The cost of owning?

Ted DuPuis said:
Oh, I don't disagree with that. The problem is that Piper, Lycoming, Hartzell, Precision, King, and every other manufacturer whose name exists on the plane will end up getting called in for a lawsuit as well. Maybe not all, but most. I've seen it too much, and it is the biggest reason why this costs as much as it does.
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Yeah, the worst case I heard of recently was the idiocy of the decision in the Parker-Hannifin suit from the Carnahan crash.

It is ludicrous what goes on. But I would never tell my wife "not to sue"
 
As far as utility goes, I've done all kinds of analysis and opportunity cost of time _has_ to be a pretty big factor before I can justify cost. I also live right next to Orlando International (KMCO) and so have a large array of flights available.

All that said, I'm looking for destinations for my wife and I as part of the adventure. She's interested for that very reason-flying is my adventure, a childhood dream that finally came true.

We did a two night (intended as one night, but weather intervened-weathered in in the Keys, it's a curse :wink2:) to Marathon Key in May and had a marvelous time. I'm looking at Jekyll Island, GA as an overnight or two day as well.

Is it more cost effective? No. I spent ~$500 more to travel to Marathon by GA than if I'd driven. (airplane time=5 tach hours@$90/hour wet, plus extra for fuel in the keys, plus a rental car for two days). But it was cool!

There are a few trips where with multiple people and significant opportunity costs, plus the lack of direct flights (since the small jets are not being used as much) might work. Orlando to Huntsville AL is one. 4-5 hours by GA (C-172, it's what I have access to), round trip costs ~$900-$1000 dollars or 6-7 hours commercial fight (via Atlanta or Charlotte), ~$200-$300 per person.

For me it's not cost effective, but it's fun. So I do it anyway.
John

P.S. And I am _so very_ thankful for the wife I have.
 
My aviation expert witness work is normally limited to commercial litigation, but I have been peripherally involved in enough accident cases to see them from the inside. One of the most interesting aspects is the concentration of aviation policies issued by only a few big underwriters.

One particular case involved claims against Cessna, Continental, Parker-Hanfin, Bendix-King Radio, the maintenance shop and the avionics shop. During the pre-trial work, we found that only two insurance carriers were responsible for all of the defendents. They had reinsured most of the claims, but were still on the hook for a good chunk. The case settled well before trial, and a reasonable payout was achieved without all the hassle.
 
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Well I just read 7 pages of this discussion, and I'll put in my own input as a pilot who's flying purely for recreational purposes.

Everskyward said:
I could never figure out why anyone would want to watch cars going around and around and around for hundreds of miles. :rofl:
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My brother actually used to race go-karts and 4 cylinders modified when he was young, and I got to see alot of behind the scenes thing that goes into prepping the car for going around in circles for hundreds of miles. So I can appreciate what goes into a race car and what continues to go into it as they come in for pit stops.

I bring this up because it relates to GA as well. Most people have a very shallow understanding of what general aviation is. They see it as either a rich guy way to transport himself, or they look at a 1970 Piper Cherokee and think that the aircraft is a death trap.

This needs to change. They don't see the guy who flies because he enjoys getting that $100 hamburger on a Saturday afternoon. They don't see the guy who's taking his family out on a weekend vacation in his Cessna 172.

Simply put, the perception of what GA is, needs to change.

Everskyward said:
But my point is why try to convince anyone with all these facts and figures? Even yourself. Aviation seems to be one of those hobbies where people seem to feel they need a practical purpose for doing it, one that needs to be justified to other people. You don't hear people saying, "Look at my new bass boat, and see all the fish I caught for free!" Well, maybe they do say that but only as a joke.

Maybe it's my own bias, though. This thread has got me thinking about what made me want to fly originally and efficient transportation was one of the furthest things from my mind. Even now if I could strip away the whole business/career end of it the thing that would attract me is doing aerobatics like I did a few years ago. I would not care that it really has no practical application other than my own enjoyment and personal satisfaction.
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Hear hear. I'll be honest, I first got into flying was because I wanted to be an airline pilot. That has not panned out. However, I have come to appreciate flying as a hobby. I don't fly because it's an efficient form of transportation, I fly because well...it's fun. I love the feeling I get when I push the throttle forward and hear that Lycoming engine rev up. I love leveling off at 5,500 (or 5,000 depending on my direction) feet and looking over the scenery.

Flying is never going to be practical for me, and as I move on from rental to ownership, it's going to get even less practical. However I make enough money where I can pay my bills and still fly without living paycheck to paycheck. There is a reason I'll never fly a Mooney or a Twin Piper, I don't want to. I'm perfectly happy with putting along in my Cherokee 180 or a Zodiac XL.

We need to figure out whether there are more pilots who are flying as a hobby, or flying because it's a practical way to travel. However, maybe we should stop trying to justify everything, and well...just enjoy it for what it is!

Ted DuPuis said:
Or moving 32 cats from Cozumel to Pennsylvania in a day. Yeah, unusual, but I've done it. :)
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Ok, what do you do for a living that requires you to transport 35 cats? I'm interested because I'm an animal lover myself, and I love hearing stories about other people and their pets.

Theboys said:
I've been following this thread and it seems kind of simple. If you want to own a plane or two so what! I have two planes a 172 and a 260 comanche. I haven't flown in years but started again recently. I think they will be a good investment in near future and am looking to buy more. I might put strip on my property and build hanger for up to 8 planes. Might not be smart but I like em and think they will go up in
value. Wish I would have done it years ago.
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Hear hear. I actually plan to build an experimental aircraft (Zodiac XL has won out), and I've had people try to convince me that a Vans aircraft would do better on resell. I'm sorry, but as of right now and for the foreseeable future, I plan to own my Zodiac XL with no plan to resell.

You don't need the greatest and latest to fly, you don't need a brand new airplane, or the latest avionics. Heck, you can still get by with steam gauges and two non-GPS form of navigation, along with a Mode C transponder to be IFR compliant.

I think we make flying more complicated and exotic than it really is.
 
Tarheel Pilot said:
Ok, what do you do for a living that requires you to transport 35 cats? I'm interested because I'm an animal lover myself, and I love hearing stories about other people and their pets.
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For a living? Well, I'm a mild-mannered engineer. But by night and weekends, I'm founder of http://www.cloudninerescueflights.org/

It's like what I do for a living - it takes just as much of my time. Only thing is it doesn't pay the bills. :)
 
Theboys said:
Okay maybe I might not make a lot of money on my investment but I'm going to have fun having my money invested in airplanes. I really don't think I'm going to lose money on them either. I have at least 6 friends and family who want to learn to fly and I'm willing to supply plane if they pay for gas.
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Welcome to POA! :cheerswine:

Care to move your friend count up to 7? :ihih:
 
wabower said:
Ask your CPA to prepare an analysis for you. Then you'll understand.
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First - most everyone in this forum flies for fun, not business. If they own a plane it is for the joy it brings and they are willing to bear the cost. I'm fortunate as I fly for fun and business. Second, I bought the plane because I love flying not because of the business case. Third, airplanes used for personal travel will most likely not be as cost effective as the airlines unless you're taking travelling to nearby cities 200 hours per year. Fourthly, corporate owned aircraft do not make sense for every business.

But for a lot of businesses you are incorrect and I do have a CPA and I am a CFO! If you were correct the number of corporate jets would be much lower and limited to Oprah types. The Baron my business flies is one of the most economical per hour from a corporate perspective. For example, I worked for Cummins many years ago. They flew several corporate planes from Indiana to Charleston and the other major plants on a regular schedule. It carried common folk like me, not just high-priced execs. It was much more cost effective then the airlines or they wouldn't have done it and they wouldn't be still doing it today. My brother in-law works for a NASCAR team, they fly the crews and drivers to all the races; why, because time is money not because they want to 'pamper' the crews.

My Baron cost $308/hour in 2009; yes that is all in real numbers and includes engines/props/airframe/hangar/taxes/maintenance/etc. My fixed cost in 2009 was $23,900. An average trip for my company to Washington DC is three people. With the Baron we do the trip in a single day, total cost $3900. Airlines it is two days for a total cost of $7,100 PLUS lost productivity and time away from family. I only have to fly that same trip 7 times in one year and I've covered my fixed cost.
 
I understand that you like to fly and can justify the use of your airplane for some of your business travel, and so did I. Over 26 years I flew my own business airplanes ~10,000 hours, so I think I understand those numbers pretty well too. Prior to that I was the "aviation guy" for a big-8 office in KC, so every airplane deal or aviation-related company (or entity) was assigned to me for whatever financial service they needed at the time.

I'd be willing to bet that if the Baron were gone tomorrow, the travel cost and time requirements for those trips would somehow magically become manageable at a lower cost than you have stated, and that the total travel budget for the company (or whoever is supporting the Baron) would decrease rather than increase.

I've also held all the "C" jobs in fnance, operations and corner office and been involved with the financial side of public company aviation operations since my company became heavily involved in the sale-leaseback of corporate jets and helicoptors in 1979.

The NBAA convention is being held this week in Atlanta. You might want to go down there and see if you can find anybody who agrees with your theory. I've attended the financial and tax conference almost every year since 1999, and so far nobody has ever suggested the company airplane was cheaper. If this year is different I owe you a steak dinner.

If your theory were correct, the first department to downsize or evaporate during every economic downturn wouldn't be the flight department, and used airplane prices wouldn't tank for lack of demand.

Big companies calculate costs and benefits many different ways, and employ different rationales for their use. Sometimes the only reason they have a plane is due to employment contracts with the top execs. If cost were the only consideration, none of them would own airplanes. I've personally flown the Gulfstreams for a number of them (as a fill-in) and have seen the passenger loads, and your theory about the every-day toads flying on them is wishful thinking. The shuttles work because they can fill the seats and operate on their own schedule between non-airline destinations.

Nascar crews have no choice due to their schedule, but the planes they fly are worn-out regional airliners that were bought on the cheap. I've spent many hours in the Sim and local restaurants with the Childress crews (and others) who did King Air recurrent for both the 200's and 1900's, and know their routines and economics reasonably well.

The rich-guy owners and some of the drivers have their own jets, but they are looking at lifestyle rather than dollars.

If you think your all-in costs for the Baron are $308, I'd suggest you refrain from making any big bets on it.

Baron2PG said:
First - most everyone in this forum flies for fun, not business. If they own a plane it is for the joy it brings and they are willing to bear the cost. I'm fortunate as I fly for fun and business. Second, I bought the plane because I love flying not because of the business case. Third, airplanes used for personal travel will most likely not be as cost effective as the airlines unless you're taking travelling to nearby cities 200 hours per year. Fourthly, corporate owned aircraft do not make sense for every business.

But for a lot of businesses you are incorrect and I do have a CPA and I am a CFO! If you were correct the number of corporate jets would be much lower and limited to Oprah types. The Baron my business flies is one of the most economical per hour from a corporate perspective. For example, I worked for Cummins many years ago. They flew several corporate planes from Indiana to Charleston and the other major plants on a regular schedule. It carried common folk like me, not just high-priced execs. It was much more cost effective then the airlines or they wouldn't have done it and they wouldn't be still doing it today. My brother in-law works for a NASCAR team, they fly the crews and drivers to all the races; why, because time is money not because they want to 'pamper' the crews.

My Baron cost $308/hour in 2009; yes that is all in real numbers and includes engines/props/airframe/hangar/taxes/maintenance/etc. My fixed cost in 2009 was $23,900. An average trip for my company to Washington DC is three people. With the Baron we do the trip in a single day, total cost $3900. Airlines it is two days for a total cost of $7,100 PLUS lost productivity and time away from family. I only have to fly that same trip 7 times in one year and I've covered my fixed cost.
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Theboys said:
Okay maybe I might not make a lot of money on my investment but I'm going to have fun having my money invested in airplanes. I really don't think I'm going to lose money on them either. I have at least 6 friends and family who want to learn to fly and I'm willing to supply plane if they pay for gas. If more people were willing to do this there would be major influx of pilots. I really don't care what it costs. I have had lots of hobbys and business's where i have spent way more with less return. I like em and thats the main thing to me. I know they cost money to own but everything in life costs money. (even my wife) and I'm not complaining about the cost. I think partnerships would be a good thing to get young people interested and involved in flying. Flying clubs are good but ownership is special.
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Well, that's different than your first post, where you claimed buying old 172s would be an investment. If you value the externalities, like pride of ownership, ability to hop into a plane (mostly) whenever you want and (mostly) go wherever you want, sure, it's a good deal.

With respect to cost of new airplanes? Go visit a factory. You'll understand pretty quickly why they cost so much. Limited production runs, LOTS of hands-on labor. Virtually no automation. These things are still pretty much made by hand. No economies of scale.

Has anyone actually seen credible numbers to substantiate the "liability premium" on new aircraft? I'm confident that the risk of litigation does increase costs, but by how much?
 
The Cessna 180 national convention attendees were invited to tour the Mooney plant in 2007. The host for my group was the head of QA, process improvement and related stuff. When I told him the shop floor looked like the Beech plant in 1964-66 (when I ran the outside audit team) he said it would never change, that they couldn't justify the cost of modernization and/or automation due to limited production runs.

flyersfan31 said:
Well, that's different than your first post, where you claimed buying old 172s would be an investment. If you value the externalities, like pride of ownership, ability to hop into a plane (mostly) whenever you want and (mostly) go wherever you want, sure, it's a good deal.

With respect to cost of new airplanes? Go visit a factory. You'll understand pretty quickly why they cost so much. Limited production runs, LOTS of hands-on labor. Virtually no automation. These things are still pretty much made by hand. No economies of scale.

Has anyone actually seen credible numbers to substantiate the "liability premium" on new aircraft? I'm confident that the risk of litigation does increase costs, but by how much?
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flyersfan31 said:
Has anyone actually seen credible numbers to substantiate the "liability premium" on new aircraft? I'm confident that the risk of litigation does increase costs, but by how much?
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Here's a quote from the article "Strict product liability and safety: evidence from the General Aviation market" by Randy Nelson and James Drews:
As a result of the long liability tail and the increase in litigation, the insurance cost for each new plane sold increased significantly. According to Sontag (1987), total industry liability expenses in 1977 were estimated to be $24 million, which when divided by the number of new planes sold that year implies a liability expense of $1,420 per plane. Priest (1987) estimates that by 1986 liability costs added between $75,000 and $80,000 to the cost of each new plane produced. Beginning in 1985, underwriters began to withdraw product liability insurance coverage for the three largest U.S. manufacturers, Beech, Cessna, and Piper. (13) Martin (1991) states that by 1987 Beech and Cessna were self-insured for the first $50 million and $100 million in losses and legal expenses, respectively, and Piper was uninsured for product liability. (14)
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Emphasis mine. Note that the 80s were quarter century ago and of course the liability premiums changed, especially since the introduction of 18-year liabilty in General Aviation Revitalization Act in 1994. Granted, we know that academics are sometimes frauds but this is at least some research and not just Internet rumours.

-- Pete
 
wabower said:
The Cessna 180 national convention attendees were invited to tour the Mooney plant in 2007. The host for my group was the head of QA, process improvement and related stuff. When I told him the shop floor looked like the Beech plant in 1964-66 (when I ran the outside audit team) he said it would never change, that they couldn't justify the cost of modernization and/or automation due to limited production runs.
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Eclipse supposedly had amazing tooling, technology, and processes. Didn't work too well for them. 260 airplanes built, bankrupcy, everyone fired.
-- Pete
 
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