Renting your Plane Out...How much to be worthwhile ?

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LouisianaLady

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LouisianaLady
Was just approached by a business that wants to rent my plane one day a week for travel to meetings. I'm considering it, but I want to make sure I get reimbursed enough to justify someone else putting hours on my baby and getting her closer to overhauls, maint, etc. Are there any guidelines that can help me calculate a price per hour?

Any advice is appreciated :)

*2005 SR22 G2, 1200 hrs since OH
 
I have never rented a plane, but flown many rented planes.
1. How does the insurance change, will that cost you anything?
2. Renters tend to abuse planes, what will be your added mantenance costs over time?
3. What is the rental agency's cut? If the plane is say $250 per hour wet, how much will be in your pocket?
 
There is no rental agency- just between me and the business. If my ins changes, I would charge them upfront for it. Looking at 2-3 hrs per week, piloted by someone I know at local airport.

Anyone know aviation atty that could help with a contract?
 
Your may also be subject to 100 hr inspections with this type of use also, someone needs to chime in on that.
 
Is this in addition to the already usual things at 100 hrs?
 
I would not do it. Too many chances for something to go wrong. The income is probably not worth it. If your finances dictate this then you probably should sell it instead. 1500 hours is approaching pumpkin time.
 
LouisianaLady said:
Is this in addition to the already usual things at 100 hrs?
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The usual private aircraft just needs annuals, rented aircraft need the added 100 hr checks. Yes the 100 and annual can be the same provided you fly less than 100 hrs per year.
 
Private owners can generally put four-five people on an insurance policy as pilots without getting lots of questions or increased premiums. It's not so much running a rental business as sharing a plane.

See if you can't come to an informal arrangement naming the pilot(s) who will fly…

I would recommend a dry rate based on hours flown. If they want guaranteed access one day a week, there should be a minimum charge for that whether they fly or not.
 
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I'm worried about someone else in my plane ( which I haven't even taken delivery of yet lol) I just got excited of the thought of extra income on her, although not necessary.

What is pumpkin time? Within 500 hrs of engine OH?
 
LouisianaLady said:
I'm worried about someone else in my plane
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Meet the candidates. Get to know them and how they fly. Interest in the plane is a good sign. You can work out something with one or two regulars without hanging out your shingle as a rental operation, or allowing anyone else to use the plane.
 
Before you can accurately calculate costs, you seriously need to have a discussion with your insurance agent/broker. That could make a huge difference.

First, does your policy cover renting out? Most do not and require a commercial policy which is typically more expensive - can be even double a non-commercial policy.

Second, will the business carry non-owned insurance? If they do, you need to make sure it is enough to cover your aircraft.

Third, even if the business carries non-owned insurance, you may still need the commercial policy to cover you for any liability. Worst case scenario, let's say you have a few million in assets and their non-owned policy has $1M liability and they have a lot of debt and few assets. On one of these business trips the plane crashes for whatever reason into a playground full of kids. Guess who is getting named in the suit even though you weren't flying the airplane? If you have assets, don't skimp on insurance.
 
You might also want to send them to an OpenAirplane facility for an SR22/G2 PTS-level checkout (or similar facility) to ensure they can fly the thing without auto-pranging it.
 
Fearless Tower said:
Before you can accurately calculate costs, you seriously need to have a discussion with your insurance agent/broker. That could make a huge difference.

First, does your policy cover renting out? Most do not and require a commercial policy which is typically more expensive - can be even double a non-commercial policy.

Second, will the business carry non-owned insurance? If they do, you need to make sure it is enough to cover your aircraft.

Third, even if the business carries non-owned insurance, you may still need the commercial policy to cover you for any liability. Worst case scenario, let's say you have a few million in assets and their non-owned policy has $1M liability and they have a lot of debt and few assets. On one of these business trips the plane crashes for whatever reason into a playground full of kids. Guess who is getting named in the suit even though you weren't flying the airplane? If you have assets, don't skimp on insurance.
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I wonder… you think all this applies if you're letting one or two others use the plane? Of course, theoretically it could. But if we're going to think like this, maybe we should reconsider the risks of getting out of bed in the morning…. Just think of all the things that could go wrong! What you're describing is a good reason never to take anyone unrelated to you up in plane ever (or let anyone else use your plane), unless your are a fully licensed commercial operation--and even then it's probably a bad idea.

I do agree the OP needs to speak to the insurer. But there are steps to take shy of treating this as a full blown commercial operation.
 
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WhiskeyPapa said:
I wonder… you think all this applies if you're letting one or two others use the plane? Of course, theoretically it could. But if we're going to think like this, maybe we should reconsider the risks of getting out of bed in the morning…. Just think of all the things that could go wrong! What you're describing is a good reason never to take anyone unrelated to you up in plane ever, unless your are a fully licensed commercial operation.
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All I am saying is that not all policies are the same and there can be significant implications if not done right.

OP needs to contact their insurance agent and discuss the scenario to see what the true impact would be.
 
WhiskeyPapa said:
I do agree the OP needs to speak to the insurer. But there are steps to take shy of treating this as a full blown commercial operation.
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If you are renting your airplane out and they are paying you for its use, a non-commercial policy may exclude that. I cannot speak for all policies, but know all of mine would exclude such coverage if there was an accident.

There may or may not be ways around it (say by naming them on your policy), but again, that is for the insurance company to determine.
 
LouisianaLady said:
Was just approached by a business that wants to rent my plane one day a week for travel to meetings. I'm considering it, but I want to make sure I get reimbursed enough to justify someone else putting hours on my baby and getting her closer to overhauls, maint, etc. Are there any guidelines that can help me calculate a price per hour?

Any advice is appreciated :)

*2005 SR22 G2, 1200 hrs since OH
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This is doable. Some considerations: (1) You do not need 100 hour inspections, as stated by another poster. Rental doesn't require it. A commercial activity like flight instruction does require it. (2) You will be able to add the pilot and the company to your policy if the pilot has enough experience to make the insurer happy. (3) Make sure that the company has non-owner coverage that names you as an "additional insured". (4) Make sure you have an indemnity clause in the contract. (5) Put the aircraft in a corporation to avoid vicarious liability if you have significant assets to protect, which I assume is the case. (6) Get a contract for a period of time with a guaranteed minimum usage or consider charging a non-refundable fee up front, to cover the cost of setting this up.

Other than the structuring issues, it could be a good deal for both parties.
 
Or, you could cut them in as a non-equity partner. That way they help with costs, you may not make a dime, but the cost of ownership will be divided between you and the partner.
 
LouisianaLady said:
Was just approached by a business that wants to rent my plane one day a week for travel to meetings. I'm considering it, but I want to make sure I get reimbursed enough to justify someone else putting hours on my baby and getting her closer to overhauls, maint, etc. Are there any guidelines that can help me calculate a price per hour?

Any advice is appreciated :)

*2005 SR22 G2, 1200 hrs since OH
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Last I saw an SR-22 of that vintage rented out for $295hr. That was by an operation that is a well established club.
 
From what I have read here, I think the best course of action would be some sort a fractional ownership setup withe the company. Figure our how many hours they will be using it and they take on that percentage of the financial responsibility. They do not give you any rental fees, but defer some of your costs. Example, if they will be flying 25% of the hours then they buy 1/4 of the plane and pay 1/4 of the continued operating costs.
 
Thanks everyone - I love how helpful everyone is!!! I love this board!
 
If the entity that is renting the airplane does not provide flight instruction but allows outside flight instructors, you also don't need 100 hr inspections. The student pays the instructor directly.
 
kgruber said:
If the entity that is renting the airplane does not provide flight instruction but allows outside flight instructors, you also don't need 100 hr inspections. The student pays the instructor directly.
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Yep, 100hr basically applies to flight schools and commercial operations, not private rentals.
 
one of the things that has not been discussed it what the business renter is going to do with the airplane. "Travel to meetings" can be anything from one person renting the airplane and flying herself to meetings to transportation for multiple people, maybe even the business' customers. Depending on the precise use, I can see a number of regulatory (both federal and state), insurance and liability issues being implicated, requiring either a well drafted agreement(s) or a "handshake and hope". There are probably no more than 4 people here qualified to even ask the right questions and the people most qualified wouldn't want to ask or answer them on a public forum.

"Handshake and hope" is my term for an agreement (or none) between two people without getting professional advice, the primary term of which is, "we sure hope nothing goes wrong."
 
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midlifeflyer said:
one of the things that has not been discussed it what the business renter is going to do with the airplane. "Travel to meetings" can be anything from one person renting the airplane and flying herself to meetings to transportation for multiple people, maybe even the business' customers. Depending on the precise use, I can see a number of regulatory (both federal and state), insurance and liability issues being implicated, requiring either a well drafted agreement(s) or a "handshake and hope". There are probably no more than 4 people here qualified to even ask the right questions and the people most qualified wouldn't want to ask or answer them on a public forum.
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As far as the person renting the plane out goes, he has no regulatory issues unless he is also providing a pilot.
 
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