buy or rent a 2006 182

"Andrew Gideon" wrote in message
news
On Fri, 25 May 2007 11:08:26 -0500, Dan Luke wrote:

So I ran a few
numbers to see how buying and renting the same model airplane would
compare, based on costs here in Mobile:

I've a problem with your numbers; I don't see how they can be correct.
It's not any specific number you've described, but the overall sum.
Essentially: how can the two work out to anything but the rental costing
the same or more?

Both aircraft are insured (and, apples to apples, I assume they're insured
identically). Both would have the same hourly into engine/paint/interior
reserves. Both use the same fuel and oil. both get the same annual, etc.

Renter's insurance is an added expense on the rental side, as is funding
the 100 hour inspections.

You're right that the renter avoids financing costs (whether aircraft is
bought for debt or cash).

The renter pay ALL costs, including financing (unless the club/owner paid
cash).

What would be different, possibly by way of being more diversified, would be
the fixed costs. For instance, how many rental aircraft are hangared? Fixed
costs are going to be lower per hour as a rental aircraft is used more
often, usually by orders of magnitude. It's this that makes renting more
economical if the utilization is MUCH less with ownership.

But the owner of the rental presumably knows
this and figures it into the hourly, making the per hour charge for the
rental slightly higher.

A rental aircraft is still owned and the owner needs to recoup their costs
as well as make a profit.

What am I missing that would "break" what I've described?

Possibly insurance, as a rental aircraft has to be insured for various level
of pilot experience. If you have 2000 hours as an owner, the rentor still
has to cover for someone with 100 hours. Also, possibly, the 100 hour
inspections that an owner isn't required to perform...

"Matt Barrow" wrote in message
...

A rental aircraft is still owned and the owner needs to recoup their costs as
well as make a profit.

This is unfortunately not always true. Ask most any leasback owner. Most
of them lose money in the deal. The lucky ones make it up in tax advantages.

Also, I have seen many flight schools come and go over the years.

Vaughn

"Vaughn Simon" wrote in message
...

"Matt Barrow" wrote in message
...

A rental aircraft is still owned and the owner needs to recoup their
costs as well as make a profit.

This is unfortunately not always true. Ask most any leasback owner.
Most of them lose money in the deal. The lucky ones make it up in tax
advantages.

Also, I have seen many flight schools come and go over the years.

So...let's see: They're pricing it wrong?

john smith wrote:
In article ,
"Blueskies" wrote:

"Vaughn Simon" wrote in message
...

"Blueskies" wrote in message
t...
Doesn't the flight school have any insurance?

Most likely yes. But most likely it covers the flight school,
not the renter pilot.

1) Pilot breaks airplane.
2) Insurance co. pays flight school.
3) Renter pilot learns what the word "subrogation" means.

Many flight schools fail to stress this "gotcha" to their
customers because then fewer folks would rent their
airplanes.

Vaughn

Yes, so the plane is covered. Then the renter's insurance covers the
additional liability...

My $30k of hull is enough to cover the owners deductible.
The liability covers the rest.

Is there a Waiver of Subrogation in place that keeps the owners insurance
company from coming after you for the difference between $30K and the actual
loss?

On May 28, 12:38 pm, Andrew Gideon wrote:
The members/owners control issues like MX, upgrades, paint schemes, etc.
Scheduling is, in theory, more complex than with a single-owner aircraft.

This is definitely the rub. Club flying is great, except for that
availability issue. owners can usually take their planes somewhere on
Memorial day weekend. Most club pilots can't, unless they planned way
ahead.

But as the number of aircraft in the fleet goes up, this becomes less of
an issue.

It's a question of how many members there are per plane. This may not
be even even across the club, for example my club has two Mooneys and
only about 20 pilots fly them, but over 50 vie for 2 172's. The
Mooney pilots think availability is great. The 172 pilots have a
different perspective.

And with multiple aircraft, the impact of any given aircraft being down
for MX drops.

This is a big plus. Another big plus is fleet variety. My club has
four aircraft types ranging from 152s to Mooneys. If you just want a
local sunset flight, you can fly a 152 for about $60/hr, if you are
going seriously cross country you can fly a Mooney for over twice as
much per hour. You seldom have to compromise the airplane for the
mission.


It's not the perfect replacement for single-ownership. You have to adjust
the seats, and there are limits on scheduling (ie. you cannot keep an
aircraft at your vacation home for "the season"). But it's also cost
effective at under 300 hours/year (or whatever number is considered the
proper break-even point nowadays {8^).

Yes. My fixed aviation costs are under $100 a month --club dues and
XM fees for my GPS396. In a month when I don't fly much, I don't pay
much. Also I don't own an airplane I'd have to unload in a down
market if something happened like losing my medical, or job, etc.

The final benefit is that you're never making choices in a vacuum; there
are always older and more seasoned members of whom to seek advice.

This is a HUGE benefit to club flying.

On May 28, 8:00 pm, Andrew Gideon wrote:
On Mon, 28 May 2007 19:31:10 +0000, Vaughn Simon wrote:
The main economic difference is probably that the rental aircraft should
have
much higher utilization because it is available to far more pilots. This
would distribute the fixed costs among far more flying hours.

Okay. If we equalize flight hours, does this advantage disappear?

No. When you rent an aircraft, you are most likely renting it from
someone who deducts depreciation on the rental asset, which the single
owner generally can't do without jumping through a lot of hoops.

And the amount of hours we are talking about is a lot -- 50-100 hours
a month for the rental aircraft. If an owner can fly that much, every
month, consistently, month in and month out, then I'm very jealous of
his lifestyle.

Also, with the rental aircraft, the overall cost to everyone totalled
up is probably more than an owner pays, but it's many more renters so
the each individual's cost is lower, and it's financially more
flexible -- as a renter you don't pay fixed costs in the months when
you don't fly, for example.

Why do you think the owner's insurance company won't
come after you for the money they paid to the owner?

Because in the real world, they don't do that.

Over the years I've talked to several FBO owners, insurance agents,
and airplane owners who have been in situations where subrogation
would seemingly be justified, even called for, and the insurance
company has always declined to pursue it.

One aviation insurance agent I know has never had a policy he's sold
to go into subrogation (and he's been doing it a long time), and he
and his customers are actually quite mad about it because in some of
the cases the people the insurers declined to subrogate were
stunningly stupid and/or negligent and they thought very strongly that
they should have been subrogated, but weren't.

Subrogation is "out there" as a threat, but it's very seldom used in
the real world, if ever. It usually isn't worth it to the insurance
company. That is probably why you can't buy high-dollar renter
policies -- the companies that sell them know better than to sell
policies worth enough to make their customers attractive targets for
subrogation.

Can anyone name a specific instance where they know subrogation was
done? I've not been able to find anyone, and I've asked FBOs, owners,
insurance agents, etc, over several years. Does that mean you should
count on it not being done? No. But it's not the big boogeyman some
people are making it out to be, unless perhaps ou have a very high
personal net worth or some other unusual circumstance that makes you a
particularly attractive target.

"Matt Barrow" wrote in message
...

Also, I have seen many flight schools come and go over the years.

So...let's see: They're pricing it wrong?

Often a school's rental price structure has more to do with local market
forces than it has to do with costs and a proper return on capital investment.
Another factor is that great aviation folks are (way too often) not great
business people.

Vaughn

On Tue, 29 May 2007 11:05:56 -0700, xyzzy wrote:

This is definitely the rub. Club flying is great, except for that
availability issue. owners can usually take their planes somewhere on
Memorial day weekend. Most club pilots can't, unless they planned way
ahead.

For whatever reason, our availability has been quite good. There was at
least one airplane available for me on short notice on Monday, for
example.

But, as I wrote, it's not the same as exclusive ownership. I had to
check, for example, rather than simply heading out to the airport.

[...]


[...]

And with multiple aircraft, the impact of any given aircraft being
down
for MX drops.

This is a big plus. Another big plus is fleet variety. My club has
four aircraft types ranging from 152s to Mooneys. If you just want a
local sunset flight, you can fly a 152 for about $60/hr, if you are
going seriously cross country you can fly a Mooney for over twice as
much per hour. You seldom have to compromise the airplane for the
mission.

I agree, but this is something that my club doesn't do as well as I'd
like. It's just 172s and 182s (with one R182). The club used to be more
diverse, but decided at some point on an all-Cessna fleet for safety
reasons.

My hope is that we'll grow the club enough to add aircraft in a diverse
way (ie. perhaps a 152 and a 206) w/o violating that "all Cessna" rule.

- Andrew

On Tue, 29 May 2007 11:14:14 -0700, xyzzy wrote:

If an owner can fly that much, every
month, consistently, month in and month out, then I'm very jealous of his
lifestyle.


Heh That's a good point.

- Andrew