Partnership vs. Flying Club

Discussion in 'Flight Following' started by Georgeyk17, May 28, 2020.

  1. Georgeyk17

    Georgeyk17 Pre-Flight

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    Can someone give me the differences, pros / cons of a partnership vs. flying club. Trying to really understand the differences.
     
  2. eman1200

    eman1200 Touchdown! Greaser!

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    'typically' more members in a club? I dunno, just guessing. that could be both a pro and a con.
     
  3. mcmanigle

    mcmanigle Pre-takeoff checklist

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    I've only really been in a partnership and rented from FBOs, but my semi-informed view is that compared to a partnership, a flying club probably has:
    1. Almost certainly more people
    2. Possibly more airplanes
    3. Almost certainly a bank account that holds the reserve for expected maintenance etc. Partnerships might do it that way, or might just split expenses as they come in. (In either case, *un*expected costs are probably handled by assessment.)
    4. Almost certainly more "administration", by which I mean:
    a. If somebody wants "in" or "out," there's a defined way to handle that, rather than an individual negotiation
    b. Rules around who gets to reserve the plane when are probably a little more structured, but this could go either way in a partnership or club
    c. Has probably already written rules that handle student pilots, CFIs, etc, whereas for a partnership this might be rulemaking from scratch
    d. Might have checkout or currency requirements that are more than just the FAA rules (I suspect this is rare in partnerships)
    e. There is probably somebody (whether an interested member or hired help) to take care of the tax and billing implications of the LLC or other structure

    So in general, while a lot of this could go either way, flying clubs tend to be a little more "structured" which makes things easier in terms of having an expectation of what will happen in any given situation, but makes things harder in terms of having more people / rules to deal with.

    In either a partnership or a club, having co-owners you get along well with and share a vision with is key. In a flying club, you're less likely to get a say in who joins, but you're also more likely to be able to get out "clean" if and when you want to.
     
  4. asicer

    asicer Final Approach

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    More pilots flying the plane = more insurance.
     
  5. midlifeflyer

    midlifeflyer Touchdown! Greaser!

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    Depends what you mean by "flying cub." I've seen the term used for everything from single ownership with casual rental to commercial flight training/rental FBOs to (what the term technically refers to), 501(c)(7) nonprofit social clubs.

    I've also seen "partnership" used more generically to mean a form of co-ownership among a few individuals to more formal set-ups like LLCs and corporations.

    That is a long way of saying, the first question isn't "what do I call it?" The first question is , "what do I want to do?" The form it ultimately takes, whether tax exempt incorporated social club or a simple nonequity casual rental, will flow from what you want to do, not vice versa.
     
  6. 86Aviator

    86Aviator Filing Flight Plan

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    I've looked into both and the core difference I've found is that partnership = owning a portion of the aircraft (usually indirectly through equity in a holding entity, such as an LLC or a corporation), where flying club = joining a club that owns the aircraft, but not actually owning a portion of the aircraft.

    The real world economics of what I found was that the buy-in for the partnership (in my most-recent case, a roughly a 1/5 interest in the plane since there were 4 other partners) was around $24k upfront (cash, no financing in my experience), then a set monthly maintenance fee to cover the expected maintenance and to build a reserve for some of the unexpected maintenance, and then a set (fairly low) hourly rate that more or less covered consumables and a portion of use-based maintenance (overhaul reserve, etc.). Partners are also subject to "capital calls" to fund expenses for which the partnership does not have enough money to pay. In a partnership, you'll want to have a lawyer review the partnership agreement (or whatever other governing legal documents exist between you and the other partners) in addition to taking whatever other steps you'd want to take when buying a piece of an airplane. If you want out, you've got to find someone to buy your piece of the partnership - whether that is your other partners or someone else (if someone else, your other partners will probably want to get to know them before jumping in bed with them in a business sense). So, your investment (if you want to call it that) isn't very liquid, but you share the plane with a small number of people and have some sense of pride of ownership.

    Contrasted with the flying club I looked at most recently, there were maybe 12-15 members or so. The club owns the airplane, and not the members. You would pay an initiation fee to join the club (around $1,250 if memory serves, and they'd let you meet payments on that over a year), monthly membership dues (similar in purpose to the "maintenance fee" I described in the partnership above, but a lower amount since more members mean people were paying for the same "fixed" costs), and then a set hourly rate that was higher than the partnership hourly rate, but lower than the hourly rate of an aircraft off of the FBO line. Because you're "just" the member of a club and do not own a piece of the airplane, you leave a club just like you'd cancel a membership to the YMCA or Costco - tell the powers that be that you want out and you stop paying dues. Club members are subject to assessments for "excess" expenses that the club can't pay for (just like every year at any country club I've ever been a member of!). As noted above, it's not unusual for flying clubs to be not-for-profit entities, so there's some money saved on taxes on consumables and other expenses. But otherwise, it's not far removed from renting from the FBO in a big-picture sense - nicer airplane, fewer people in the "renting" pot, usually (not always) experienced pilots instead of students, and a slightly different economic relationship.

    Others have probably had different experiences with both, but that was the result of my exploring both options here in Atlanta and in upstate NY pretty recently. So, hopefully this is at least somewhat helpful.

    Edit: One more thing to mention - my flight school has a "flying club" in that you pay an extra $325 a year plus a $50 initiation fee, and then you get a discount on aircraft rental and CFI rates. Members are not subject to any other fees, assessments or expenses - just pay the annual fee, plus the hourly rental rate of the aircraft. It always felt less like a flying club and more like a business retention tool to me, and I think it can easily be distinguished from most other "traditional" flying clubs.
     
    Last edited: May 28, 2020
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  7. frfly172

    frfly172 Touchdown! Greaser! PoA Supporter

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    Depending on the size of the club,you have more oppotunity to deal with controversial pilots.when your in a partnership you usually have part ownership of the airplane and treat it as your own.
     
  8. Will Kumley

    Will Kumley Pre-takeoff checklist

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    My flight school does this as well and I've bought into it. What does it mean for me? Cheaper rental rates, slightly better service as they are expected to gas the plane up as per my request prior to my arrival, and a lower hobbs requirement per rental. I'd have to look it up as I haven't used it really yet for that purpose but I think the 4 hour minimum for a day rental becomes a 2 hour minimum per day rental. But with COVID we haven't exactly been able to fly anywhere and do any sightseeing. The downside is the planes are still on the schools scheduling site so students still take a fair amount of time and I can't fault a school for that. They also have a policy that checkrides take priority and can bump other renters/students from the schedule. Another thing I wont get mad at since I understand the pain of getting a checkride in this area and then getting the weather to cooperate with it.
     
  9. N1120A

    N1120A Pattern Altitude

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    It really depends on the club. Is it a big leaseback club? You probably don't want to fall in love with one single plane, cause you'll be competing with other pilots and probably the owner. One of these 10 spot clubs with 2 planes that is more like a big partnership? Those can be good and you get what you want.

    Personally, I really like a 2-3 person partnership. You align desires, get what you want and the plane flies like it is meant to. You can usually schedule pretty easily.
     
  10. Georgeyk17

    Georgeyk17 Pre-Flight

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    Thanks for the breakdown. I think I got what I was looking for!
     
  11. Clip4

    Clip4 Final Approach

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    There can be no difference between a flying club and a partnership or there can a huge difference between the two.
     
  12. j1b3h0

    j1b3h0 Line Up and Wait

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    I’m co-owner of three airplanes. A V35A, A Stearman and a Luscombe. Four own the Bonanza, three the Stearman and two the Luscombe. Been on-going for several years, we’re all friends, good pilots and everyone has coughed up the bucks when we need to. The availability of the planes is almost never an issue, we all take the time to wipe the bugs from the leading edges, clean the windscreen, and lately, wipe down the cockpit. I’m sure I could fly cheaper if I liked flight school spam. So long as you have the right folks and the right airplane it works well. Hell, if I owned the Bonanza by myself I’d be forking out at least $1K a month. Buy the wrong airplane you could have eye-watering bills.