessna 172, this one operated by a flying club. Let's look at the differences — a tale of two similar airplanes operated under different types of ownership. The flying club is called the Sterling Flyers and operates two 172s, one based at Leesburg, northwest of Washington, D.C., and another in Manassas, west of Washington. The club is headed by Al Simmons, a former air traffic controller.
Simmons said it costs $350 to join the club, but $150 is returned when a member leaves. He has 15 members in the club. Dues are $50 a month for a total of $600 a year, but rental on both aircraft is only $55 an hour wet. And both 172s are IFR-equipped. The flight school on the Leesburg airport charges $84 for an older-model 172, and slightly more than $100 an hour for new 172 aircraft.
"You come out even when flying only two hours a month," Simmons said. If a member wants to keep an aircraft from Friday to Monday, there are no minimum hours required per day as at many FBO-based flight schools.
Scheduling for Sterling Flyers is handled by an answering service. The club has been in operation for 35 years. "We were never in business to make money," Simmons said. "We figure out what it costs to have an airplane at an airport and to pay all costs." Since Leesburg lies under the Class B airspace surrounding nearby Washington Dulles International, the club was threatened when enhanced Class B rules prevented the club's VFR-only pilots from flying. At this writing, revenues were down and cash reserves were being used to meet expenses.
The disadvantage to the flying club is that more pilots are scheduling the aircraft, meaning trips must be planned far in advance. Still, the cost savings are substantial.
Multiple owners cut costs
Some co-ownerships successfully involve 10 to 15 people (they pay an insurance surcharge for having so many owners). A club in Frederick, Maryland, is able to offer a 1968 Cessna Skyhawk for $30 an hour, with dues of $30 a month. The cost of joining is to pay $2,500 a share, returnable upon leaving the group. One of the pilots, Dorsey Shipley, said he can schedule the aircraft "95 percent of the time." There is no problem selling an owner's portion of the aircraft, because there is a "waiting list all the time," Shipley said. Strict rules govern the airplane's use, but twice a year members are allowed overnight trips. Shipley said he enjoys the diversity of experience among the members: Fellow co-owners include a Boeing 777 captain, a former F-16 fighter pilot, and a college program manager.
So far, this article has shown the rosy side of co-ownership, so it is time to cover the possibilities of things going wrong. Will Risdon of Winchester, Virginia, is currently in a successful co-ownership with another pilot on a 1979 Cessna 182RG. But it wasn't always so. He was once in a different co-ownership that encountered trouble when a member would not agree to aircraft improvements that were sought by the other owners.
The key is to "get along" with your partners, Risdon said. The current co-ownership on the 182RG has been a happier experience. The co-owners charge themselves $90 an hour for use of the aircraft, and can take it for a month at a time. The key reasons Risdon wants to stay in a co-ownership are to have an airplane that he can trust and to split out-of-pocket costs.
Co-ownerships control quality
Risdon's Skylane has been equipped for IFR flight. The owners have added an electric artificial horizon and vacuum pump, a Garmin 430 moving-map display, and a Goodrich WX-500 Stormscope. "It's a safe and sound airplane," he said. "Something you can depend on in bad weather." He recalls a less confident feeling during his membership in a military flying club. "It was touchy. You would reserve the airplane and find out that the radios weren't working, and have to cancel your reservations at a resort."
That isn't to say that flying clubs poorly maintain their aircraft, of course. Most have a satisfactory record and may offer a better alternative to ownership than co-ownerships. A flying club in the Minneapolis area at Anoka County-Blaine Airport called Flywell Flying Club — a not-for-profit corporation — has worked out the finances to a science.
The club sells "stock" for $6,500, but members get $6,000 back when they leave. They can only sell their stock to the club, not to individuals. Members must pay their membership costs until there is a buyer for the stock, but the club holds an open house each year that attracts 400 people and serves to freshen the waiting list. Dues are $85 a month. To be economical, members need to fly 10 hours a year, not a difficult goal. The end result is that the club is able to offer a Cessna 172 (all rates are wet) for $41 an hour, a Piper Archer for $49 an hour, a Cessna 182RG for $66 an hour, and a Piper Lance for $79 an hour. Utilization is reasonable, since there are only 46 members. The club has been around since 1963 when operations started with a Cessna 140 and 10 people.
A similar club
Another longstanding club — the Inn Flying Club located at Montgomery County Airpark in Gaithersburg, Maryland — is similar in many respects to the one near Minneapolis. It has 48 members and operates four aircraft, a Cessna 152 (all rates are wet) renting for $45 an hour, a 1981 Cessna 172 for $65, a 1997 Cessna 172 for $70, and a 1983 Cessna 182 for $80. Members may join at various levels offering privileges in just one, a few, or all four aircraft. For all four, the initial membership fee is $1,350, but members get back $1,300 when they leave. Dues are $67 per month. A club official said members flying just a few hours a year will find that they fly less expensively than if they were renting from the local FBO. The club is proud of its spring safety proficiency checks offered to all members.
If your goal is airplane ownership, a co-ownership agreement will economically put you in the left seat. If your economics suggest that doing so would threaten your food supply, then a flying club may be a better alternative.
Linking up with partners
Just as I was writing this, one of you e-mailed to ask a timely question: How do you find a co-owner? "I'm especially interested in methods of hooking up with potential co-owners and negotiating the financials," an AOPA member wrote.
There are two obvious answers: Put a note on the airport bulletin board or find an airplane that you think you would like to fly at your airport and contact the owner. Newspaper classified ads are also commonly used to link potential co-owners.
Another way to search for co-owners is to post a message on AOPA Online. In the Members section of AOPA Online, select Messaging/Chat, and then select "Clubs and such." While that section is devoted primarily to flying clubs, pilots seeking co-owners have also left postings there. You just might luck out and find someone in your local area, especially if you live in an area with a large pilot population, who wants to share the cost of ownership.
Once you have found a prospect, remember the importance of "getting along" with your new business partner. You don't want this source of pleasure to become an irritation.
But what about negotiating the financials? Under the AOPA Legal Services Plan, you'll have an hour of time with an attorney to discuss buying or selling an airplane. That's your chance to get the agreement legally correct.
AOPA has published a booklet to help you set up the proper co-ownership agreement, or just to evaluate flying clubs. Usually it is best to work out the details on paper, such as sample arrangements offered in AOPA's The Pilot's Guide to Multiple Ownership: Co-ownership and Flying Clubs. The booklet is available to members free on AOPA Online ( www.aopa.org/members/files/guides/coown.html), or a paper copy can be obtained for $5 by calling 800/USA-AOPA.
E-mail the author at [email protected].
The AOPA message and chat room on AOPA Online contains a section on "Clubs and such" that can bring potential aircraft co-owners together.
www.aopa.org/members/messages/
The AOPA Legal Services Plan offers a free hour of consultation on several topics, including aircraft buying and selling.
www.aopa.org/legalservices.html
An AOPA booklet, The Pilot's Guide to Multiple Ownership: Co-ownership and Flying Clubs, is available on AOPA Online.
www.aopa.org/members/files/guides/multiple.html
