Group Ownership

The thread currently underway about whether to buy an existing RV-6 (and also whether to get a loan) got me to thinking...

There was only one suggestion to go in with partners, and this suggestion was summarily dismissed by the thread starter (his right, he knows himself better than anyone), and was never commented on again to my knowledge.

Are we Americans just too independent to consider this (or maybe too...hmmm...what reason would you give)? I know there are many horror stories out there about partnerships, but given the choice, some of our UK (and probably other European) bretheren favor the partnership over no aircraft at all.

The South African group-built RV-12 is a great story. Never heard of it happening here much unless the builders are under 18 years old and under direct supervision by a team of adults.

Why do you think this is? Serious and not so serious responses both welcome. Why do partnerships (on the whole) work better elsewhere?

All I know is that any aircraft owned by myself - not happening with two kids in college. Half of one? Maybe. A quarter of one? Might actually be affordable both to own and use on occasion.

Up here in the great white north, it is very common to see part owners. It is a very cost effective way to own an aircraft when you only purchase a share. In fact, corporations invest in fractional ownership; companies like Air Sprint. I think it's a fantastic idea for both private and the commercial sector.

Proximity

I'd seriously consider a fractional ownership if the members and plane were reasonably co-locaded. There not so many RV's near me so it has not panned out. I own outright at the moment but would consider a partner buying into the plane. Time will tell.

I think that civil action and lawsuits may not be as prevalent up here as well, which may be a factor?

A friend just dissolved his partnership in a Stinson. His partner wasn't doing any flying (no licence) so my buddy asked to buy him out since he was doing teh majority of teh flying. The partner agreed, but then came back and said he thought his share was worth more, so my buddy said "if that's the case, you buy me out", and his partner did!

Now the 100% owner, who isn't licensed yet, has to deal with all of the costly issues on his own and this was pre-annual. Now the compressions are low and some of the cylinders have to be replaced.

Guess he shouldn't have been so quick to buy him out.

I personally would not entertain a partnership, unless I really knew the partner, their habits, and so on. I just don;t want to put years of time into a machine to have someone else bend or wreck it on me!

Cheers,

DP

I suspect that it is an American culture issue at work. We are mostly too independent to want to share a plane.

The answer is "Costs"

Duffer said:

Why do partnerships (on the whole) work better elsewhere?

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Hi Jon,

I am in the UK and am building an RV-7 on my own. As you mention, there are many group-owned aircraft in the UK. I'm a relatively low-time pilot (just over 250 hours). For doing 50 or so hours per year, buying a share in a group-owned aircraft in the UK is much more economical than renting by the hour from a flying school, and plenty of share-owners do a lot less than 50hr/yr. My first share after gaining my PPL was 1/12th of a Cessna 150. Today I have a 1/6th share of a really nice 1967 vintage Piper Cherokee 180. Both groups have worked well. Sure there's been the odd disagreement over finance or policy but things always work out in the end. And I've met and flown with some really good guys.

Flying is a very expensive hobby in the UK. Avgas is currently around ?2 per Litre (not gallon). Landing fees often ?20 a time. Hangarage for the Cherokee is about ?300 per month. The bill for the last Annual Maintenance was over ?4000. Insurance at ?1500 per annum. Prorate these fixed costs over 50 hours per year and you get a hefty cost per hour. Now divide the fixed costs up between the six owners and it's a lot easier to bear. (Take those number and multiply by 1.6 to turn into US Dollars).

I have a feeling that the costs of flying are much lower in the US so the pressure to reduce costs is not so great.

When it is complete, being able to do the annual myself on the non-certified RV and save on that ?4000 professional maintenance bill is for me a major factor in reducing the costs of flying. Hopefully I'll get to do more than 50 hours per year when that day comes.

In the past, group-owned RV's were not that common in the UK, but it is definitely on the increase.

All the Best,
Steve

my view on partnerships here and there.....

I too would like my fixed costs to be cut in half! Imagine flying for $50 an hour plus fuel, rather than $100, ( or whatever your numbers are!.... mine is $213 ....dry)
I could probably share a hangar, and fly twice as much in the winter with preheat and a clean, dry ship.
Yes, they are a lot like a marriage, but they can work, if the partners are very similar, or perhaps even very different!
( an AME/ A&P and a CFI.....the roles are pretty obvious, eh?)

successful ventures are often with certified aircraft.....why?
1. no-one has a vested personal emotional attachment.
2. a mechanic annuals the plane, and everyone pays the same.
3. if you bend it, the insurance either fixes it, or you 'cash out' and start over. Major inconvenience, yes....end of the world? No.
4. if the partnership is dissolved, there is the hassle of buy-outs or pay-outs, but the ship can be sold at current market value, eventually.

amateur-built partnerships;
1. If one guy built it, he's going to approach flying, maintenance, upgrades, with a different view than the partner who 'buys-in'. ...it's HIS baby. You know this to be true!
2. It's annual time...who does the work? One guy wants a new engine, the other, a glass panel. etc. etc.
3. IF the builder bends it, he kinda has to fix it! If the partner bends or totals it.....then what?
4. If dissolving the partnership, it's a bit harder to nail down the fair market value.
....currently, values are 'sliding' (to be kind!). You will not likely get your investment back, so this 'depreciation' raises the hourly cost to own, and can leave a bitter taste in the end.
funny, I see a partnership in my future....(especially if I lose my medical!)

I think they can be a good idea. There is even a website for helping people find partners that has apparently been bought out by AOPA. I just typed in the old website and it redirected me to http://ap.aopa.org/.

The keys are to ensure you find very like minded individuals and have a very good and binding document on how things run, how upgrades are done and paid for, how to get out and get a new person in, etc. I'm in the military and move frequently so it might not work out for me. I might try it though because I have two friends that want to do it with me if I move to their area. They won't do it without me though for some reason so I know I'll be the guy running it all, which is fine.

I've been considering trying to form an RV-10 partnership and have been thinking through some of the details. As much as I enjoy building, I think we'd have to purchase a partially complete or flying RV-10 for a partnership for several reasons:

Regardless of the way we acquired the aircraft though, I think we would likely have it maintained by an A&P while in the partnership since it would be difficult to come up with an equitable arrangement if the maintenance always fell to one partner.

Disadvantages of purchasing an already flying RV-10 include:

I'm sure there are some RVs in partnership. It would be great to hear from those that have some experience with this.

If I wanted to SHARE a plane, I would continue to rent the local spam can. Much, much cheaper.

Duffer said:

There was only one suggestion to go in with partners, and this suggestion was summarily dismissed by the thread starter (his right, he knows himself better than anyone), and was never commented on again to my knowledge.

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That was me... I just know that after having my Cherokee all to myself for the better part of a full decade, that I just don't think I could do a partnership.

Independent? Definitely. And like many pilots... I like being in control of things a bit too much. Sometimes my closest friends probably have to work a little too hard on keeping me humble too. And I don't want to risk inflicting that on an airplane partner.

Duffer said:

Why do you think this is? Serious and not so serious responses both welcome. Why do partnerships (on the whole) work better elsewhere?

All I know is that any aircraft owned by myself - not happening with two kids in college. Half of one? Maybe. A quarter of one? Might actually be affordable both to own and use on occasion.

Click to expand...

A partnership can be a superb way to get into a plane at a reasonable cost. They work great in the USA--I've been in two successful and enjoyable partnerships. One was a four-way where it was set up as a corporation that was strictly run as a business (bylaws, shareholder meetings, etc....) and the other was just me and my partner in a gentleman's agreement to keep our restored 1940 J-3 in good shape while we flew the wings off it. As I fly my RV-6 less than I used to, another partnership may be in my future.

Do your homework, be very picky about your partners, cover all the bases (operate it as a business) and you will enjoy sharing the plane with your comrades while flying at a fraction of the cost of full ownership.

I was in a partnership for 5 years.

My partner and I bought a QB -6A in Texas and brought it home...built it over two years.

Before that, however, we had an attorney draw up a contract and specified things like rights of first refusal to buy each other out.

We also agreed that the buyout price would ONLY reflect what we had invested....not market value.

Our wives also signed waivers to not sue the other family in the event of a death in the airplane and so on. It worked very well for 5 years and I eventually bought him out since his flying enthusiasm waned and his wife never flew with him at all.

It was sold a couple of years ago and I bought the -10 as sole owner but the possibility is there for another partnership.

BTW....I had also known my partner for 20 years before and that we were compatible.

Best,

Having been in great plane partnerships, I find the primary critical success factor to be, like all relationships, simply an expectation setting exercise to be successful.
Set the expectations on everything you can think of.... and enjoy a good relationship.
Failure to address, define, and follow the expectations set, starts the ball rolling for a nasty divorce.

Syndicate

As the one who suggested partners I know of quite a few successfully run groups here in the UK.
The advantages are over renting is that you can take the plane away without restrictions.
The costs can be a lot less than renting.
I think the main success is in having a good agreement and everyone understanding the rules. If everyone has a clear understanding then there's less likely to be any problems. This includes selling shares on etc.
Most people only do 50 hours max per year meaning that 90% of the time the aircraft is just sitting there, why not cut costs and keep the aircraft being used.
Most groups use a Internet booking system and will have basic rules so that everyone can get a weekend per month etc. Or limits to ensure it's fair.

Some of my friends have partners that don't even fly yet still help pay the bills.
With my aircraft which I own outright, I still let 2 really good and experienced friends use to keep the aircraft flying. It's much better to make sure it has a run every week.

kiwipete said:

Some of my friends have partners that don't even fly yet still help pay the bills.

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I need about seven partners like this and I'll be all set!

I've been thinking a partnership -- at the recommendation of some folks on VAF -- for the almost completed RV-7A. But I haven't been able to find enough -- any, actually -- information about how to value shares etc. I'd be interested in seeing the paperwork that someone who has a partnership, has put together.

I don't know nuthin' about now conclusions about our culture and sharing things. I don't see the partnership issue as being one between people who can afford to own singly vs. having a partner. I see it as an issue between people having a partner or having no airplane.

Share value

Bob

Most syndicates here simply take the Market value and divide by number of partners.
Then if someone wants to sell there's normally a requirement to sell to someone with a certain experience, say 100 hours min etc.
Here we don't yet have quite the same culture for suing but I'm not sure if making it a limited company and having shares would stop that or as Pierre said draw up a good agreement.
To get partners you see here in the for sale ads, aeroplanes with shares available, then the monthly rate, plus hourly rate.
If you start the partnership with some money already in the bank to cover any unforeseen break downs etc and then let the maintenance and engine replacement fund build there should be few problems.
Sometimes if the fund gets to quite a large amount then this can be used to do upgrades.

Peter