How to rent out my airplane

"Dude" wrote in message ...

OTOH, shared ownership can and often does work very well. It can work
out poorly but there's more you can do to prevent that.


Not really. It may or may not work out better more often, but there are no
real stats on this, so its up to how many anecdotes you have heard.

Fair 'nuff.

Think of it this way, a leaseback is like a business contract with someone
you are expected to be wary of. A partnership is like a marriage, and if
you act as if you are suspicious its bad form. Hear more about divorces
than business failures? Yep, but are there really that more of them? Nope.

Well, like business and marriage, it all comes down to setting
realistic expectations.

The higher complexity of leasebacks entail more risk for the
uninitiated, which the OP clearly was. Your first plane is not the
time and place to learn this, unless you can afford to lose money on
an hourly basis, which is a very real prospect in a leaseback.

I think that the new trend towards fractional ownership reflects this. In a
fractional, you have no pressure to treat other owners with anything more
than common courtesy and respect. If one of them goes cuckoo, you expect
the managing company to make you whole, not some lunatic who wasn't raised
right.

I think the biggest factor in the fractionals is the same as for
bizjets- it's both cheaper and *better* than outright ownership. All
you do is make your payments and show up when you want to fly and
there's a clean, well-maintained arplane all gassed and warmed up
waiting for you. Ever look at how much one of those programs actually
costs when you're done with it? A small slice of an SR-22 could buy
and own a whole used 182. Not the same plane to be sure but puts it in
some perspective.

What I cannot understand is why more FBO's have not started to cater to the
fractional crowd. Why do you need an Ourplane or other group to essentially
do what the FBO does now? Get a contract, get four owners, then get 4 more
and another plane, and so on.

My gut instinct as a businessperson is that it ain't that simple and
to make it work well takes a little expertise in setting up and
administering it.

Another factor is that fractionals in lightplanes at least are
currently focusing on new aircraft for fixed durations which means
maintenance under warranty which means predictable costs around which
one can build a plan. The market for new A/C is sizable but limited.

Also, there's a real value I think to the network aspect of AirShares
or OurPlane. As a heavy business traveler I really like the idea of
being able to fly the tube from Boston to LA or SFO and then head over
to OurPlane and pick up an SR-22. Think about going on vacation in a
place farther away than you want to fly to yourself. If someone can
build a really broad network this could become a huge selling point,
as it has for places like Moorings who've been doing this kind of
thing with sailboats for decades.

Best,
-cwk.

The higher complexity of leasebacks entail more risk for the
uninitiated, which the OP clearly was. Your first plane is not the
time and place to learn this, unless you can afford to lose money on
an hourly basis, which is a very real prospect in a leaseback.


If you want complexity, read the ourplane contract.

Or, try to figure out how to untangle yourself from a partnership with a
lunatic without outright walking away from your share of the plane.

Leasebacks are actually pretty simple. The main rule is that if you cannot
afford to own the plane without the leaseback, then you shouldn't go there.
That way, anytime it seems you are going the wrong direction, you can pull
out. It may take several tries to find the right FBO.


I think that the new trend towards fractional ownership reflects this.
In a
fractional, you have no pressure to treat other owners with anything
more
than common courtesy and respect. If one of them goes cuckoo, you
expect
the managing company to make you whole, not some lunatic who wasn't
raised
right.

I think the biggest factor in the fractionals is the same as for
bizjets- it's both cheaper and *better* than outright ownership.

I still can't see how its really cheaper than a partnership. It has
benefits that a partnership does not, but I don't see the extra cost being
worth it.

All
you do is make your payments and show up when you want to fly and
there's a clean, well-maintained arplane all gassed and warmed up
waiting for you.

My local Raytheon offers this service. Yes, you have to approve repairs,
but for a little extra, they do give red carpet treatment.

Ever look at how much one of those programs actually
costs when you're done with it? A small slice of an SR-22 could buy
and own a whole used 182. Not the same plane to be sure but puts it in
some perspective.

It costs more than that, the total cost seems pretty well disguised in these
deals to me, and geting out is toughter than selling your plane at a loss.
That is the bad thing about a partnership. When you figure out one of the
partners is a loon, you will have a hard time selling your share.

What I cannot understand is why more FBO's have not started to cater to
the
fractional crowd. Why do you need an Ourplane or other group to
essentially
do what the FBO does now? Get a contract, get four owners, then get 4
more
and another plane, and so on.

My gut instinct as a businessperson is that it ain't that simple and
to make it work well takes a little expertise in setting up and
administering it.

I am thinking that its lack of capital, and lack of cycles. There seems to
be two FBO ownership types: Those lacking funds, and those lacking energy.
One could easily pay a lawyer to draw up the contract. Especially given the
contracts available for free you could start with.



Another factor is that fractionals in lightplanes at least are
currently focusing on new aircraft for fixed durations which means
maintenance under warranty which means predictable costs around which
one can build a plan. The market for new A/C is sizable but limited.


So, you think that the partners would not want to be in the deal if the FBO
had carte blanche to fix just about anything? And the FBO would not want to
be in the deal if they could get stuck with a big bill on a fixed price
budget? That is a tough nut. I see the fixed time as the main bugaboo in
the present fractionals. The contracts I read seem to leave the owners in a
lurch at the end.

Also, there's a real value I think to the network aspect of AirShares
or OurPlane. As a heavy business traveler I really like the idea of
being able to fly the tube from Boston to LA or SFO and then head over
to OurPlane and pick up an SR-22. Think about going on vacation in a
place farther away than you want to fly to yourself. If someone can
build a really broad network this could become a huge selling point,
as it has for places like Moorings who've been doing this kind of
thing with sailboats for decades.


There is a limited market to me -Those that would really like the wide
network. None of my jobs ever would have let me do that, and I try not to go
commercial except overseas or skiing. Sailing is a lot different to me, but
you could be right.


Best,
-cwk.

"Dude" wrote in message ...

If you want complexity, read the ourplane contract.

Sure 'nuff.

Or, try to figure out how to untangle yourself from a partnership with a
lunatic without outright walking away from your share of the plane.

Well, if you have a good partnership agreement there may be options.
You can't plan for every possibility but you can plan for some. In a
2-way partnership you have no choice, but in my 5-way there is a
provision for 4 people to force a buyout of 1, or 3 people to force a
buyout of 2.

Leasebacks are actually pretty simple. The main rule is that if you cannot
afford to own the plane without the leaseback, then you shouldn't go there.
That way, anytime it seems you are going the wrong direction, you can pull
out. It may take several tries to find the right FBO.

In this sense I guess I would agree.

I think the biggest factor in the fractionals is the same as for
bizjets- it's both cheaper and *better* than outright ownership.

I still can't see how its really cheaper than a partnership. It has
benefits that a partnership does not, but I don't see the extra cost being
worth it.

Cheaper than sole-ownership. Partnerships are definitely cheaper.

Ever look at how much one of those programs actually
costs when you're done with it? A small slice of an SR-22 could buy
and own a whole used 182. Not the same plane to be sure but puts it in
some perspective.

It costs more than that, the total cost seems pretty well disguised in these
deals to me, and geting out is toughter than selling your plane at a loss.
That is the bad thing about a partnership. When you figure out one of the
partners is a loon, you will have a hard time selling your share.

In agreements I've seen, you put a fuse on this so that if you can't
sell the share within XX days of advertising it then either he has to
buy it or the whole plane has to be put up for sale.

So, you think that the partners would not want to be in the deal if the FBO
had carte blanche to fix just about anything? And the FBO would not want to
be in the deal if they could get stuck with a big bill on a fixed price
budget? That is a tough nut. I see the fixed time as the main bugaboo in
the present fractionals. The contracts I read seem to leave the owners in a
lurch at the end.

If the FBO doesn't provide a blanket guarantee of an airworthy and
complete airplane as purchased, then we're right back to what in my
experience is the leading cause of partnership disagreement: how to
maintain the bird when something goes downhill. No investor would fund
a plan where the FBO is liable for maintenance overages on a used
plane, it just doesn't make sense. You might as well buy the plane and
make better margins renting it out.

Then there's the buyout issue. I agree with you that the current
arrangement makes it look deceptively cheap to own an SR-22. Well, for
four years, anyway. Then they turn the bird over to you and say, "hey
guys, good luck, SEEYA!" I suspect when some of these contracts run
out there will be some guys crying about being left upside down with a
seriously-depreciated plane. Though to be fair this isn't that
different from being in a partnership.

place farther away than you want to fly to yourself. If someone can
build a really broad network this could become a huge selling point,
as it has for places like Moorings who've been doing this kind of
thing with sailboats for decades.

There is a limited market to me -Those that would really like the wide
network. None of my jobs ever would have let me do that, and I try not to go
commercial except overseas or skiing. Sailing is a lot different to me, but
you could be right.

You think the market's smaller because you're not in it, I think it's
bigger because I am. Go figger.

It's worth noting that the sailboat leaseback programs have been
around for a long time, and are still regarded with widespread
suspicion. After 4-5 years in a charter fleet a lot of the boats come
out looking ten years older than they are owing to the constant use.
Owners can plan on dramatically higher maintenance costs than they
would if they just owned it. My personal theory is that the programs
last because the supply of suckers is self-renewing. They're similar
to fractionals/leasebacks in some ways but not in others, the analogy
isn't perfect.

Best,
-cwk.