Airplane Buying - Cost vs. Capital

Aviation General Aviation
1

Here is the most important thing one needs to know about buying aircraft:
The price of acquisition is not directly related to cost of ownership.

In other words, if you are thinking you want to buy a plane and have a budget of “about x dollars”, then STOP! As soon as you say this, everyone in the business knows you are a fool who they may seperate from his money.

What does it matter if the plane only costs $100,000 if it costs $40,000 per year to keep it in the air? Would you rather have a similarly capable plane that costs $150,000 and only costs $12,000 per year to keep in the air the same amount of hours? I bet you would.

What you want is an idea of how much the plane will cost you to own per year (or the time you plan to own it). If you are working with someone who can’t help you figure that out (a flight instructor, mechanic, etc.) they are not a good mentor.

Either educate yourself (takes months of reading and hangar talk), get an experienced mentor (someone who has owned several planes) or higher a consultant/broker. I used to charge a pretty penny, but I usually saved my customers that much even without considering the cost of their time.

Get all the help you can.

2

I have a question.

I’ve been going over numbers weighing out this topic for the last couple months with my wife trying to figure a monthly number for all expenses associated with a couple different aircraft types including financing and associated costs.

My original plan was to buy a small single piston for myself and possibly sell blocks of hours to a few pilot friends interested in leisure travel, and flight training to help defer costs.

Recently, a flight instructor I work with got hired up and his group needs a new partner on a their 172. I haven’t talked numbers with the group, but they are interested in filling the position.

Would it be better for my first plane to start in a group. Is that old fashioned? I like the idea of managing a plane, or even a few small planes to make aviation more accessible to pilots in my community. Maybe that’s just an unrealistic fantasy. Any recommendations?

3

Owning in a group is generally easier on the finances and a good way to learn. Sharing the costs helps a lot. Managing a plane is something some people enjoy, and others don’t so that can be a benefit as well.

Unfortunately, the caveats are long and scary. I will hit a few.

Your partners, are like wives and children. You become married to them. They crash, you get involved. You need to have legal counsel go over the agreement.

You need to get a good idea of their compatibility on maintenance issues and flying use with you. Some mixes of people work well, others not. Most important is rules in the agreement on deferring maintenance and upgrades. Many partnerships have become nightmares because of incompatibilities and plane bad behavior. Other things to look at are industry insiders using your plane for their profit.

Buying a part of a plane is still buying a plane. Get a pre-buy inspection. This is NOT an annual inspection and should not cost that much (something around $500). On a 172 you are looking for things like corrosion and other things that ANNUALS DO NOT CATCH. Assume airworthiness (usually), you want the inspection on monetary gotchas and commonly missed items. Start with the logs, without even seeing the plane these can stop the deal. Always use someone OTHER than the guy normally used for maintenance.

Usually, its best to limit your partnership to no more than 4 parties. More than that means availibility may be worse than renting. Also, the 5th guy only lowers your variable cost by a small margin, and also doesn’t lower your capital costs by enough to warrant the risk and hassles unless the plane is rather expensive.

Now, directly to your situation.

Renting out a plane is a tough business and full of traps. You need legal counsel familiar with both aviation tax and FAR issues. The cost of that is hard to offset with a 172.

If the instructor in the group is giving instruction to people outside the group then this ends up being a rental plane according to the FAR’s (You are now a de facto flight school with all the costs and hassles thereof). It will have higher insurance and maintenance costs. If it’s not making a profit, then why do it? If it is making a profit, why do they want more partners? There may be a logical reason, but if I were a member, I would try to buy up more of a money maker.

Without more specifics from you, that’s about all I can tell you for now.

4

Can you provide some examples of costs to own a Cessna 152? For example, how much does an annual inspection cost? What’s the cost to do the overhaul at 2000 hours? What kind of things may break and what would they cost to fix, on average? I’m just looking for ballpark figures.

5

See: cessnaowner.org/forums.asp