Leaseback Question

[Aeric]

Flying clubs take an Ops fee of approximately 20% out of the hourly rental rate. A question for those who are familiar with leaseback arrangements or who actually administer the leaseback themselves: Is it common practice or even uncommon practice for a flying club to take that same Ops fee from the owner of said aircraft when the owner his or herself flies the airplane?
I'm starting to get the idea that the answer is no, in fact one of the local flying clubs doesn't charge an Ops fee at all and relies on membership dues alone.

 

[Ken Ibold]

If it is your airplane, you should pay nothing to the club to use it. All of the fuel, insurance, mx etc comes out of your rental income anyway, and you certainly should not pay what amounts to a commission to use your own property. I have had three aircraft in leaseback and have never had to pay an ops fee.

 

[Aeric]

If it is your airplane, you should pay nothing to the club to use it. All of the fuel, insurance, mx etc comes out of your rental income anyway, and you certainly should not pay what amounts to a commission to use your own property. I have had three aircraft in leaseback and have never had to pay an ops fee.

Thank you, it's what I am starting to realize. Obviously I pay 100% of everything (I do get either a 5 or 10 cent/gallon club discount on fuel ) and the Ops fee is for their marketing, but they don't have to market the airplane to me. I just hate watching that Hobbs tick while I'm number five waiting to take off on a busy training day...

 

[poadeleted20]

If it is your airplane, you should pay nothing to the club to use it.

There are legal reasons why that is not necessarily true, largely regarding liability and asset protection -- keeping the plane at "arm's length." It also complicates the bookkeeping on the arrangement, as well as creating the potential to void the protection the the club's insurance provides when you're operating the aircraft outside the club. It even creates the potential for the club to sue you for "loss of use" of the aircraft if you damage it while you're flying it outside the club and it's down for a while.

All in all, this is the sort of reason why a lot more "due diligence" including advice from an attorney familiar with these arrangements is needed than most aircraft owners perform when entering such an arrangement. Before you try to change things, I suggests sitting down with such an attorney along with the existing leaseback agreement, the club's insurance policy, and your insurance policy, and examining the ramifications of changing the arrangement as well as the benefits of the existing arrangement.

 

[Aeric]

There are legal reasons why that is not necessarily true, largely regarding liability and asset protection -- keeping the plane at "arm's length." It also complicates the bookkeeping on the arrangement, as well as creating the potential to void the protection the the club's insurance provides when you're operating the aircraft outside the club. It even creates the potential for the club to sue you for "loss of use" of the aircraft if you damage it while you're flying it outside the club and it's down for a while.

All in all, this is the sort of reason why a lot more "due diligence" including advice from an attorney familiar with these arrangements is needed than most aircraft owners perform when entering such an arrangement. Before you try to change things, I suggests sitting down with such an attorney along with the existing leaseback agreement, the club's insurance policy, and your insurance policy, and examining the ramifications of changing the arrangement as well as the benefits of the existing arrangement.

Thank you for this info as well. I know that there are lots of legal ramifications in being an owner and having the airplane on leaseback. I guess I'll just need to sit down with the owner of the flying club and have a talk. After all, from everything I've heard, some things are negotiable. This is purely a business situation, and there has to be a favorable reward for the risk and so far there hasn't been much reward.

 

[gprellwitz]

Thank you for this info as well. I know that there are lots of legal ramifications in being an owner and having the airplane on leaseback. I guess I'll just need to sit down with the owner of the flying club and have a talk. After all, from everything I've heard, some things are negotiable. This is purely a business situation, and there has to be a favorable reward for the risk and so far there hasn't been much reward.

I'm sure you're aware of this, but the owner of the flight club is going to have their own interests at heart. Also, it's possible that they are unaware of some of the nuances if they've never needed to make a claim before. Your own lawyer can give more comprehensive, unbiased advice.

 

[Aeric]

I'm sure you're aware of this, but the owner of the flight club is going to have their own interests at heart.

As do I .
My hangup is the fact that no other club official that I've spoken with charges an Ops fee when the owner flies the airplane.

 

[dukeblue219]

I rent from a pretty successful and fairly operated flight school (IMO), and I recall from a leaseback seminar that while they do not charge the usual 20% for owner flights, they do have a smaller fee (maybe $7/hr hobbs?) that they say pays for the services they are still providing to you (a dispatcher at the desk, maintenance scheduling, GPS update installation, etc).

(But of course a true flying club may operate differently)

 

[Aeric]

I rent from a pretty successful and fairly operated flight school (IMO), and I recall from a leaseback seminar that while they do not charge the usual 20% for owner flights, they do have a smaller fee (maybe $7/hr hobbs?) that they say pays for the services they are still providing to you (a dispatcher at the desk, maintenance scheduling, GPS update installation, etc).

(But of course a true flying club may operate differently)

For those services, I'd be ok with a small owner Ops fee...

 

[Ken Ibold]

There are legal reasons why that is not necessarily true, largely regarding liability and asset protection -- keeping the plane at "arm's length."

... snip...

All in all, this is the sort of reason why a lot more "due diligence" including advice from an attorney familiar with these arrangements is needed than most aircraft owners perform when entering such an arrangement.

This is certainly true. I should have made it clear that my arrangements were endorsed by my attorney. Of course, to get those services all it cost me was dinner and a movie.

Oh, and a new BMW every 8 years or so.

 

[poadeleted20]

This is certainly true. I should have made it clear that my arrangements were endorsed by my attorney. Of course, to get those services all it cost me was dinner and a movie.

Oh, and a new BMW every 8 years or so.

...and half of everything you own if you ever fire her.