Block time or partners

[kmack3211]

Has anyone had experience with either selling block time or forming a partnership with their planes? The sad truth with our 337H is the fact that we do not use it enough to justify the expense of ownership. For the amount of flight time totals for this past year, chartering a Learjet would have been more practicle for the few times I used it for serious travel. I hate to get rid of it, but it sure becomes hard to justify the yearly cost at the present rate that we are flying. Any comments or suggestions would be appreciated.

[Skymaster337B]

Good airplanes should never be rented. However, a good partner might be ideal. The key to a good partnership is a written contract: one that covers every detail, such as who will clean it, how much reserve per/hr each one will pay, what happens when one partner desides to sell his/her share, etc.

[stackj]

Prior to the Skymaster I owned a Beech Sierra with three other people.

We did not put together a very binding contract with ourselves.

Two of the other owners fell on relatively hard times. One of them sold his share of the airplane to Jenny at a reduced price. Jenny could not really afford to pay market value for his share, but she offered what we could to buy his share. He accepted and was thankful to get out of the burden of fixed expenses for his share (Jenny and I assumed those fixed expenses).

The other owner who had fallen on hard times refused to pay his portion of the agreed upon expenses. This went on for a year. He told us that he would not sell his share as he felt we had taken advantage of the owner we had bought out. We made offers to him at fair market value. he would neither accept the offer nor pay his share of the expenses. We ended up going to court with the judge ordering him to sell his share to the corporation at the fair market offer we had made. Unfortunately, the corporation had to bear the legal expenses.

Jenny and I found the Skymaster and were interested in upgrading to this twin. The third owner of the Sierra (Who had faithfully paid his portion of the fixed expenses and who rarely flew the airplane) chose to not move into the Skymaster.

We calculated the fair market value of the airplane, made him an offer, which he accepted, and bought his share of the Sierra. We then made the trade for the Skymaster.

Jenny and I have chosen to not have other owners for the 'family' airplane. Our experience with joint ownership had been both good and bad. Unfortunately, the bad outweighed the good in our case.

You can certainly set up a good ownership agreement. Be sure to do that. Approach the deal as a BUISNESS arrangement. Even if you are making the deal with friends... especially if you are making the deal with friends.

The loss of a friend is a big loss.

[danbooker]

I am new to this forum and have been "reading" messages for a couple of months with the idea of becoming a partner in a C337 relationship! I have cooled on the partnership and the owner has offered a rental agreement to me instead of the partnership. He is very nice and wants to get a couple more hours per month on his plane. He does not fly it very much. Does anyone have any idea what a good dry rental rate would be for a '69 C337D?

[Ernie Martin]

I don't think anyone rents 337s, so it may be hard to come up with a rental rate. But let me take a stab at approaching it from two viewpoints.

Cost Model
First, what are the operating costs per hour on a Skymaster? If we can get a decent handle on this, then we have a floor, with rental being something above this floor. There have been a number of threads here about operating costs, but let me steer you to one that's easy to find. If you go to the third thread (What to look for when buying a Skymaster), fifth message, you will find this link www.skymaster.org.uk/purchase.asp which has a discussion on operating costs. There, and allowing for some inflation, a rule of thumb is proposed that non-fuel operating costs are roughly equal to $3.00 times number of gallons burned. If an average burn (including takeoffs) is 22 gal per hour, then, by this model, non-fuel operating costs are about $66 per hour. So, if the "renter" uses the aircraft on a Saturday for three hours, you might expect him/her to pay, say a 50% premium on top of this, or about $300 for 3 hours (plus fuel, of course).

But wait. That might cover the wear-and-tear aspects of operating costs (engine and prop reserves, tires, brake pads, oil changes, spark plugs, etc.), but what about fixed costs, those that are relatively insensitive to use (tiedown or hangar, insurance, annual inspection, etc.). Should those be included in the rental base? I once did a cost analysis for my aircraft, which is tiedown (not hangared) and uninsured, and came up with $123 per hour, nearly twice the $66 above (details at the end of this message). Add a 50% premium and a 3-hour "rental" is $550 (plus fuel).

What's the right amount? The first one? The last one? Somewhere in between? Who knows. It depends in part on what the owner is seeking. If he/she is concerned that the aircraft's lack of flight is hurting it (engine corrosion, for instance) and actually wants to put more hours on the plane, then the first figure seems right -- provided, of course, that the "renter" is someone who is going to take exquisite care of the airplane. If the owner wants to defray some of the ownership costs, then the second figure seems more logical.

Comparison With Other Rentals
A fundamentally different approach is simply to extrapolate from the rental costs of other aircraft. What's the closest twin to the Skymaster in the rental fleet? Take that and adjust moderately if the Skymaster is in cherry condition and the twin rental is cosmetically beat up. Or how about taking a Cessna 172 rate and doubling it?

Ernie Martin




Cost Analysis For My Aircraft
Assume 100 hrs of operation per year

Overhead Items
Tie-down $85 * 12 ~ $1000
Annual Inspection ~ $5000 (includes misc. items thru the year, including small repairs, tires, oil changes, etc.)
Paint, windows ~ $10,000 every 10 years, so 1000 per year
Total $7000 per year, or $70 per hour

Per-Hour Items
$25000 per engine overhaul per 1,500 hours of flight = $33 per hour ($50000/1500hrs)
$5000 per propeller overhaul every 5 years (500 hrs) = $20 per hour ($10000/500hrs)
Total $53 per hour

Grand Total $123 per hour

[danbooker]

Thanks for all of the effort on calculating a rental rate range. The owner decided to give me a half-rate rental of a twin apache that is located at the local fbo. I will do some more research and see if this is fair!