posted 04-19-2001 01:23 PM            

At what level of flying (hours per year) does it become cost effective to buy/lease your own plane and what about leaseback arrangements with flying clubs/fbo's etc.

I am thinking about perhaps leasing/buying a new Cessna / Robin (French plane) or 4 seat Katana.

Failing that I would consider a nearly new model if the finances were right.

posted 04-20-2001 09:19 AM            

Plane ownership is still very expensive as compared to renting. I own a Turbo Arrow IV and I have figured my total operating costs to be around $55 per hour (wet) to operate (and this is a generous estimate). Obviously, the more I fly the less this number is. But the number doesn't go down significantly as you fly more hours from year to year. I might pay $100-$110 per hour (wet) to rent this aircraft.

I would advise a partnership with one or two other pilots. This is the best way to leverage the cost of the plane and all of the fixed costs. My last annual costed $8,500. Okay, the annual costed $1,500, but the cost of all of the other repairs + the annual was $8,500. If I had to do this myself, I would never be able to afford a plane. I own a plane NOT because I fly a lot and it is cheaper (I don't and it's not), I own a plane because it is more convenient and I'm totally in control of the maintenance and upgrades. That convenience is indeed expensive.

posted 04-24-2001 03:43 PM            

Similarly, having children is an EMOTIONAL decision. You do it because you want to, not because of any cost/benefit analysis.

I have purchased two different airplanes and have fathered two children in my lifetime. I have not tallied up the cost. The cost is secondary to my love of my children, and of my passion for flying.

posted 04-25-2001 04:49 AM            

Thanks for the prompt reply, I strongly disagree that buying an aeroplane is an emotional decision like having children, although having children should also (in this day and age) involve some form of financial planning - if you can't afford to keep and raise children properly then you shouldn't have them (but that's a different area for discussion)!

The desire to purchase an aeroplane may well be emotional, however the actual decision must be businesslike and circumspect:

Can I afford to buy one? Can I afford to run one? Do I, or am I likely to, fly enough hours to make the investment worthwhile?

I think we all fly because we love so to do,however the type of flying we do must involve some form of cost/benefit analysis otherwise instead of being just poor, the majority of us would be very poor indeed.

To date I have sired one child (no desire for any more) and bought no aeroplanes.

My flying is all for pleasure, no business involved and thence no tax deductions (my flowery language may persuade you that I am not American, although all my flying is done in the United States - my second home).

Hence my question to the Aeroplanner community. I was looking for information, practical information, to help me make a rational decision on a cost benefit basis.

The flying is emotional, the spending of money (big money) is rational and that was the crux of my question.

The emotional decision has been made - yes I would love my own aeroplane, but....

Keep the help coming, it is appreciated.

posted 04-25-2001 07:01 AM            

It helped to make sure that I was able to list all the costs of ownership: financing costs, fuel, maintenance, insurance, etc . . . Using this as a starting point, I built a spreadsheet that helped me visualize the true costs on both an hourly and monthly basis. I also calculated out the income I could expect to receive from a leaseback to a local operator.

The final result was that with a "well used" aircraft, the cash flow would be slightly positive. Then I applied a reality factor that told me that the cash flow would most likely be slightly negative and could be seriously negative. I also looked into what it would have done to my ready cash reserves and decided against the purchase.

Now, like someone said above, it's a very personal decision. My decision was based on what I was able to afford at the time. Everyone has very different comfort levels.

On the single owner vs. partnership vs. leaseback issue. Well that could fill a whole web site. (But, in my research it hasn't yet!) In my case, I was planning on using the leaseback as a source of income and found that it was too iffy. Plus, with the with the increased usage of an airplane under leaseback, comes a corresponding decrease in the convenience of availability. And isn't that one of the main reasons we buy planes?

I also considered a partnership but that's pretty much tantamount to getting married (at least in the area of shared responsibilities and trust) and couldn't find a suitable partner.

Is there any level of personal flying where it becomes cost effective to purchase an airplane? Not in my case. And I would imagine that there's not a lot of people who it would be cost effective for. I think it's more like buying a pleasure boat. Does anyone really need one? Nope, they just want one and have the financial wherewithall to make the purchase of a "toy."

posted 04-25-2001 09:18 AM            

While this sounded excessive to me, I am told by many that this in very normal for first year on a used 30 year old aircraft.

posted 04-25-2001 12:48 PM            

My situation is slightly different through living abroad but spending almost half the year in socal - any aeroplane I bought would stand idle for half the year but get maxxed for the other half - perhaps the suggestion of a partnership may be the way forward, althought I take the point about it being like a marriage (and me divorced!).

Thanks so far guys, and you Mooney Man - seems our little "spat" has livened the discussion up.

No offence meant and none taken I hope?

posted 05-10-2001 04:34 PM         

I have been toying with buying an airplane now for over a year and it encompasses more than just the financial concerns.

I have gone from wanting a 172, 182, Archer, Apache, Aztec, 177RG, 210, back to a 172.

Why you ask? Well, I stepped back from my emotion and ego(leaving my wallet completely out of it) and thought about what kind of flying I was really going to do and the frequency of the flying. I also considered the availability and price(or price increase) of the planes I am currently renting.

After all of that, unless I really step up my flying, buying an aircraft would be wasteful to me right now without a partner to fly it when I am not. Nothing chaps my cheeks more than seeing Aerostars and Barrons sitting in the hangar accumulating dust and days while the owners are too busy to fly these aircraft. I would glady put some hours on the planes for them when I have time.

It comes down to if you can afford it, are willing to fly a lot(don't assume since you will own an aircraft that you will fly 2 and 3 times more than you do, there are still only 24 hours in a day last time I checked) and what type of flying you will be doing(will you be going to the next state over, and locally for those $100 hamburgers, or will you be flying to Sun-n-Fun/Oshkosh types of events or will you be using it for business and doing a little of both?)

This is just a little advice from someone who is still trying to decide whether ownership is right for me or not.

Good luck.

posted 05-16-2001 11:02 AM            

I think the consensus is that you are really calculating how much disposable income you can afford to put into an aircraft for your convenience and pleasure, and not wether this is a cost effective venture.

If this were a business venture then the profit/loss analysis would apply.

Right now the loss analysis is probably what your looking at.... eg. how can I cut my losses.

I understand you dilema my brother and I with you, but every number I enter comes out a loss, or nearly so.

Best to You,

posted 06-07-2001 04:03 PM            

I agree with the emotional vs. cost discussion. An airplane is an emotional buy, and for most pilots flying is just somthing we have to do. I would say very few of us could really justify the expense.

I made the jump a couple of years ago and bought a 172.( I picked it up the day JFK jr bought it, didn't make my pregnent wife happy waiting for mew to get home while all that was on tv ) I went with the leaseback to offset cost theory. Well it didn't work out and a new house purchase forced the sale of the plane last fall. In my short experience maintenance costs ate up all the extra dollars and some unlucky and bad piloting added to the expenses. If I were ever to go this route again I would buy a brand new aircraft and leave it online until the warentee expired and then dump it.

posted 06-21-2001 03:06 PM         

1) Decide how much time you'd fly per year if wx and/or plane availability weren't a factor. Multiply this by the going rental rate at your FBO.

2) Figure out your annual cost of owning/operating an a/c by adding fixed costs(insurance, hangar/tie-down fees, registration, etc) and operating costs (fuel, oil, annual insp., maintenance reserve, and engine reserve) Use same # of hours as in 1) above.
Note I haven't added loan payments because I assume you'd recover all or most of the original aircraft value if you sold it (add in the interest accrued if you like, but that would be applicable only for the term of the loan)

Other assumptions: a) You'd buy the same type/model plane you fly now. b) you wouldn't upgrade radios, or anything else unless needed.

Comparing the numbers you get in 1) and 2), maybe you can get closer at the economic side of the answer.

I ran these numbers for myself, and flying less than 75 hrs /year it doesn't pay for me to own. (Yes, if $$ weren't a factor I'd love to have my own bird)

Happy landings!

------------------
Javier @ 6d6
PP-ASEL

[This message has been edited by JavMan (edited 06-21-2001).]