Confused about high costs of flying clubs & fractional ownership
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SoonerAviator
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SoonerAviator
Aside from the buy-in amounts which will vary based off of aircraft value and number of members, I don't see much out of line with those amounts.
A local flying club with a 1980 172 w/430 and brand new interior/plastics had:
$1,000 buy-in (9 current members, but can do 15 total under insurance)
$100/mo dues
$40/ tach hr dry rental (so assume another $45/hr for fuel)
That puts it pretty close in line with your examples. There is, again, likely variability on the buy-in due to aircraft value and membership level, as well as some regional price differences for fixed cost which will affect monthly dues and engine/maint reserve.
A local flying club with a 1980 172 w/430 and brand new interior/plastics had:
$1,000 buy-in (9 current members, but can do 15 total under insurance)
$100/mo dues
$40/ tach hr dry rental (so assume another $45/hr for fuel)
That puts it pretty close in line with your examples. There is, again, likely variability on the buy-in due to aircraft value and membership level, as well as some regional price differences for fixed cost which will affect monthly dues and engine/maint reserve.
JHW
En-Route
Way too much analysis. If you join a club then you have lots of other people voting on how to spend your money. If you want to control your costs, find a plane that fits your budget and buy it yourself. I doubt you'd do anywhere near this much ciphering before buying a late model used pickup truck. It's the same abount of money.
bflynn
Final Approach
Clubs - there's a wide variety
I call it a Club if everyone is equal and nobody has money at stake - in other words, it's about the organization. A Partnership occurs when you have a contract to buy an equity share in the airplane and an obligation to share future expenses. If the money comes in the door and goes into the corporate coffers, it's a Business.
regardless, what's available in your individual area varies. Individual club policies vary. Individual preferences vary. The only way to know if a particular club is a good deal is to look at what they do and what their prices are compared to what others are asking
A question to ask - where does the buy-in money go and what is it for? Is it transferred to an outgoing owner? Is it used to buy new airplanes? A deposit against future damage?
Insurance - everyone says it's expensive, but not necessarily. You can get by-the-hour insurance, so how much insurance you buy directly correlates to how much you fly.
If you're only going to fly 20 hours a year...nothing is cheap, your hours are going to cost a lot. If you fly 200 hours a year, a club or owning is certainly the way to go. Where the break points are depends entirely on your situation.
I call it a Club if everyone is equal and nobody has money at stake - in other words, it's about the organization. A Partnership occurs when you have a contract to buy an equity share in the airplane and an obligation to share future expenses. If the money comes in the door and goes into the corporate coffers, it's a Business.
regardless, what's available in your individual area varies. Individual club policies vary. Individual preferences vary. The only way to know if a particular club is a good deal is to look at what they do and what their prices are compared to what others are asking
A question to ask - where does the buy-in money go and what is it for? Is it transferred to an outgoing owner? Is it used to buy new airplanes? A deposit against future damage?
Insurance - everyone says it's expensive, but not necessarily. You can get by-the-hour insurance, so how much insurance you buy directly correlates to how much you fly.
If you're only going to fly 20 hours a year...nothing is cheap, your hours are going to cost a lot. If you fly 200 hours a year, a club or owning is certainly the way to go. Where the break points are depends entirely on your situation.
SoonerAviator
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Sure is a myopic viewpoint you have there. You could literally use that same excuse for an airplane of just about any value, just change the comparison vehicle. You could have access to a shared aircraft for a few grand buy-in and monthly dues . . . or you could outlay $40K+ for a 172 and still have monthly dues (fixed costs). Which one impacts cash flow greater in the short term? Your comment is exactly why GA is having issues and why most consider it an extremely expensive hobby.
There's no "considering" it an extremely expensive hobby, that's just what it is. It doesn't matter how you slice it, general aviation is very, very expensive. Period. There are steps that can be taken to mitigate some of those costs, but at the end of the stay it's still not a hobby for those without a reasonable amount of disposable income.
One of the things I don't like about our "industry" is the steps some take to make getting a license "affordable" (loans, etc.) without taking into account the costs to actually use the license after the fact. I'd love to see some statistics showing the percentage of those who really stretch their finances to get a license (long-term saving, taking out loans, etc.) who actually continue to fly once they pass their checkride. Over the years, I've flown with a number of students who could barely afford to get the license, manage to do so, then find they can't afford to actually keep flying. The Flying Club I was in was full of guys like that; they got into the Club looking for "cheap" flying, but quickly realize that they can't afford to actually use the airplanes. They pay their monthly dues because they hold onto the dream that someday they'll be able to use the planes, but many end up just throwing away the $75-100/mo club dues.
SoonerAviator
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I don't disagree with the idea that people with very little disposable income will not be able to make much use of GA (other than ultralights). However, the premise that people should just ignore flying clubs/partnerships because the cost of a plane isn't much different than a new truck, or a new BMW 5-series, or a new Maserati is just flat out wrong. Many (if not most) people who are sole owners only fly a few hours per month, if that, as evidenced by the declining number of small aircraft activity. So why not have multiple people share the costs and get increased aircraft utilization?
I'm one of those who chose to get the PPC while early in my working career, which left me little disposable income after I was done with it. Home purchases, boat/car, "life" takes more precedent than the license did, so I all but quit flying for a few years. Now, I can afford to go buy a $60K+ aircraft if I really wanted it, but I know I still wouldn't be flying more than a few hours per month, so why take the hit to cash flow/savings? Flying clubs/partnerships allow for greater flexibility for those who are willing to trade out a bit of leverage in aircraft decisions.
If one has means and desire to be a sole owner, more power to you, but lets not pretend like it's the best/only solution for everyone in the pilot community.
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Don't get me wrong, I think Clubs and Partnerships are great. I've been in a Club, and I'm currently in a small partnership. I can't stomach the full ownership costs, even if I could "afford" them. My point was, I guess, that even Club's and Partnership's aren't "cheap" and can still be very expensive, though much less so than sole ownership.
I agree on clubs. Clubs seem to have a million and one rules, bylaws, etc.... The savings aren't THAT great. Keeping a 172 in the air costs what keeping a 172 in the air costs. It doesn't matter if you're flying it as a club member, renting it by the hour, or owning it yourself. Single owner is the most expensive option since you're not splitting the fixed costs across multiple people, but it cuts way down on complications. There are no scheduling conflicts, no partnership agreements, etc...
But hey, this is just what I've seen so far and I've only been flying a couple of years as a renter! I'm enjoying the fact that it's pay as you fly. Plane breaks? Not my problem, I just tell the owner and it's their problem. Don't have a good reason to fly for a couple of weeks? No guilt about paying that hanger rent on something I'm not using.
I guess clubs are a middle ground. You're buying into a fraternity of pilots and can take part in weekly weenie roasts.
Different strokes for different folks.
I foresee aircraft ownership in my future, but I'm not there yet.
But hey, this is just what I've seen so far and I've only been flying a couple of years as a renter! I'm enjoying the fact that it's pay as you fly. Plane breaks? Not my problem, I just tell the owner and it's their problem. Don't have a good reason to fly for a couple of weeks? No guilt about paying that hanger rent on something I'm not using.
I guess clubs are a middle ground. You're buying into a fraternity of pilots and can take part in weekly weenie roasts.
Different strokes for different folks.
I foresee aircraft ownership in my future, but I'm not there yet.
The capital outlay and ongoing monthly expense on a 172 in a three-way partnership is less than the cost of owning a jet-ski or being a member in the local golf course.
Sure, maintaining an IFR capable plane for your exclusive use is expensive, but just as a 'hobby' flying can be done for a reasonable outlay.
As for clubs, some can be buerocratic and personality driven, others are laid back and just function as a big partnership with 3/4 of the partners not actually flying the plane. Before joining, you would really want to have some insiders perspective from a current or former member. Again, no different from any other social club, rotary, kiwanis or a golf-course.
Until something expensive breaks (which is, basically, anything and everything on the airplane) and everyone has to write an extra $1000 check on top of their normal monthly contributions, etc.
JHW
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It IS an extremely expensive hobby, but so are all motorsports hobbies. You can pretty much spend as much or as little as you want on anything with an engine. Our neighbors spend way more on their snowmobiles than we do on our champ. And the snowmobiles are faster
SoonerAviator
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You'll get no disagreement from me about it being expensive, I never said it wasn't.
My comment was simply directed at your viewpoint that there was "way too much analysis" and in order to "control your costs, find an airplane in your budget and buy it". It will always be expensive, relatively speaking, but it doesn't have to be as extreme as "sole ownership or nothing". For some $25K is a huge outlay, for others it's a pittance. There's no one-size fits all solution, hence the analysis going on in this thread.
JHW
En-Route
Fine, but i might suggest you read the OP again, S/he is trying to slice it down to single $$ per hour resolution. I can't predict that close on my lawnmower much less my airplane. It's paralysis by analysis. Once you go to a club or fractional, they cant predict it that well either. Their solution is to round everything up to make sure that the club doesn't come up short. Any money left over at the end of the year will always be spent on upgrades. Therefore there is no way for the club plane to operate at with the minimal amount of $$ actually needed to keep the plane flying, which is the way i read the question. Yes the expenses per owner will be less than sole ownership, but the total spend per airplane will be higher. Often, a lot higher.
Insurance jumps way up for a rented lease-back plane. 10 years ago I considered putting a Mooney on with a flight school. No primary instruction and it still jumped from $1200/yr to around $7000. And for partnership I think there is a limit of 4? member before rates jumped.
SoonerAviator
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I read the OP's question more along the lines of an hourly cost comparison of flight clubs/partnerships vs renting. Your costs with a flying club are fairly predictable, outside of major squawks or items that exceed the available engine reserve. Otherwise, it's a fairly straightforward analysis of what the initial investment (buy-in) is, the fixed costs (monthly dues), and hourly rental (engine reserve/maint). Once you have that data, it really just a matter of what the break-even amount of hours per month is vs renting.
There will obviously be a difference in actual ownership cost vs what comes in from monthly dues and hourly revenue. However, the treatment of that overage/shortage would be determined by the laws for that flying club. No way to say whether the total ownership costs would be kept at minimum or not. The problem I saw with the OP's assumption is what made up the "$21/hr" hourly expense. Most everyone seems to think the real amount is closer to $40/hr for the dry rate, which when $45/hr in fuel is added, brings it inline with some of the numbers from the flying clubs at least with something similar to a 172.
There will obviously be a difference in actual ownership cost vs what comes in from monthly dues and hourly revenue. However, the treatment of that overage/shortage would be determined by the laws for that flying club. No way to say whether the total ownership costs would be kept at minimum or not. The problem I saw with the OP's assumption is what made up the "$21/hr" hourly expense. Most everyone seems to think the real amount is closer to $40/hr for the dry rate, which when $45/hr in fuel is added, brings it inline with some of the numbers from the flying clubs at least with something similar to a 172.
Depends on the underwriter. Some will write 5 named pilots (I know from experience), but won't give you an open pilot warranty. If you have 5 partners, it does limit your insurance choices, though.
Again, no different from a jet-ski or a golf course membership. The last hurricane caused a hefty assessment to the members to pay for washed out culverts and downed trees. A jet-ski that eats an impeller or fries a power-head will either go to craigslist as 'free to pick up' or require a check to be put back into operation.
Life is expensive.
RalphInCA
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Yep, sure is. That is why I find it easier to consider aviation a "lifestyle" as opposed to a hobby.
It's just part of my life. And life, as you say, is expensive.
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dans2992
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3-way partnership. He said don't bother... They'll find a way to pierce the LLC - not worth it.
I paid nothing for this advice, so I don't feel ripped off.
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airdale
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airdale
Not worth what? How much did he say an LLC would cost? In my experience they are nearly free. Like $200.
It's actually pretty hard to pierce the veil unless the partners are totally ignoring corporate formalities. It's not that hard to follow the proper formalities and pretty well cement the protections.
JimNtexas
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Jim - In Texas!
This is why a shared ownership situation is so much better than any rental. The rental pilot doesn't give a rats behind if he breaks the airplane. It's not his problem!
This is why most rental airplanes become dogs after only a few months on the line.
Multi-ownership is the best way to fly more than 20 hours or so a year. Especially if you can't just write a check for your airplane and not wince when when you get the bill for that first annual.
You get better airplanes for less money.
marcoseddi
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Planes are rairely 25k as well my clubs has 2 152 2 172 archer and arrow - and a good 152 probably costs closer to 40k give or take - They also do a lot of maintenance and you have to pay for a tie down or inside, lots factors i think a club is great because it flies a lot and many other people to see if things are wrong, flying a plane constantly is huge.
Unless you fly more than 200 hours a year, owning is rarely less expensive than renting.
Also, owning is more RISKY than renting. Owning could be MORE than renting, could be less. The big thing you dont know is maintenance. When will a repair hit? If its a whole engine, that is a LOT, and that COULD hit at any time. With renting, its just paying the average cost over time, the rental fleet evens it out
A club? Not really full ownership is it? You cant leave your logbook and sunglasses in the plane between flights, and carry the keys on your key ring and go fly whenever you want. THAT is the reason for ownership, not saving money...
Also, owning is more RISKY than renting. Owning could be MORE than renting, could be less. The big thing you dont know is maintenance. When will a repair hit? If its a whole engine, that is a LOT, and that COULD hit at any time. With renting, its just paying the average cost over time, the rental fleet evens it out
A club? Not really full ownership is it? You cant leave your logbook and sunglasses in the plane between flights, and carry the keys on your key ring and go fly whenever you want. THAT is the reason for ownership, not saving money...
SD: fifty bucks + a $85 for the resident agent
(of course that doesn't affect any personal property tax or use tax in the state where the plane is based)
AOPA had a one pager a few months back - the monthly blurb where they profile airplanes, pros and cons, etc.. . Anyway, they figured $85 an hour wet for a reasonable 172.
My club is a bit cheaper than that, and charges Tach, vice Hobbs, as well. Paved tie-down, no hangar. Plus $90 dues.
My club is a bit cheaper than that, and charges Tach, vice Hobbs, as well. Paved tie-down, no hangar. Plus $90 dues.