SD sdatverizondot.net@ writes:
Well, I'm about to take the plunge into aircraft ownership...
Sounds like you're really about to make an investment in an aircraft
rental business.
As such, you might want to think of things a bit differently:
What do you have on each side of the deal?
You have some capital
They have a setup for maintaining and insuring airplanes
You both have a desire to see students stick around and pay you both
more money.
The negotiation points would be payment schedules and risk
assumption. (Who pays if the airplane needs a top next year?)
Personal flying would be a nice benefit but doesn't sounds like a
strong motivator.
For example:
You're planning on owning the aircraft and leasing it to your flight
school. This means you shoulder:
1) The price of the airplane
2) The maintenance of the airplane
3) The liability of the airplane
You have no economy of scale to address #2 and #3. On the other hand,
the flight school does.
Advantages:
1) It's your airplane -- you take it with you wherever you go and you
say how it will be used
2) It's a traditional, well understood arrangement
Disadvantages:
1) Lease backs are generally accepted to be fairly costly to the
owner(whether this is true or not is beyond my experience).
2) You're responsible for the maintenance of the airplane
3) You're responsible for liability insurance (according to my CFI/A&P --
a one man/one airplane shop, this is difficult and/or expensive to
obtain).
Another viable scenario would be:
1) You *loan* the flight school the purchase price of the aircraft
(you probably don't have the money up front -- I suspect you could
find some secured or counter-signed loan arrangement to make this
work).
2) You could make this advantageous to the flight school by offering
an effective "interest rate" below normal commercial rates, or by
structuring repayment differently (for example, they could repay
the loan per flight hour). (If they repay you per flight hour it's
effectively the same as a lease-back, right?) You could even give
them a negative interest rate. Careful on the taxes with this one
-- you probably can't claim it as a loss, but you should be able to
as a business expense.
The flight school then owns the aircraft. The flight school is
responsible for maintenance and liability. However, the flight school
already has this for 2 other aircraft and the step from 2 to 3 is much
smaller than that from 0 to 1. Their costs will presumably be lower
than yours would.
In consideration of your below market interest rate they might also
grant you a reduced price when you do take the airplane for personal
use.
Don't forget that in this case *they'd* be paying for maintenance and
the price structure should reflect this.
Advantages:
1) You don't have to deal with additional time and money expenditures
(e.g. maintenance and liability). This makes it much more
efficient for everyone.
Disadvantages:
1) You don't have control over the airplane -- it's not yours, it's
just securing your note.
2) You're in a potentially longer-term relationship with this place --
you mentioned that you've only been there 1 month.
The trick is to find a cooperative business arrangement. You're
willing to put up money to help keep students -- they should be
interested in that, too. On that basis you should be able to find
some way to achieve your mutual goals.
If the flight school *isn't* interested in anything other than a
traditional lease-back (even given your mutual goals and existing
relationship), I would personally consider that a belligerent business
relationship given the common perception of lease-backs. They might
be thinking they'll make money on *you* having to do maintenance. In
this case, you're betting that you'll need to do less maintenance than
the maintenance shop thinks you will, and they have the experience of
these other airplanes to work from.
Good luck with whatever you decide.
Disclaimer: I only know of lease-backs through articles and
conversations with friends, and I don't own an aircraft. I have done
a little business, though...
--
Dewey M. Sasser
|