Ownership: The Tie that Binds

Some of the relationships last a half century or more. Others, months. The failures generally fall into one of two categories: buying an airplane that doesn’t meet the mission or, more commonly, people problems.

Finding the right airplane for the mission requires a great deal of soul searching and discussion among partners—and a realistic assessment of how and how much you will use the airplane. The bigger challenge is finding the right person or persons with whom you want to share this adventure.

“Getting a partnership going is kind of like getting married,” explained Dennis Cuneen, a pilot at Washington’s Tacoma Narrows Airport who has been involved in numerous partnerships and flying clubs over the years.

Pat Brown, AOPA’s Texas ambassador and longtime member of a partnership, concurred. “It’s like a marriage. If you describe it that way, it works. You have to date long enough before you put the ring on.”

So, how do you find a date? Even in the information age, word of mouth works pretty well. Hanging around the FBO, pilot organizations at the airport, flying clubs, and other aviation groups is a good start. Let others know you have a portion of an airplane you’d like to share. If you’re not an owner, seek out those who have an airplane that meets the mission you’ve established. Social media also can be an effective means of finding partners, as are postings on various aviation forums. AOPA will have Sellers’ Corrals at all its regional fly-ins this year where local pilots can offer their airplanes for sale. If one aircraft strikes your fancy, note who else is looking it over. They, too, may be looking for a partner.

Sometimes you have to get creative, especially when there may not be many potential candidates around. In rural West Virginia, Cessna 172 owner and CFI Kevin Murphy found a potential candidate in an acquaintance who wanted to learn to fly. “We worked out a deal: He’d buy half the airplane if I’d teach him to fly at a reduced rate.” It worked and the two remained partners for 20 years.

As for assessing candidates, compatibility is key. Jonathan Freed, AOPA senior vice president of communications, has been in a variety of partnerships. “Check out their car,” he recommends. If you’re a neat freak and the candidate’s car looks like a dumpster on all-season radials, you may have a problem. You’d like to think that political views don’t matter, but as in a marriage, they can. Check out the person’s social media posts. If the pilot posts stream-of-consciousness political hyperbole and that’s not your thing, keep looking. Are you technologically compatible? If you’ve got the latest whiz-bang electronics in your pocket and want your airplane to reflect your interests, a potential partner with a flip phone who loves flying NDB approaches may not be your best choice.

Decide what you want out of the arrangement—people to share the costs or also a social element? Freed and four others owned a Piper Warrior. “It was not a social club, but some of us became friends, and still are. Establishing that expectation—is your group very social or is it just a way to own a plane—is important when onboarding a new partner so you get a good match.”

Setting expectations is important, agreed Thomas Barry, secretary of the Nate Abel Flying Club at Hicks Field in Fort Worth, Texas. The newly formed club won the AOPA You Can Fly Cessna 150 contest and has as its mission promoting aviation. Because the group is a charity with a mission, “there is work involved,” Barry emphasized. As a result of the mission, those who apply seem to be self-selecting as people who support it. The group has an extensive application form that asks lots of details about the individual, which helps inform the officers before they interview the candidates. The officers also check references on all candidates. The young group—it was formed in late 2016—has yet to have to turn anyone away. One pilot with a bit of a reputation around the airport for playing fast and loose with the regs expressed interest, but didn’t bother to apply after he learned about the screening process and the well-defined rules.

It seems that cavalier attitudes do sometimes lead to problems. Doug Lesh is one of three partners in a Piper Turbo Lance at Meadow Lake Airport in Colorado Springs, Colorado. Two partners had to take a previous partner to arbitration after he refused to earn an instrument rating as he had originally agreed to do. After three years of paying higher-than-expected insurance rates because of his lack of an instrument rating, the two took action—but lost in arbitration. Eventually the other pilot sold his share, and the new partner was a much better fit.

The least experienced pilot will set your hull and liability insurance premiums, according to Jim Pinegar, vice president at the AOPA Insurance Agency. Getting insurance for a co-owned airplanes is “super simple,” Pinegar said. More than half of the policies AOPA writes are for co-owned airplanes. Most anyone can be insured to fly a simple single-engine airplane, even a student pilot. However, as Lesh’s group learned, if you’re looking at a high-performance cruiser such as a Lance and your potential partner doesn’t have an instrument rating and has little experience, the insurance company may insist on some restrictions on him, or additional flight time before flying solo. And his experience level will increase your premiums.

On a related note, are you financially compatible? If you’re one who wants to continuously upgrade and invest in an airplane, find someone with a similar interest and financial ability. “You have to be like-minded when it comes to financial risk tolerance,” said Adam Meredith, who heads the AOPA Aircraft Finance program. About 10 percent of the loans AOPA arranges are for various types of co-ownership. The most common arrangement is two pilots wanting to finance an airplane, but four is not uncommon. Most finance companies balk at arrangements that include more than four partners. The finance deal can be structured in any number of ways, but the terms often reflect the credit score of the least qualified candidate. “If your potential partner has beaucoup credit card debt and is barely making the payments, what will happen when you have an unexpected major aircraft expense, and what stress will that put on your partnership?” asked Meredith. You may be left holding the bag for a major aircraft expense.

The foundation of a successful partnership is a written agreement. AOPA’s Pilot’s Guide to Co-Ownership, available on the website, includes a checklist to help you draft an agreement. “Compatibility is good, but understanding the rules is critical,” Cuneen stressed. “It’s a business relationship, but needs the rules to protect the friendship. The closer you are, the friendlier you are, the more you need the rules.”

Brown offers a similar sentiment that at first sounds counterintuitive. Once you’ve met a potential partner, “if you feel you must have a partnership agreement, then you probably have the wrong person. But you need a good agreement nonetheless.” In other words, if you feel you need a written agreement in order for your partner to comply with how things should be done, you probably have the wrong candidate. The agreement should simply provide guidance for how things should be done, not whether they should be done. That should be intuitive to both. “It’s like a prenup,” Brown said.

When assessing a candidate, Brown does a phone call first and later insists on a face-to-face meeting. “Your gut feeling is probably right,” he said.

Cuneen invites those on a waiting list to join his group at their regular aircraft wash and breakfast. Then he debriefs with the other members later. “One guy came out to drink coffee only and didn’t participate. We didn’t invite him back. If they’re only looking for a cheap way of flying, we’re not interested. You have to really want an aircraft first, and if you do, here’s how to make it cost less—by being in a partnership.”

Email [email protected]