By Phil Lightstone
Financially, aircraft ownership is not for the faint of heart. Some general aviation pilots have deeper pockets and longer arms, but many pilots have shorter pockets and short arms. Total cost of ownership (TCO) is comprised of the one-time acquisition of the aircraft, annual fixed costs, variable operating costs, and unforeseen one-time costs (see my total cost of ownership article in the March 2021 edition of Canadian Owners and Pilots Association Flight magazine). Partnerships are an effective way to help reduce TCO.
The cost of owning and flying an aircraft has been increasing year over year with insurance costs doubling (at least in Canada) over the past three years. Post-pandemic labour and material costs have risen, with fuel prices on the rise. While block time and renting are the most cost-efficient way to build hours, for aircraft owners they provide a mechanism for cost recovery. Canadian GA pilots fly on average 16 hours per annum, according to a study conducted for COPA. For a Cessna 172, the total cost of ownership (excluding fuel and oil costs) could be as high as CAD $23,000 per year. The hourly cost for a single owner could be as high as CAD $1,150 while the market rate to rent a Cessna 172 is CAD $120 per hour. Some owners are starting to think twice about the hourly rate gap.
One owner interviewed expressed his concerns about fuel cost. He owns a 2009 Cirrus SR22T with five owners. His share of the acquisition cost was CAD $115,700 (excluding HST) with annual fixed operating costs at CAD $9,360 per partner. Using a 10-year amortization period for his aircraft, his annual cost of not flying is CAD $21,460, exclusive of any incidentals or unexpected maintenance costs. Flying 10 hours per year has an annual hourly cost $2,266 (this is reduced to CAD $989 per hour excluding the cost of the aircraft through the partnership), plus fuel and oil. The owner is expecting that the maintenance costs will reduce over time, as they remediate maintenance issues carried over from the previous owner (PRO TIP: buy an aircraft wisely with a great pre-purchase inspection). Partnerships can significantly reduce the annual costs. Nothing new under the sun.
The block time versus ownership paradigm can focus a conversation for pilots new to aircraft ownership to consider a partnership. With their capital doubling or tripling, aircraft buyers may consider more modern aircraft. With the operating costs split between many pilot/owners, the financial responsibility may align with the individual’s specific financial reality.
Like a marriage, partnerships are easy to get into but difficult to get out of. For many, aircraft ownership can be a deeply personal endeavor. Some aircraft widows(er) see their spouse’s aircraft akin to a second spouse. In fact, a flying club friend of mine owned a Cherokee 180 with five other guys, while hiding the aircraft ownership from his wife. To this day, his wife has no idea that for five years, they owned an aircraft.
When creating an aircraft partnership, try “dating” the potential partner first through flying to $100 hamburger events or flying club trips to the Bahamas or other far-off destinations. Sharing meals, hotel rooms, FBO pilot lounges, and the cockpit should help you understand each other’s personality and psychological traits. Hopefully you’re a good judge of character and can determine if a partnership will last the test of time. Decision making is a critical factor in any partnership, e.g.: financial matters; safety; aircraft upgrades; deferred maintenance; accounting practices; and much more.