Graham wrote:
Now onto ‘non-equity’. As far as I’m concerned, a non-equity group is a straightforward rental business and I’m yet to hear any convincing arguments to the contrary
However it can be done on a SDMP in the UK.
I bought a 1/6 share in a Jodel DR1050 at the start of 1990. The Group lasted till late 2020, when death/illness made selling the only solution. £50 per month, £60 per tach hour at end. The aircraft was always tatty but flyable, between Shetland, Killarney, and central France.
I got the Group name and bought a plane. The Group continues.
I was for a year a founder member of a larger Pa28 Group. It lasted 30 years until the spar failed an annual. Despite more members, their problem was getting enough hours flown. She was well kitted out and we’ll maintained.
The only thing that matters is that the Group members want cheap flying and are prepared to argue. 3 would be too few – 2 v 1 in arguments. 6 worked well.
Don’t reject equity syndicates.
Graham wrote:
Now onto ‘non-equity’. As far as I’m concerned, a non-equity group is a straightforward rental business and I’m yet to hear any convincing arguments to the contrary. If there’s no equity shared among the members, then in what way is it a ‘group’? It’s certainly not group ownership. It is group ‘operation’? Possibly, but the definition of ‘operator’ is fluid at the best of times. I think your insurers will tell you that if you run a non-equity group then you’ll be insuring for rental – or maybe they’ll use a different term but the premium will be the same. The CAA will probably want to see ‘for hire and reward’ maintenance requirements followed, and the taxman will consider the money your ‘members’ pay you as income. I have heard proponents of non-equity groups argue that it isn’t rental because it isn’t open to all comers. Well, rental is not open to all comers either. Any business can rent you an aircraft or not at their absolute discretion and they don’t have to give a reason. As long as they’re not discriminating based on some characteristic that is protected in law, you cannot make a business accept you as a customer.
They are rentals indeed, for maintenance my understanding it need CAMO if Part21 and owner can’t do 50h check? (someone quietly told me you don’t need engineer for 50h in non-equity, I told him quietly we don’t even need any papers and we can just fly it with fuel and without airworthiness or insurance, joking), the insurance stays manageable with named pilots in terms of excess & premium (my insurance require 300h TT & 100h on model for any pilot, 100TT & 25h on model for named pilots, instructor sign-off for the owner), the tax authorities will be interested if you are making money, less so if you are covering your costs
In the other hand you can sell 1$ equity share and then it’s no longer a rental but rather ‘equity syndicate’
Peter wrote:
The difference here is that Snoopy is trying to do some version of N147KA, which had a ~£400/hr hourly rate
I don’t know what N147KA is. 
My point is that people go into “syndicates” simply because it is what makes most sense. The goal is to have some fun doing some loops. Do you have to purchase yourself an entire aircraft to do that? Not if several others also are looking for the same kind of fun.
There is no difference between this and any other aircraft, for any purpose, as long as the objective is what matters, and this objective is agreed upon.
Ibra wrote:
the owner has literally zero emotional attachment or financial dependency to it
This is also important IMO. You cannot grow too emotionally attached, or become financially dependent to the aircraft when sharing it with others. It’s the usage, whatever that usage is, that is of importance, and which everybody should focus on: the “mission profile”. Even the our club would become too financially dependent, if the club was to purchase it. It wouldn’t work.
Snoopy’s case is a bit different. He is looking to offset the ownership costs (or cut the losses is perhaps another way to say it ) The financial dependency is already there from the start. There seems to be some level of emotional attachment as well? Maybe it will work, maybe it wont. I don’t know. But then I would think it would perhaps work to lend it out on a per case financial basis to known persons. I would think though it would be better to cut most emotional attachments, lend it out to a club in need of a touring machine (if this is what it is). Snoopy could still use it as before, but would have to focus on the “mission profile” rather than the aircraft as such (to stay a happy person )
It’s the same in the Air Force as well. Each plane has it’s own ground crew, and with the name of the crew chief on the plane. It’s important that the ground crew is emotionally attached to “their” plane, as well as keeping a healthy competition between the crews. Some senior pilot might have a his name on a special plane, but there are too many pilots compared with planes anyway. The pilots should focus on the mission, 100%, not on the plane (and yes, I have seen Top Gun )
The much talked about ‘syndicate problems’ are usually easy to spot a mile off. Poor condition PA28-140 or C152, 20+ members who each fly the minimum hours per year to keep their licence. The cheapest possible (certified) flying = quite obvious that members won’t expect to or be prepared to put their hands in their pockets. It fits a need in the market and if you want to pay £40 a month fixed costs and £80 per hour wet with close to zero commitment and a low buy-in price for the share then you can, but don’t expect extensive aircraft availability or money-no-object maintenance!
Neither of the syndicates I’m in have any such problems. You meet the people and see the aeroplanes and it’s clear why. Obviously we pay a bit more, but it’s still a lot cheaper than outright ownership in terms of dividing up the fixed costs.
Now onto ‘non-equity’. As far as I’m concerned, a non-equity group is a straightforward rental business and I’m yet to hear any convincing arguments to the contrary. If there’s no equity shared among the members, then in what way is it a ‘group’? It’s certainly not group ownership. It is group ‘operation’? Possibly, but the definition of ‘operator’ is fluid at the best of times. I think your insurers will tell you that if you run a non-equity group then you’ll be insuring for rental – or maybe they’ll use a different term but the premium will be the same. The CAA will probably want to see ‘for hire and reward’ maintenance requirements followed, and the taxman will consider the money your ‘members’ pay you as income.
I have heard proponents of non-equity groups argue that it isn’t rental because it isn’t open to all comers. Well, rental is not open to all comers either. Any business can rent you an aircraft or not at their absolute discretion and they don’t have to give a reason. As long as they’re not discriminating based on some characteristic that is protected in law, you cannot make a business accept you as a customer.
There are of course options for less formal arrangements. One is where you fly a friend’s aircraft (they having put you on the insurance) and you slip that friend some money afterwards which is, if anyone asks, unrelated to flying. This is straightforward private use.
I would suggest either coming to informal private arrangements with people you know and trust, syndicate it (probably unattractive if you wish to retain control), establish a rental business around it (which is what non-equity syndication is) or stick as you are. Each has different pros and cons which may matter more or less depending on your circumstances.
To me, this sounds awfully lot like a model predestined for desaster the moment something goes wrong, i.e. a damage appearing ‘out of nowhere’, or a sudden engine issue or any other expensive repair. It just asks for trouble, because the renters will always feel somewhat inferior compared to the owner. Because you cannot emulate ownership, you have to contribute capital to do that. Someone without a capital commitment doesn’t understand and doesn’t appreciate the joy and pain coming along with it.
I own a plane together with one other person. The maximum long term realistic number of owners in such a co-ownership model, in my personal opinion, is three.
We both own 50% and we share all the cost, the pain, the joy and all the responsibility for everything. And because we are only two, there is no overlap in use. A model of three would probably work, but not more. And we sometimes charter the plane out to pilots we know and have flown with at a wet hourly rate. We wouldn’t even dream to mix both models.
Snoopy wrote:
I don’t think it makes sense with 10 people. Availability will become an issue. Tracking who did what (if) becomes an issue. As owner, you want to be in control of your plane, and it doesn’t make a difference if 4 people pay fixed costs/4 or costd/10.The idea here is for a low number of flyers to understand that in return for shouldering the costs they get access to an excellent airplane as well as „almost“ ownership benefits without fronting a few hundred K euro and without the risks associated with sole ownership.
@Snoopy, I’m just describing the situation from a consumer perspective. If I could pay handreds per month just for my share of fixed costs, I’d consider a share in the same type of a/c, or just buying it ourtright. That’s why I say four people is meaningless to me. About availability – it depends. When I’m flying regularly, I’m flying three times a month, few hours each flight. But! I’m not flying all the time, sometimes I have to stop for a few weeks, then I resume, same for many people around me – we all have other priorities as well. That’s why some options like even twenty people in a group might work as well.
To sum up: if you find the right people for your project – why not, but they are likely to move on soon.
Good luck! I hope something works out.
Yes – you are going for the froth on the coffee, and we all know how long it lasts for. The 147 SR22 deals all disintegrated AFAIK (N147KA was converted to a submarine by the RBS “banker”). When I tried to do this 2002-2006 it became obvious what the problems would be. There can also be BIK (or national equivalent – every modern country must have “BIK” tax) issues, if the owner is a pilot too.
The only long term groups around high end GA planes were ones with 2 or 3 wealthy people.
I come across few Cirrus rentals, they seem to work pretty well, the availability is usually very good and people fly them on touring whole weekends but it seems to be down to 3 ingredients 1/ the pilots have IR with plenty of experience and high monthly cash-flows 2/ the owner runs some business and aircraft is one of many business asset 3/ the owner has literally zero emotional attachment or financial dependency to it 4/ usually operated in 1000m paved instrument runways with full ATC
Good luck, the main problem is finding the right people and keeping them, they go and buy their own aircraft in 2 or 3 years 
The difference here is that Snoopy is trying to do some version of N147KA, which had a ~£400/hr hourly rate, plus an hour block purchase to incentivise people away from just ignoring it (which is what happens with all pure rental).
This kind of thing works in a very high net worth individuals market.
