Flying clubs - the good , bad and ugly

Pugs said:
In my ever-evolving opinion, it’s an equity vs. non-equity organizational structure.
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So, the 30-person, 3-airplane equity club I was in was a partnership? I sure wouldn't call it that.

Pugs said:
That being said, I’ve been in both equity and non-equity clubs and it’s just my current opinion that non-equity is a better structure for long-term clubs.
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Why?

And going with that, who foots the bill for the airplane purchase? Or would you suggest a non-equity club exist solely with leasebacks?
 
WRT the equity vs non equity. It’s cleaner as a non equity club I think because if the club sells the plane for whatever reason (to buy a new one or to dissolve the club) then the “what’s a share worth” becomes irrelevant and it removes the plane from the equation. Is this great? No real idea but separation of the plane from the club seems to be a cleaner way to do it if someone wants the plane and makes a case for “I already own part”.

My two best clubs have been single plane and members. The big club I was in was a mess.
 
Pugs said:
WRT the equity vs non equity. It’s cleaner as a non equity club I think because if the club sells the plane for whatever reason (to buy a new one or to dissolve the club) then the “what’s a share worth” becomes irrelevant and it removes the plane from the equation. Is this great? No real idea but separation of the plane from the club seems to be a cleaner way to do it if someone wants the plane and makes a case for “I already own part”.
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It sounds like you're describing more of what I would call a partnership, where people are owners of part of the plane directly. Our equity club was structured such that the club, a corporation, owned all of the planes and the members owned shares in the corporation. The Board of Directors made the decisions to buy and sell planes. Of course, we (the BoD) solicited opinions from club members, and earlier on before the club was really complete with its revitalization process, there would be some people who would advocate for going to a lower number of planes but they were a very small minority (10% or less).

I'm sure things are more difficult with a single-plane club, especially if there's only a handful of members, but if you keep the members from actually owning parts of the airplane I think your concern is at least partially mitigated. The more members and more planes you have, the easier that gets.

Pugs said:
My two best clubs have been single plane and members. The big club I was in was a mess.
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How big?
 
flyingcheesehead said:
… Our equity club was structured such that the club, a corporation, owned all of the planes and the members owned shares in the corporation. The Board of Directors made the decisions to buy and sell planes. …
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Ours similarly. The bylaws drive what the Board can and can’t do. Our bylaws allow the Board to operate the club so that our mission and financial objectives are met. The only limitation in our bylaws relates to selling an aircraft, which requires 2/3s majority vote.

The previous Board had a philosophy that decisions should be made by a simple majority of members when possible, which really just kicked a bunch of decisions down the road. The current Board (I sit on it) is moving away from that philosophy.
 
flyingcheesehead said:
It sounds like you're describing more of what I would call a partnership, where people are owners of part of the plane directly.

I'm sure things are more difficult with a single-plane club, especially if there's only a handful of members, but if you keep the members from actually owning parts of the airplane I think your concern is at least partially mitigated. The more members and more planes you have, the easier that gets.


How big?
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No, the opposite of that. The members do not own a share in the plane. They just belong to a club.

It was 65 members and 5 planes. They have since bought a 6th plane but don’t know how many members they have now.
 
Ed Haywood said:
Begs the question: what is optimal ratio of members to planes?
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Depends on the members - when you do the analysis and the airplanes are booked three months out on every weekend and they fly more than 5 days a week you've got too many members or not enough airplanes. That's what drove me from that club. Zero chance for a plane for a weekend trip unless booked 4-5 months out.
 
Ed Haywood said:
Begs the question: what is optimal ratio of members to planes?
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It changes with the number of planes.

With three planes, 10:1 still gave us excellent availability - It was rare to want to fly and not be able to get an airplane at all. But 10:1 with only one airplane and there'll be lots of times you can't fly.

TCABM said:
Our insurer’s breakpoint is 8:1.
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Interesting. I've always seen 5:1, 10:1, 15:1 breakpoints on insurance. Also, with 5:1 or less you'll probably have to name every pilot, but you'll also have lots of options in terms of aircraft (I can do 5:1 in the Mooney Ovation for example). At 10:1, rates are still pretty good but you'll be limited in terms of what aircraft you can get - Nothing like a Cirrus, Bo or Lance. We could do a fixed gear 6 seater or a retract 4 seater, but also more limited to common Cessna/Piper types. At 15:1, rates went up 10-15% and I think retracts and 6-seaters might have both ceased to be an option.
 
flyingcheesehead said:
It changes with the number of planes.

With three planes, 10:1 still gave us excellent availability - It was rare to want to fly and not be able to get an airplane at all. But 10:1 with only one airplane and there'll be lots of times you can't fly.


Interesting. I've always seen 5:1, 10:1, 15:1 breakpoints on insurance. Also, with 5:1 or less you'll probably have to name every pilot, but you'll also have lots of options in terms of aircraft (I can do 5:1 in the Mooney Ovation for example). At 10:1, rates are still pretty good but you'll be limited in terms of what aircraft you can get - Nothing like a Cirrus, Bo or Lance. We could do a fixed gear 6 seater or a retract 4 seater, but also more limited to common Cessna/Piper types. At 15:1, rates went up 10-15% and I think retracts and 6-seaters might have both ceased to be an option.
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Our is 20:1 - we can up to 20 members and keep the same rates as 5 members. We currently have 15 and may add a couple after we see how our use it. Availability is the key driver. We did all the math to think about a 182 but it just doesn't work out right now.
 
Ed Haywood said:
What does breakpoint mean?
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When we grew beyond 8 pilots to one plane, our premium jumped significantly. We renew next month at 6.5% of hull value for the premium.

With less than 8, we were being charged 4.5% for the same declarations and limits. Our insurer is also asking us to consider adding a club policy that anyone acting as PIC must be passenger current or fly with a CFI to get passenger current. Leads me to believe they have data saying >8:1 leads to leas folks flying frequently enough to maintain basic currency, much less proficiently.

We’re shopping underwriters in the meantime.
 
I just left a club I'd been a part of for the last 4 years or so. It was $205/mo membership, and that gave access to a fleet of modern Archer IIIs and Saratogas. All of the planes were leasebacks, though, and the longer I was in it, the more I realized I don't want to buy someone else a plane for them. So I bought into a 4 person partnership on a 182 for a little less than what the club was costing me. Even if it ends up costing me more, availability and knowing the maintenance will be done right (because I'm in charge of it) is good piece of mind. The downside is, the magnetos are off for their 500 hr and so I haven't flown in 3 weeks. There's not another plane I can hop into when ours is down. I think that's going to be the biggest negative of ownership/partnership. When the time comes for an engine overhaul, I may just join a club for several months just to keep flying while we wait on the work to be done.
 
flyingcheesehead said:
"Partnership" is merely one end of the "multiple ownership" spectrum. The line between them is not well defined.

When does a partnership become a club?
Is it when two partners becomes three? Or four? Or five? Or six?
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Considering the impact that it has on the expenses, the transition to "club" happens when the insurer says so and raises premiums commensurate with that change. I believe the consensus is 5 members makes the ownership a "club". Fewer than that, they rate the partnership by the least experienced member.
 
I belonged to a club for over 24 years. Sold my membership earlier this year when I lost my medical (permanently). We had a membership limit of 50 members with a waiting list, so it didn't take long to sell it. Sold it for what I paid in 2000. Probably sold it for too little, but what the heck. 3 aircraft. I could count the number of times I could not get a plane in 24+ years on the fingers of one hand. Didn't always get the plane I had originally had in mind, but flew something that was well maintained and airworthy. When I joined in 2000 we had 4 aircraft, a 150, a 172, a 182 and an Arrow. We later sold the 150 and replaced it with a 172 (and replaced that later on). When the Arrow was sold we did not replace it. I have 4.1 hours in that 150 and never had the urge to up that number. Something about my knees going into the panel every time I went for the brakes. I didn't miss the Arrow when it was sold as 3 hours was my limit. Anything more and it was all I could do to crawl out of it. The 172 and 182 that were in the club in 2000 are still there 25 years later. Avionics have been updated a few times, but the aircraft are still there. I took both my private and instrument check rides in the 172. Why did I stay a member for so long? Cost. It was the least expensive way to fly when I joined and was still the least expensive way to fly when I had to give up being PIC.
 
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