Selling Block time on your aircraft

Morgan3820

Morgan3820

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El Conquistador
A local pilot (Marine Captain flying AV-8B Harrier at MCAS Cherry Point, NC) has approached me to buy a block of time (75-100 hrs) on my C-172. Apparently, he needs the time to get his ATP and his Harrier time somehow doesn't qualify or will not add up to enough before his planned departure from the marines and he wants to save over renting from the local FBO. He is PPL, ME, and IR

I don't get it either but assuming he is on the straight and level, what are the issues that I need to be aware of? $5K in the plane's bank account would be nice, but is it worth it?
 
Morgan3820 said:
A local pilot (Marine Captain flying AV-8B Harrier at MCAS Cherry Point, NC) has approached me to buy a block of time (75-100 hrs) on my C-172. Apparently, he needs the time to get his ATP and his Harrier time somehow doesn't qualify or will not add up to enough before his planned departure from the marines and he wants to save over renting from the local FBO. He is PPL, ME, and IR

I don't get it either but assuming he is on the straight and level, what are the issues that I need to be aware of? $5K in the plane's bank account would be nice, but is it worth it?
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Probably not worth it IMHO, but do you want to help the guy out?
 
Run the numbers,you still have your fixed costs. Are you going to fly the airplane also? Is he going to carry his own insurance, what benefit are you going to realize at the end of this deal?
 
Sound right to me, military fighter type pilots don't get that many hours.

I'd fly with him first and make sure you like the way he treats your plane.

Just remember some people are of the mindset that "nothin' flys like a rental"
 
I'd consider it seriously if it doesn't interfere with your use. One additional user, obviously well-qualified and trained, presumably a gentleman of good character, exactly the situation you would choose if you could draw it up from scratch. Frequently-flown planes typically fare much better than seldom-flown planes.
 
First things first...check your insurance policy to see who can fly your plane and still be covered. My policy listed just me and my instructor, anyone else was not allowed.
Second... is he paying wet or dry. If wet you are getting hosed. My guess is your 172 burns about 8 gals an hour and at 5000 dollars for 100 hrs your profit is $1000 and does not even begin to pay for your maintenance(figure $20 an hr for your overhaul fund). If dry then maybe you are breaking even assuming he does not bend your metal, but even then I think you are probably losing money in the long run. The 172 in my local FBO costs about 150 an hr wet. I would charge him by the hour and probably about $80 to $90 an hour wet(though the real way to do this is to see what it costs you to fly the plane an hour and then decide how much you want to pad it), but to tell you the truth, I sort of like not having anyone else fly my plane.

Just my thoughts
 
My insurance would cover another (qualified) pilot flying my aircraft casually, but what it won't cover is me renting it out. If you like this guy and he has sufficient qualifications you can probably add him to your policy for small or zero dollars. If you try to get a policy to cover rental in general you're most likely looking at 3x what you are paying now.
 
Morgan3820 said:
He suggested $45 dry which I think is low. The local FBO is $68 dry
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How much per hour does it cost to fly your plane(some costs such as insurance,hangar/tie down fees, mortgage payments are fixed, but others are dependent on how many hours your plane is flown and so you may want to figure differently for these costs), then add how much padding you want, and the amount per hour for overhaul set aside and you know how much to charge him. For my 182 it costs about 150 an hour wet to fly(does not include set aside for overhaul) so I would be charging him a lot more than 45 an hour dry. In other words, if you subtract $20 from the $45(assuming 2000 hr for time to overhaul and $40000 for an overhaul--may be cheaper, but unless your engine is at 0 hrs since overhaul it is actually a lot closer to overhaul anyhow and so is more expensive per hr) he will be giving you 25 dollars an hr. How much of this 25 dollars per hour is eaten by maintenance. Also, add in the stress factor while he is flying your plane. My guess is most of it if not all, and it seems to be a poor idea to me. Lots of risk, little gain, except for the fact you are being nice to a military guy, and a fellow pilot. Never know what those brownie points may get you.
 
Don't forget to factor in the cost of the 100hr because you just became a commercial operation.
 
soyAnarchisto said:
Don't forget to factor in the cost of the 100hr because you just became a commercial operation.
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100 not required unless renting it for PPL training with CFI. Plane rental alone does not require 100 hr inspections.

I allowed 3 friends (who I had flown with and knew how they treated equipment) to pay me $45 per hour dry to fly my Cherokee which was not getting 50 hrs a year. They flew it about 100-150 hrs a year and everything was perfect. The $4500-6000 per year covered 100% of my hangar rent, insurance and maintenance plus left some cash in my aviation account for other things. The plane was in better condition than if I flew it only 50 hrs a year. I would fly with the guy and if I liked how he flew then I would go for it.

Any deal I made I would include my being able to cancel and refund the balance if something came up that I did not like.

It was a great deal for me and for them.

The way we did it to make it pass Insurance muster is that we made those guys Non Equity Partners. They had no steak in the plane other than ability to use it for paying offsetting expenses. Insurance knew full details and assured me it was fine with them for non commercial policy. They named all three pilots plus me on the policy for $700 a year. Since I had no insurance before allowing them to fly they paid 100% divided 3 ways. I am happy to be self insured for me but not for someone else using my plane.
 
It cost me $1440 a year hangar, $700 insurance, no taxes in KS, annual $600 plus maintenance/repairs another $600 = so about $3300. I flew 50 hrs a year and my non equity parters flew 120-140 hrs a year and added $4500 to my aviation account so I did a little better than break even or fly free 1 year.

The variable maintenance on a Cherokee/172 is about $10 per hour. I don't worry to much about reserves as that is nonsense and I ultimately sold the airplane 880 hrs past TBO. Reserves only matter if you intend to actually replace the engine. but if you want to be a bit nit picky about it $14k divided by 2000 hrs work out to another $7 per hour.

It is hard to imagine $45 per hour dry is not a good deal for the owner to get and not have to buy commercial insurance.

douglas393 said:
How much per hour does it cost to fly your plane(some costs such as insurance,hangar/tie down fees, mortgage payments are fixed, but others are dependent on how many hours your plane is flown and so you may want to figure differently for these costs), then add how much padding you want, and the amount per hour for overhaul set aside and you know how much to charge him. For my 182 it costs about 150 an hour wet to fly(does not include set aside for overhaul) so I would be charging him a lot more than 45 an hour dry. In other words, if you subtract $20 from the $45(assuming 2000 hr for time to overhaul and $40000 for an overhaul--may be cheaper, but unless your engine is at 0 hrs since overhaul it is actually a lot closer to overhaul anyhow and so is more expensive per hr) he will be giving you 25 dollars an hr. How much of this 25 dollars per hour is eaten by maintenance. Also, add in the stress factor while he is flying your plane. My guess is most of it if not all, and it seems to be a poor idea to me. Lots of risk, little gain, except for the fact you are being nice to a military guy, and a fellow pilot. Never know what those brownie points may get you.
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Tony_Scarpelli said:
It cost me $1440 a year hangar, $700 insurance, no taxes in KS, annual $600 plus maintenance/repairs another $600 = so about $3300. I flew 50 hrs a year and my non equity parters flew 120-140 hrs a year and added $4500 to my aviation account so I did a little better than break even or fly free 1 year.

The variable maintenance on a Cherokee/172 is about $10 per hour. I don't worry to much about reserves as that is nonsense and I ultimately sold the airplane 880 hrs past TBO. Reserves only matter if you intend to actually replace the engine. but if you want to be a snit about it $14k divided by 2000 hrs work out to another $7 per hour.

It is hard to imagine $45 per hour dry is not a good deal for the owner to get and not have to buy commercial insurance.
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Sorry I insulted your intelligence(guess I am not up to your standards of decorum), but not trying to be a "snit", just giving my opinion(which obviously is worth the amount the OP paid for it). You have a different one, and I wish I could fly my plane as cheaply as yours, but thats what so nice about these forums, everyone has an opinion and is free to tell others what they think.

Have a nice day.

Your neighborly "snit"
 
$45 dry does not sound unreasonable, but it depends on how long he is going to be flying it, and if he is going to cover your fixed costs during that period of time or if the dry rate is supposed to cover them.

need more details

Also - tell him you aren't sure if you want to do the dry lease thing - but if he wants to get some hours you wouldn't mind splitting fuel with him and doing simulated IMC practice or a lunch run. Get him in the left seat, let him fly a leg and see how he does. If he treats the airplane well, putting some extra hours on it will only benefit the health of the plane.
 
Morgan3820 said:
A local pilot (Marine Captain flying AV-8B Harrier at MCAS Cherry Point, NC) has approached me to buy a block of time (75-100 hrs) on my C-172. Apparently, he needs the time to get his ATP and his Harrier time somehow doesn't qualify or will not add up to enough before his planned departure from the marines and he wants to save over renting from the local FBO. He is PPL, ME, and IR
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I'm having trouble understanding how a USMC AV-8B pilot can be PP-AMEL-IA. Upon completion of USN tactical jet pilot training, he should have been able to qualify for a CP-ASEL-IA, and since the retirement of the T-2 Buckeye many years ago, there are no ME aircraft in that pipeline. I can understand an AV-8B pilot having a shortage of Airplane category time (under the rules since 1997, the AV-8B is Powered-Lift, not Airplane), but something else isn't right. You should look into this before you go further.

I don't get it either but assuming he is on the straight and level, what are the issues that I need to be aware of?
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The biggest issue is insurance. You need to make sure your insurer accepts this pilot on your policy. The biggest problem will be that with a PP-ME-IR, he is not rated in your ASEL 172. He will have to obtain training from a CFI and take the ASEL additional rating practical test before he is, and your insurance probably doesn't cover that. You would also be wise to require him to obtain his own non-owned policy with substantial liability coverage and at least enough hull coverage to cover any deductible you have on your policy, preferably a lot more.

There are also issues of control of the aircraft. You probably want to get a lawyer to draw up a contract covering his use of your plane, including any operational limitations you want to put on what he does, such as no unpaved runways, or weather minimums, or recent experience beyond the FAA minimums -- just the sort of thing you see in the rental agreements you sign at the FBO. The contract should also cover scheduling and maintenance (especially the procedures if the airplane breaks away from home -- authorizations and limits on what he can do without getting your permission).

$5K in the plane's bank account would be nice, but is it worth it?
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That's a question only you can answer for yourself once you've worked out all the details discussed above.
 
Tony_Scarpelli said:
100 not required unless renting it for PPL training with CFI.
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Any flight training with an instructor provided by the aircraft provider, not just PPL. However, in this case, the OP is not providing instruction or the needed instructor, so it's not an issue.
Plane rental alone does not require 100 hr inspections.
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Correct.

See 91.409 for details.
 
I suggest you consider the IRS at least or more heavily than the FAA - for example who has possession and control of the plane. Google a damp lease or a sham dry lease.

I think I would only do this with people I trusted more than some random off the street.
 
soyAnarchisto said:
I suggest you consider the IRS at least or more heavily than the FAA - for example who has possession and control of the plane. Google a damp lease or a sham dry lease.
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Those are not issues when someone leases a plane to fly themselves, only when you provide pilot and plane or there are paying passengers involved, and those aren't the cases here.

I think I would only do this with people I trusted more than some random off the street.
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Agree completely -- you need to get to know who this cat is, and the information about him in the original post has contradictions in it.
 
Sorry Douglas, definitely not intending to call you a snit. I was thinking more nit pick but didn't intend to call you that either. :) Not offended.

True there are different costs and owner has to figure if he wants to lower his costs for a year and what that means to his flying....



douglas393 said:
Sorry I insulted your intelligence(guess I am not up to your standards of decorum), but not trying to be a "snit", just giving my opinion(which obviously is worth the amount the OP paid for it). You have a different one, and I wish I could fly my plane as cheaply as yours, but thats what so nice about these forums, everyone has an opinion and is free to tell others what they think.

Have a nice day.

Your neighborly "snit"
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Thanks for clarification.

Ron Levy said:
Any flight training with an instructor provided by the aircraft provider, not just PPL. However, in this case, the OP is not providing instruction or the needed instructor, so it's not an issue.
Correct.

See 91.409 for details.
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Tony_Scarpelli said:
Sorry Douglas, definitely not intending to call you a snit. I was thinking more nit pick but didn't intend to call you that either. :) Not offended.

True there are different costs and owner has to figure if he wants to lower his costs for a year and what that means to his flying....
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And I think this is where rub lies, the devil is in the details... the nitpicking issues and minor costs often add up and make something that looks profitable on the surface, a losing proposition in reality. If the OP does not figure in all his costs to have the plane fly that extra 100 hrs, how can he know how much to charge? I think nitpicking would be very appropriate, especially since it seems to me that the OP concern is not charity as much as it is breaking even at the very least, and probably making a small profit.
 
I would never do this, never, ever.

What happens if the guy prangs the airplane? OK you have him as additional insured, but you are still left with an aircraft with forever damage history. So the plane is now devalued and you will not get compensated for that. The other thing..... lest we repeat another thread, liability. If you don't have your aircraft registered as a corporation, then what happens if he has an engine failure, gets badly hurt, and decides you as the owner didn't maintain the aircraft appropriately?

Lots of risk for $45 an hour.

Sounds like a good deal for him and a crappy one for you. Let him go make a block time deal with the local flight school.
 
I'm still wondering how a Marine AV-8B pilot has a PP-AMEL-IA with no ASEL and not a CP. As I see it, he should have at least CP-ASEL-IA based on what he flew in the training command (T-34/6/45 -- all ASEL), but no PL rating based on AV-8B qualification (considered ASEL before 1997 anyway) since the FAA decided not to issue them until a PL aircraft is FAA-certified. And no AMEL unless he did that outside the service, since to my knowledge, the pipeline to the AV-8B doesn't include an multiengine aircraft (although it would accrue at the CP level if it did). Information just isn't internally consistent.
 
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In my case, I saw value in the airplane flying at least 75 hrs a year as I was not able to fly it that much. An airplane that flies fairs better than one that does not fly.


douglas393 said:
And I think this is where rub lies, the devil is in the details... the nitpicking issues and minor costs often add up and make something that looks profitable on the surface, a losing proposition in reality. If the OP does not figure in all his costs to have the plane fly that extra 100 hrs, how can he know how much to charge? I think nitpicking would be very appropriate, especially since it seems to me that the OP concern is not charity as much as it is breaking even at the very least, and probably making a small profit.
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50,000 trainer airplanes get rented out every day on flight lines around the world.... you take reasonable precautions. What can he do that isn't covered by insurance? A Mooney is so finicky on maintenance and operations that is another matter.

Alexb2000 said:
I would never do this, never, ever.

What happens if the guy prangs the airplane? OK you have him as additional insured, but you are still left with an aircraft with forever damage history. So the plane is now devalued and you will not get compensated for that. The other thing..... lest we repeat another thread, liability. If you don't have your aircraft registered as a corporation, then what happens if he has an engine failure, gets badly hurt, and decides you as the owner didn't maintain the aircraft appropriately?

Lots of risk for $45 an hour.

Sounds like a good deal for him and a crappy one for you. Let him go make a block time deal with the local flight school.
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Tony_Scarpelli said:
50,000 trainer airplanes get rented out every day on flight lines around the world.... you take reasonable precautions. What can he do that isn't covered by insurance? A Mooney is so finicky on maintenance and operations that is another matter.
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Commercial insurance policies, corporate structures, attorney drafted agreements, etc. Not even in the same ballpark as doing this as an individual.
 
Maybe you want to reread this thread.

commercial insurance not required
corporate structure not required
attorney drafted agreement not required but you can hide behind that if you like.

Of the 5000 or so partnerships how many do you think have commercial insurance, lawyer drawn up documents or legal structure?

I get that you do not wish to let someone use your airplane but that in no way makes it unreasonable for anyone else to do.


Alexb2000 said:
Commercial insurance policies, corporate structures, attorney drafted agreements, etc. Not even in the same ballpark as doing this as an individual.
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Tony_Scarpelli said:
Maybe you want to reread this thread.

commercial insurance not required
corporate structure not required
attorney drafted agreement not required but you can hide behind that if you like.

Of the 5000 or so partnerships how many do you think have commercial insurance, lawyer drawn up documents or legal structure?

I get that you do not wish to let someone use your airplane but that in no way makes it unreasonable for anyone else to do.
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Sometimes on POA I think I'm reading this in another language.

This isn't a friend using an airplane and it sure isn't a partnership that implies equal interest in the airplane. The OP was asking about what amounts to a business transaction. He does not know this individual, he was approached by someone wanting to buy a block of time, and he wants to know if it makes sense for him financially. The marine pilot just wants to build time as cheaply as possible, once that is done, he will presumably move on.

I don't know how you do business transactions, but I make sure I have all the standard protection measures in place (insurance), the agreement is well drafted (clear understanding by all parties), and the numbers make the risk worthwhile (is it just the airplane or is all the OP's personal property at risk). My opinion is that these need to be dealt with, which is all these threads are about.
 
Alexb2000 said:
I don't know how you do business transactions, but I make sure I have all the standard protection measures in place (insurance),
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The issue was, I think, Commercial vs Business/Pleasure insurance, not insurance vs no insurance, and I think B/P will do for this deal rather than the far more expensive Commercial level of coverage. Talk to your broker or insurer to be sure.

the agreement is well drafted (clear understanding by all parties), and the numbers make the risk worthwhile (is it just the airplane or is all the OP's personal property at risk). My opinion is that these need to be dealt with, which is all these threads are about.
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...an opinion with which I agree. Good fences make good neighbors, and good contracts make good business relationships -- and this is definitely a business relationship.
 
And the IRS doesn't care whether the FAA considers your operation commercial or whether you have insurance. That $45 an hour is income, and if you have no other business or need for a schedule C - that means its taxed at ordinary income rates. So that's probably $30 bucks after taxes.

That is unless you are comfortable with the risk of auditing from tax evasion too.

You're right, technically everything is optional....

Ron Levy said:
Not required, but probably a real good idea to protect yourself from liability for something the other pilot does with your airplane.
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Most airplane deals generate very little taxable income. Expenses are deductible too.

soyAnarchisto said:
And the IRS doesn't care whether the FAA considers your operation commercial or whether you have insurance. That $45 an hour is income, and if you have no other business or need for a schedule C - that means its taxed at ordinary income rates. So that's probably $30 bucks after taxes.

That is unless you are comfortable with the risk of auditing from tax evasion too.

You're right, technically everything is optional....
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