Ratio of lease/purchase in general aviation

[datafuser]

Among various options of buying/using a Cessna 172 or Cirrus Design SR22 or any other similar light aircraft, how many percents fall under each category below?

The options I know are:

- Outright purchase: you pay the whole cost of the aircraft upfront and own it

- Loan/purchase: you borrow money to buy the aircraft and offer it as collateral on the loan

- Operating lease: you pay the leasing company to use the aircraft for a certain period of time and return it at the end of the lease

- Financing lease: you borrow money to lease the aircraft on condition that you buy it at the end of the lease

- Synthetic lease: something between the operating lease and financing lease

- Fractional ownership

I am wondering what is the most popular among those options.

 

[jesse]

I've pretty well convinced myself that I can't truly afford to own one until I can just outright buy one. But--there are those nights where I'm looking at Barnstormers and I try to convince myself I can afford all kinds of ridiculous things.

 

[KennyFlys]

I would assume GAMA might have some data to answer that question. I'm sure they do for new aircraft and may well for used aircraft for the benefit of their members.

GAMA: General Aviation Manufacturers Association

Ken Ibold is also likely well informed on such matters.

 

[Ken Ibold]

- Outright purchase: you pay the whole cost of the aircraft upfront and own it

- Loan/purchase: you borrow money to buy the aircraft and offer it as collateral on the loan

- Operating lease: you pay the leasing company to use the aircraft for a certain period of time and return it at the end of the lease

- Financing lease: you borrow money to lease the aircraft on condition that you buy it at the end of the lease

- Synthetic lease: something between the operating lease and financing lease

- Fractional ownership

I don't know where concrete info on this might be found. The insurance companies are the only entities that would have a handle on the specifics, and I'm sure it varies from company to company. Having said that, here are some of my observations on your menu of options.

Leasing in general is virtually unheard of until you get up into the turboprops and bizjets. There simply isn't enough margin in it for the lower value airplanes to make the risk acceptable. Part of the reason is because of the way damage history diminishes the value of an airplane. A lease is structured to cover depreciation (plus profit) and if someone prangs an airplane, even after it's fixed it will be worth tens of thousands of dollars less on the open market in the relatively short terms most leases have.

(Leasebacks by FBOs of airplanes they intend to rent are different animals and subject to a different set of rules and concerns.)

That leaves loan purchase, outright purchase and fractionals. I have done all three. Each has advantages and disadvantages. But you asked for percentages. That probably doesn't exist, because so many airplanes are owned by corporations that have no assets other than the airplane. So who's tracking who the shareholders of the corporations are? Well, just the IRS. So it becomes an impossible thing to know for certain cuz they ain't talking. By the way, when you say fractionals, in light aircraft most people will call them partnerships, but it's really the same animal.

 

[datafuser]

I don't know where concrete info on this might be found. The insurance companies are the only entities that would have a handle on the specifics, and I'm sure it varies from company to company. Having said that, here are some of my observations on your menu of options.

Leasing in general is virtually unheard of until you get up into the turboprops and bizjets. There simply isn't enough margin in it for the lower value airplanes to make the risk acceptable. Part of the reason is because of the way damage history diminishes the value of an airplane. A lease is structured to cover depreciation (plus profit) and if someone prangs an airplane, even after it's fixed it will be worth tens of thousands of dollars less on the open market in the relatively short terms most leases have.

(Leasebacks by FBOs of airplanes they intend to rent are different animals and subject to a different set of rules and concerns.)

That leaves loan purchase, outright purchase and fractionals. I have done all three. Each has advantages and disadvantages. But you asked for percentages. That probably doesn't exist, because so many airplanes are owned by corporations that have no assets other than the airplane. So who's tracking who the shareholders of the corporations are? Well, just the IRS. So it becomes an impossible thing to know for certain cuz they ain't talking. By the way, when you say fractionals, in light aircraft most people will call them partnerships, but it's really the same animal.

Many thanks for the reply. I really appreciate it.

Both Cessna and Cirrus offer lease programs but I do not know how popular they are.

As you can see below a Cessna dealer says you can fly a $241,000 Cessna 172S for as little as $3,192 out of pocket.

http://www.swaircraftsales.com/index.php?pr=Cessna_Lease

And Cirrus offers a lease program called Cirrus Lease.

http://www.cirrusdesign.com/ownership/lease/default.aspx

I wondering if Cessna and Cirrus run these programs just to have offerings for all sorts of potential customers.

 

[Shipoke]

Well Data i opted to get a loan and when its done i own my plane . No partners but i do have a friend who flys my plane and helps with the bills.
Dave G