So if the airframe is well chosen, (hours/times, condition, avionics, appropriate model) with a plan on how to use it, excluding a catastrophe can that work.
How about a 1998 c172 with a new cd155 (warranty)?
Basic six but with gtn750 and flightstream.
Usage would be 30hr CB IR instruction packages mostly. And generally IR instruction
I don’t think leasebacks on new planes have been money makers for 30 years, certainly not so in the US, although if you were going to do one a C172 is a good choice. The Diesel sounds like a bad idea – its not clear to me that Continental/Thielert has a business model that will sustain the Diesel business for long.
This wouldn’t be a leaseback to a school. Operational control would remain close to the owner.
For a owner flown 50hr/year plane diesel wouldn’t make much sense, fuel expense isn’t a big factor.
Advantages of diesel are fadec/electronic engine control which avoids engine mismanagement (torture) and jet a is cheaper and has better availability than avgas, which starts playing a (financial) role when supplying the market with lower hourly prices thereby increasing yearly hours volume.
Read the last sentence of my post above, it’s non technical.
Hope your buyer finds a plane he likes regardless.
Can you explain why you think conti doesn’t have a sustainable business model regarding diesel? Thanks.
To your original question:
I think the model you have in mind (buying an aircraft, renting it out to earn its maintenance fees and after some years selling it at basically the same value you bought it for) is possible but has some quite significant risks:
- The rent out business model depends on the flight school market. Obviously for every flight school that is in capacity need such an offer is attractive. If market slows down, however, your plane will be the first to not being utilized and therefor doesn’t earn its maintenance cost. Plane needs to fly at least 150 paid hrs. per year to do this…
- You carry the entire risk of oil price, environmentalists, etc. If some external shock happens that puts the small GA in total under pressure, your investment will loose value. Compared to that the upside you can hope for is extremely limited
- In the segment you are looking at, technology is an extremely important factor that can get into your way… (see below)
Snoopy wrote:
How about a 1998 c172 with a new cd155 (warranty)?
Basic six but with gtn750 and flightstream.Usage would be 30hr CB IR instruction packages mostly. And generally IR instruction
Depends extremely on the location of this plane. I would assume that over the next couple of years the market for steam gauge IFR-Trainers will become very limited: With the availability of comparatively cheap glass cockpits the willingness of customers to pay for steam planes will deteriorate quickly in Western Europe…
I am unfamiliar with the diesel engines so can’t comment with experienced or educated input.
Your points in favour seem sensible.
For an aircraft set up leaning toward IFR training there will perhaps broadly be 2 types of client groups.
One who will have access to high end equipment, has money to spend, and will be keen to learn on something nice with glass and all the toys.
The other will be someone keen to have an IR and will look for the ‘Path of least resistance’
A package deal of training, test prep and test opportunity, isn’t available in the way PPL training is.
So I would imagine that person to be less worried about the equipment beyond a certain minimum. They just want to get it all done and will sort out the rest later.
I’m only closely friendly with 3 IR pilots but they only fly 6pack.
I personally would (if I had it) would rather spend 35-50k on flying rather than upgrade to glass.
A concern/worry would be availability of a back-up aircraft from somewhere if the principal one goes tech.
Malibuflyer wrote:
- The rent out business model depends on the flight school market. Obviously for every flight school that is in capacity need such an offer is attractive. If market slows down, however, your plane will be the first to not being utilized and therefor doesn’t earn its maintenance cost. Plane needs to fly at least 150 paid hrs. per year to do this…
I’ve looked into this from both sides as potential owner and for our club as lessee. Believe me, unless you are in some sweet spot by dint of unusual circumstances, the numbers don’t add up. As owner (lessor) you carry the entire risk, whereas the lessee essentially only gets the benefits. It may (may!!) work if you just want to defray some cost of ownership, but then ask yourself – would you want to own a school plane?
Malibuflyer wrote:
Depends extremely on the location of this plane. I would assume that over the next couple of years the market for steam gauge IFR-Trainers will become very limited: With the availability of comparatively cheap glass cockpits the willingness of customers to pay for steam planes will deteriorate quickly in Western Europe…
100% correct, not only for Western Europe. The price for glass is tumbling and the old six-pack is going the way of the Dodo, especially for IFR.
Now, there’s also our friend SARS Cov-2…. you can bet that once this is over, many, many people won’t be able to afford an airplane and/or flying anymore, at lest for a while. I expect prices – especially for airplanes with legacy panels – to come down significantly.
Right now, if you have cash – hang on to it. Deals will be had.
172driver wrote:
Right now, if you have cash – hang on to it. Deals will be had.
For “bigger” planes, apparently the Coronavirus crisis has incited some people to want to close their deals quickly:
https://www.ainonline.com/aviation-news/business-aviation/2020-03-23/iada-notes-march-surge-bizav-aircraft-transactions
With growing flight restrictions and stay-at-home orders in the offing, the pace of transactions is highly likely to slow as approvals and regulatory obligations take longer to achieve, Starling added. But economic effects of the pandemic could lead to further changes in the market for buyers and sellers of preowned business aircraft, he noted.
