In 182 partnership for six months. Got PPL last April. I'm finding that partner is doing more than I am as my work has been crazy the past few months. He's the accounting person and I deal we plane/maintenance issues -- which he gets involved in due to more experience most the time. He hasn't complained and financials are split down middle. For you guys in two person partnership where one partner does more "work", is there a way you compensate that person? Lower hourly rate? Just trying to keep things fair!
50/50 partner where it's more like 70/30
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Let'sgoflying!
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My dad was in the perfect '3-way partnership' decades ago.
Two other guys who wanted to let the world know they owned a plane, but never flew!
One was an alcoholic and never got a medical, the other was just too busy.
As long as their checks kept coming in, Dad was fine with it!
Two other guys who wanted to let the world know they owned a plane, but never flew!
One was an alcoholic and never got a medical, the other was just too busy.
As long as their checks kept coming in, Dad was fine with it!
Turningfinal
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I feel like splitting fixed expenses 50/50 is the only fair way to do it. Hourly rate should be dependent on all the variable costs (fuel, MX reserve, engine reserve, etc.). Fly more - pay more variable cost.
Quite frankly, it sounds to me like everything is OK in your situation.
Brad Z
Final Approach
Best thing is for you to fly more.
steingar
Taxi to Parking
Most of the partnerships I have seen had silent partners who didn't fly, mine included. Like the man said, so long as the checks roll in and everybody obeys the FARs (re: currency) its all good.
rbridges
En-Route
he's probably thinking he's lucky to have you, too. He flies more, you split fixed expenses down the middle. He may be hands on, but he'd probably be doing it anyway if he were the only owner. Since he flies it more, most of the wear and tear is probably from him.
Gerhardt
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Exactly. This is similar to a partnership I had several years ago. 5 of us, I handled books and maintenance, but I was also the only one who flew. The others were more than happy, I was ecstatic.
My advice, don't monkey with his hourly rate because when you start flying more...bringing up the topic of raising his hour rate will be angst-ridden. Just send him a really, really nice Christmas present every year.
denverpilot
Tied Down
We've always spilt fixed expenses equally and variable expenses go to whoever incurred them, save for one thing... We've always averaged out the fuel cost. It's not worth figuring out who burnt the cheap gas and who burnt the expensive gas.
We split it 50/50. Each owner pays for their own fuel, and everything else is split even. The pilot flying less (currently me) just needs to fly more.....
Most importantly, set the rules up front and live with them.
Most importantly, set the rules up front and live with them.
ColoPilot
Line Up and Wait
Nate -- how do you handle fuel? I thought most partnerships just fill up the plane when finished flying so each partner pays their own fuel. Do you have a common fuel account or something?
Let it ride....if he feels there's an issue he'll raise it. I was in a similar situation, except I did much of the work. My partner was a busy exec and I was happy to do it. I also did the majority of the flying.
One evening we were taking my brother for a ride and my brother commented on how nice the plane was. I said, "Yeah, I keep telling Mike (my partner) that so he'll fly it more!"
His response to my brother was: "We have the perfect partnership: I think he does all the work and he thinks I don't fly it enough. The best part is, we both feel guilty about it!"
It was a great partnership for 12 years before he took a new position out east.
Loren
P.S. He did occasionally buy me a nice gift claiming it was for all my work on the airplane. One time I got a beautiful model of the aircraft (which still sits proudly on my shelf.) Upon selling the airplane (which I did all the legwork on), he bought a very nice camera he knew I had been eyeing for awhile but wasn't willing to spend the significant $$ to acquire.
This describes my partnership, except that one of the guys in my partnership who is not flying much does all the accounting, bill payment, and insurance shopping!
denverpilot
Tied Down
We keep all receipts and average out the fuel pricing and give a credit to whoever paid. Paid fuel bill is a credit on the master spreadsheet, so if you paid for expensive gas and the average was lower, you might be passing along a few bucks to the other co-owners, and the converse. Nobody gets too uptight about it. Just simpler to average it since nobody knows if someone burnt their 75 gallons or the "other" 75. Haha. It works out about a wash. I'm sure if someone did an extended multi leg flight we could devise a more complex system of tracking, but it's not worth it, because that long flight will end up pushing the average to whatever the average for that flight was... (Like the week I flew the IFR stuff with Jesse, the average for that month was mainly based on what I paid for hundreds of gallons in LNK just because of the number of gallons used.)
Sac Arrow
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Snorting his way across the USA
Here's what we do:
1. We charge ourselves an hourly wet rate and deposit the money in a shared account.
2. Fixed costs and maintenance are paid for by the account. Any expense beyond what can be covered in the account is split down the middle.
Still favors the guy that flies more, but it works.
1. We charge ourselves an hourly wet rate and deposit the money in a shared account.
2. Fixed costs and maintenance are paid for by the account. Any expense beyond what can be covered in the account is split down the middle.
Still favors the guy that flies more, but it works.
Pretty much what we did other than we each covered our own fuel when we flew and left the plane full and ready to go after each flight. Worked well for a dozen years.
denverpilot
Tied Down
You've hit on the reason we don't / can't do that... Stupid long range tanks are too freaking big in the summertime around here, and coordinating a "could you leave it 20 gallons down" and then figuring out who paid for what gas, would just be incredibly annoying.
If it burnt more gas or was a twin or something, it'd be a bigger deal but at a solid average of 11.5 GPH for years, and fuel prices eventually being about a wash as you fly around to different places, it was not really necessary to get too wild about tracking it to the penny.
None of us would be in the ownership game if $20 was gonna be a serious problem, that's for sure. Haha.
We leave the plane at 25 gal a side when it could hold ~50. That gives us flexibility.
Tell him that you feel bad about not pulling your weight. There is about a 90% chance that he will say 'no worries'.
If you have some extra time, take a bucket of detailing supplies and clean up the planes interior or wash&wax the exterior.
If you have some extra time, take a bucket of detailing supplies and clean up the planes interior or wash&wax the exterior.
denverpilot
Tied Down
We want it full in winter (usually) for bladder longevity, and about 1/2 - 2/3 in summer, with the high DAs. Can't really ever hit a specific number too easily in summer without messing around with it a lot. If it's half or higher it's fine. But then if one of us decides to fly it light somewhere far off, we may top off at home before departure or... Well, you see where this leads.
Way simpler to just average it out and credit back each receipt. Plus it gives all of us an equal reason kinda "built-in" to think about fuel prices in XC planning. Or maybe even hunt down on-field MoGas (rare) or go through the hassle of towing our MoGas trailer to the only place close enough to get it without our State mandated corn juice additive.
pigpenracing
En-Route
I have had several partners and we split everything 50/50. No hourly rate crap and no putting money in a account when you fly... Just fill the tanks before you put it in the hangar.
I do not understand the hourly rate and savings crap....
If you are a half owner on the plane why do you have to pay to fly your own airplane? That sounds pretty stupid but lots of folks do it.
Why not just put that hourly rate savings money toward a plane and own it by yourself???
So if you buy a plane and the first 10 hours you put money in a account for a "hourly cost"
What if you throw the rods out and need a new engine???? What is that chump change in the account going to do?
Just buy the plane, fly the plane and when it breaks deal with it.
Do you put $100 in a account each time you drive your car? Why not? Sounds pretty stupid right? But you may need maintenance money to change the oil or replace the transmission Geez!
I do not understand the hourly rate and savings crap....
If you are a half owner on the plane why do you have to pay to fly your own airplane? That sounds pretty stupid but lots of folks do it.
Why not just put that hourly rate savings money toward a plane and own it by yourself???
So if you buy a plane and the first 10 hours you put money in a account for a "hourly cost"
What if you throw the rods out and need a new engine???? What is that chump change in the account going to do?
Just buy the plane, fly the plane and when it breaks deal with it.
Do you put $100 in a account each time you drive your car? Why not? Sounds pretty stupid right? But you may need maintenance money to change the oil or replace the transmission
Geez!Couple of reasons to use a reserve account and fill it based on an hourly contribution:
- It allocates proportional variable cost to the party that caused it. The other way to do this would be to split the cost of an overhaul when it happens based on the relative hours. That's all fine as long as there have been no changes in the partnership since the last overhaul.
- Many people don't just have the money lying around to pay for 1/2 or 1/3 of an overhaul. By building a reserve account, the decision to overhaul is easy.
- It allocates proportional variable cost to the party that caused it. The other way to do this would be to split the cost of an overhaul when it happens based on the relative hours. That's all fine as long as there have been no changes in the partnership since the last overhaul.
- Many people don't just have the money lying around to pay for 1/2 or 1/3 of an overhaul. By building a reserve account, the decision to overhaul is easy.
Ravioli
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Aside from providing more fair cost splitting, it also helps if a partner wants to sell out, since the reserve funds are an asset the new buyer purchases. It's easier to sell a share in a plane with a high time engine when the reserves are there to cover the imminent overhaul.
Aside from providing more fair cost splitting, it also helps if a partner wants to sell out, since the reserve funds are an asset the new buyer purchases. It's easier to sell a share in a plane with a high time engine when the reserves are there to cover the imminent overhaul.
It keeps the value of a partnership share fairly constant and reduces the urge for someone to sell cheap because he knows an overhaul is coming up.
All this is probably less important on a 2-way partnership in a simple plane. In that setting, and if both partners are financially strong, just splitting the bills as they show up can be one viable way to organize things. In a larger partnership where people join and leave along the way, building reserve accounts helps to avoid conflict. The only downside is the time value of money. Some people rather have their share of the overhaul in their own pocket rather than the partnership account. One way to structure that would be to have a note that the corporation holds on which each partner accumulates debt as he flies the plane. When overhaul time comes around, everyone pays up.
denverpilot
Tied Down
Aside from providing more fair cost splitting, it also helps if a partner wants to sell out, since the reserve funds are an asset the new buyer purchases. It's easier to sell a share in a plane with a high time engine when the reserves are there to cover the imminent overhaul.
^^ These. We didn't want an engine fund at first, because we all could afford our portion but most years I'm flying more than my co-owners (not always) which meant my share of the timing out or eventual repair of the engine should be higher.
We decided on an hourly rate that actually will "underfund" a replacement engine by a bit. We'll have to calculate a "settle up" once we need to do it. Mostly because we all hate seeing cash sit doing nothing.
Ravioli
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Sorry... the Time Value of Money assertion is BS.
If that is an actual "issue" you should look at it as pooled funds that can be invested to reduce the real cost of maintenance. Thus becoming of a further cost advantage vs sole ownership.
Don't put it in a coffee can behind the hangar.
If that is an actual "issue" you should look at it as pooled funds that can be invested to reduce the real cost of maintenance. Thus becoming of a further cost advantage vs sole ownership.
Don't put it in a coffee can behind the hangar.
denverpilot
Tied Down
Oh we'd invest it if there were any reasonable place to invest such a paltry sum that earned anything these days.
No worries there.
Some of us remember money market accounts making 12%+ interest easy, so the current numbers are nothing but laughable.
The value of money thing was that both of the co-owners have businesses that they could invest in themselves and their own company growth instead of allowing money to sit in an account doing little.
One also plays in stocks and makes a chunk of change there. He's pretty good at it.
"Lowering the cost of maintenance" via an investment amount that's roughly half the price of an O-470, ain't gonna be much of a knock off of even a clean annual inspection, let alone actual maintenance throughout the year or things found that need fixing. We won't turn down the paltry interest it earns the LLC, but it's not like we're going to go day trading with it.
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Ravioli
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Such a "paltry sum", and much less a fractional portion of that sum, could hardly be missed by the money making machines you describe.
Thank you for affirming my view that the TVM argument is BS.
In my current partnership, if I fly a lot for a year or two, I may have 15 or 20k sitting in the overhaul account for several years. I would rather have this money in my pocket than in a 0.X% money market account. Those sums may be petty cash for you, for me it is real money and could be put to better use.
As mentioned, there are good reasons to build a reserve, there are other reasons not to do it.
denverpilot
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Except that nobody made a TVM argument. But it's nice that you made an inaccurate assumption.
As I've said, the reasoning was that capital investment in two businesses would yield better results than parking cash in an account owned by the LLC, but for various reasons, we decided to do it anyway.
Had absolutely nothing to do with TVM, nor did I claim it was, chief. Unless you're referring to some other post? Did someone make that claim?
With all three of us flying, it's not like this account is going to be a long term thing anyway. This year we didn't (collectively) fly as much as we all probably should have, so it's moot for this year, but in peak years the time before an overhaul will be needed is turning the clock hands fairly quickly.
Actually, I did.