Your local sandwich shop likely offers the option to buy half a sandwich. That may seem odd, but there are circumstances where a customer only wants half a sandwich, not a whole. Maybe they’re hungry but watching their waistline. Perhaps they’re eking out the last few dollars until payday.
Sometimes, half a sandwich is enough. The same is true when it comes to aircraft ownership.
If the price tag on that airplane you’ve been longing for remains beyond the limits of your budget, buying half the airplane would logically and practically cut your cost in half. Suddenly the unattainable has become far more manageable. Add a third owner and your costs get even lower. Bring in a fourth and the darned thing is getting downright affordable.
It’s simple math coupled with a clear vision of what your probable use case would be. Few of us need access to an aircraft 24/7/365. In truth, most of us fly just once a week or less. The bulk of those flights are relatively local and short.
Sharing ownership can be a great way to cut costs dramatically, develop important connections with others at the airport, and perhaps learn something of real value in the process — all while maintaining sufficient use of the aircraft to satisfy your desire to fly pretty much whenever and wherever you want.
Terminology makes a difference in this deal. It’s not uncommon, but it is almost always inaccurate, when someone describes this arrangement as a partnership. It is not.
A partnership is a for-profit business enterprise involving more than one principal.
When it comes to more than one person sharing ownership of an aircraft, the appropriate term is co-ownership. There is no profit motive. The goal is to access a good quality aircraft for a more affordable cost. Savings is the objective.
Words matter. Especially when it comes to taxes, insurance, and the law.
That, and the possibility to obtain an ownership stake in an aircraft you couldn’t otherwise afford, makes this the perfect time to start thinking seriously about becoming an aircraft co-owner.
You may already have a friend or an acquaintance who would be interested in purchasing an aircraft jointly, for the exact same reasons the idea appeals to you: Lower cost, higher utilization, greater availability, and the freedom to take the aircraft for days without unduly inconveniencing anyone.
None of those details are under your control when renting. All are within your control when you’re an owner.
If your circle of friends doesn’t reveal an interested party, social media could help you find one in short order. The idea of buying an attractive aircraft for a fraction of its actual cost can be appealing to a wide assortment of pilots.
Co-ownerships also make sense for aircraft that are currently owned by an individual. Imagine the engine starts burning oil, or losing compression, or the tach time has reached a point where overhaul or a rebuild is the wise move.
Major engine work is quite expensive. An individual owner may find they can’t shoulder that burden alone, making this the perfect time to consider taking on a co-owner. By selling half or two-thirds of the aircraft, the previous owner may find the new engine is no longer a financial burden. And who wouldn’t love to be flying an airplane with a new engine?
Can I retain the privileges of ownership while sharing the cost of major upgrades with others? Yes, you can.
The same goes for panel upgrades, interior refurbishment, or paint. Large dollar costs can be shared equally, making them not just desirable, but downright cost-effective options that can increase the value of the aircraft to boot.
Many a successful co-ownership has been sealed with a handshake. Many more have devolved into bitter disputes about custody, usage, and cost sharing. Thankfully, there is a way to mitigate these risks. Insist on a written co-ownership agreement.
An aviation attorney is the gold standard entity when it comes to writing co-ownership agreements. And in the big scheme of things, the cost to work with one is a small price to pay for the assurance of avoiding future disagreements.
Dealing with specifics well in advance of the purchase can make all the difference. It is, in fact, the basis for a successful and long-lasting co-ownership relationship.
Will the aircraft be titled to multiple individuals or an LLC owned by those individuals? Where will the aircraft be based? What is the process involved in changing that base? Is there a limit to the amount of flight time a given pilot can log in a year? How many consecutive days may a pilot take the aircraft for and how often? Is there a designated shop to use for regular maintenance? How will maintenance away from base be paid for? What is the agreed-upon hourly operating cost of the aircraft? How will disputes be resolved?
All these issues are possible tripping points down the road. Knocking them out in writing in advance not only serves to smooth the path to satisfactory ownership relationships down the road, but the agreement also adds value to the owned portions should one co-owner wish to sell and move on.
A trouble-free co-ownership arrangement with years of beneficial use behind it is an appealing option for many potential owners in the exact same situation you find yourself in today.
A great many of us have looked at our checkbook, our income, and our obligations and come to the conclusion we simply can’t afford to become an aircraft owner. And on an individual basis, that might be true.
But as a member of a co-ownership arrangement, it is not just possible, but likely you can indeed benefit from the privileges of ownership for a literal fraction of the overall cost.
For more information, please feel free to shoot me an email to the address below. I know a guy who can help.
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