Aircraft Leaseback

Widebelly pilot

Filing Flight Plan
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Widebelly pilot
Greetings everyone,

New member here seeking information, I've already delved into leasebacks but would appreciate any up-to-date insights. I'm in the process of acquiring two light sport aircraft, each around 190k, with the intention of leasing them to a busy flight school. These planes, equipped with full glass avionics, are slated to be priced at approximately 160 an hour wet—significantly more economical than the current 172s at the flight school. The goal is to offer competitive rates, facilitating quicker time-building for individuals aiming to accumulate around 1500 hours.

Based on my math, the break-even point for these planes would be around 60 hours a month, factoring in maintenance, fuel, insurance, oil, and other expenses. I don't plan to fly these aircraft myself; this is purely a business venture. Any insights or advice on this idea would be greatly appreciated.

Thanks in advance.
 
Welcome.

This will be interesting. Most of the threads here on leasebacks have been about pilots who own a single airplane which they fly and use the leaseback as a cost-reduction tool rather than a money-making business strategy.

I knew one guy years ago. I think he had 3 or 4 airplanes leased back to a local flight school and did ok. But even then it was a labor of love. He took his first flight lesson in his mid 60s and flew until he was 90, even though in his 80s he avoided flying without another pilot.
 
60 hours a month is a good bit, even for a flight school. That's of course a minimum of 2 hours per day on average and that's just breaking even. What are you hoping to achieve out of this?
 
It can be done.

The flight school needs to be solid, both in quality and volume and in a decent location - preferably where winters won’t significantly drop your flight volumes. If you are running 2 planes, you probably need a minimum of 3-4 instructors checked out in the planes and regularly available to ensure the planes are flying enough, and I’d lean towards at least the chief pilot being a tailwheel pilot. A lot of LSAs are on the light side and need solid crosswind instructors.

You, as an owner have to commit to solid maintenance, require adequate insurance of the students and school, and the planes need to be appealing. Keep spares on hand if you can afford to, since down time hurts more than you can imagine. Don’t be afraid to charge enough to cover your expenses if you are actually maintaining the aircraft well. People will notice if you’re consistently deferring stuff or brushing it off. Also, a good mechanic who can support the LSA is important. Not all mechanics are equal… especially with things like Rotax engines, which I think are great, but if all your mechanic is used to is Lycomings and Continentals, there may be a learning curve.

10 years ago I was flying N158AP quite a bit down at 5C1 along with one other primary instructor and we were keeping it pretty busy. It was owned by a guy in Florida who also had other LSAs in other locations. I was told more than once that it was the only one of his planes consistently turning a profit. I’d take that plane again in a heartbeat for my little operation if someone was offering it for leaseback.

Another thing, check with other owners about stuff that breaks. Some of the LSAs I’ve flown or talked with their owners about are barely tough enough for a single owner and don’t hold up as well with students as a legacy Cessna 150 would. Others are better, like the Legend Cubs, for example.
 
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Another thing is to consider a plan to sell the planes and replace them before they really need major work. If you budget $30k for a new engine in the operating expenses, but sell the airplane when there is still, say, 40% life left on the engine, you *might* actually clear a decent profit. That’s not in any way guaranteed, since sometimes engines don’t make TBO, but I’ve actually made a little bit of a return on an aircraft that way before.
 
How did you budget for maintenance and time down? You’ll need 100hour inspections which on your calculation must be every 4-6 weeks if you are breaking even.

Maintenance parts inspections etc take up a lot of time.

Do you have seasonal weather?
 
I can think of many other investments that are more lucrative and less speculative than single engine aircraft leasing.
Single engine airplane leasing as a business venture might be a better option than single engine airplane leasebacking.
 
Single engine airplane leasing as a business venture might be a better option than single engine airplane leasebacking.

Yes. Ask Udvar Hazy*.

A colleague of mine ran a GA aircraft lease business on the side. He was able to leverage his access to capital and his skill to find planes out of flight school bankruptcy auctions to make it a worthwhile business. As it qualified as an 'active business', there was also a tax angle to it.



* yes dear, I know, he leased airliners, not SEL.
 
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Thank you so much for the input, not I’m not looking to get rich quick, I’m looking to build equity while having some passive income but prepared for a loss, looking for more insight on the tax advantages.
 
If it were so lucrative, the flight schools would just own these aircraft. There’s a reason they don’t.
I think most of that is cost of acquisition, although cost if maintenance is definitely another factor.
 
Another thing is to consider a plan to sell the planes and replace them before they really need major work. If you budget $30k for a new engine in the operating expenses, but sell the airplane when there is still, say, 40% life left on the engine, you *might* actually clear a decent profit. That’s not in any way guaranteed, since sometimes engines don’t make TBO, but I’ve actually made a little bit of a return on an aircraft that way before.
I was actually thinking that, cycle them every few years im not sure how well light sports hold up for flight training. I seems like LSA’s are a common aircraft for flight training over in Europe so I know it can be done.
 
Put your money into a REIT Index or Exchange Traded Fund. (REIT - Real Estate Investment Trust) This will build equity in real estate, and give you a little bit of current income. Someone else will do all the managing, etc.

If you still want to do leasebacks, I think Aerodynamic Aviation in San Jose, CA could use more planes. However, the LSA (Evektor SportStar) we had is a total loss, as the damage to the fiberglass fuselage would cost more to repair than the plane is worth.
 
Greetings everyone,

New member here seeking information, I've already delved into leasebacks but would appreciate any up-to-date insights. I'm in the process of acquiring two light sport aircraft, each around 190k, with the intention of leasing them to a busy flight school. These planes, equipped with full glass avionics, are slated to be priced at approximately 160 an hour wet—significantly more economical than the current 172s at the flight school. The goal is to offer competitive rates, facilitating quicker time-building for individuals aiming to accumulate around 1500 hours.

Based on my math, the break-even point for these planes would be around 60 hours a month, factoring in maintenance, fuel, insurance, oil, and other expenses. I don't plan to fly these aircraft myself; this is purely a business venture. Any insights or advice on this idea would be greatly appreciated.

Thanks in advance.

Just curious, what does a C172 rent for in your area? $160/hr would be pretty steep in the Boise area...
 
Just curious, what does a C172 rent for in your area? $160/hr would be pretty steep in the Boise area...
Not in Denver area. At Aspen Flight School (sorry, didn't want to imply Aspen CO) - most the 172s start at $179 and go up. A few older ones are $159. Let's not even mention Independence, a Cirrus school. It grudgingly has a couple 182s for $215+$105 (consumables) but try to dissuade people from flying them because Cirri go for (take a deep breath)

$325/hour and then...
$95 consumables - billed per Hobbs hour and include all fuel, oil, TKS fluid, and oxygen for flight.

Want a Turbo? $464/hr plus $160 consumables
 
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Not in Denver area. At Aspen - most the 172s start at $179 and go up. A few older ones are $159. Let's not even mention Independence, a Cirrus school. It grudgingly has a couple 182s for $215+$105 (consumables) but try to dissuade people from flying them because Cirri go for (take a deep breath)

$325/hour and then...
$95 consumables - billed per Hobbs hour and include all fuel, oil, TKS fluid, and oxygen for flight.

Want a Turbo? $464/hr plus $160 consumables

I guess it's relative. It looks like C172's rent for $140/hr around here, so is $160/hr really "steep" like I implied? There's only one FBO that I'm aware of that rents LSA's and they rent in the $140/hr range too...
 
For that amount of investment, I'd rather run 4 or 5 mid-70s/mid-80s C172 Skyhawks. If I wanted shiny or planned to exit this venture quickly, then 2 or 3 restart 172Rs would work also.

Put them in a sunny place at a busy school with a lot of DPEs nearby.

This is a venture where novelty will be punished. Boring, reliable, easy to maintain sky-corollas are what you seek. I'd even skip the glass and get 430/530W stacks, or 650/750 if I had to. The G1000s are in their own cul-de-sac and not ideal.

$0.02 with a 10% marketing fee to the FBO
 
Best way to make a million dollars in aviation. Start with two million. You’re off to a good start!
 
As a business owner myself I got chatting about the biz, operational numbers, and aircraft ownership options with my Flight School owner and all I remember him saying was "I love leasebacks, they always work in the favor of the flight school over the owner"

Good luck with on coming out with that $380K on the other side.
 
In my opinion this business model is flawed because it bases at least in part on the assumption that time builders towards ATPL would rent these aircrafts @ 160 USD/h. Those customers are usually shopping for the cheapest rate. As long as there are C150/152 @ 100 or 110 USD/h available, this group is not going to rent these LSA's, especially if they cannot be flown legally in actual IMC.

I am also convinced that all the big pilot mills did the math many years ago. I am not aware of a major player in the flight school business that is using LSA's for primary training. So obviously the numbers did not played out in comparison with the trusty C172 and PA28.
 
I’ve looked at this and would love to have the numbers work, unfortunately, I’ve come to the conclusion that they don’t. :/
 
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