Possibility of a large co-ownership

There is an SR20 in Birrfeld with 10 owners sharing it. But they are not interested in IFR and said their plane was “VFR only”, hence I wasn’t interested in joining the group.

Their website was way more informative the last time I looked: http://cirrus-club.ch/

But you might try to contact them and ask about their experiences.

In my opinion, for flying distances an SR22 is a better choice than the SR20, because you can arrive at a similar cost per mile (excluding depreciation) but have more options. In France, it may probably still be worthwile to set this up as a club according to the “Loi 1901” and not as a shared ownership; but I am not an expert on French taxes.

Welcome to EuroGA, frequent_flyer

I would suggest a search here on the word “syndicates” and you will get plenty of tips on what to avoid.

I tried your proposition in 2002-2006 and the hardest thing by far was finding enough “good” people.

No matter how you shake this, it will sound elitist, but most people who rent do so because they can’t afford to buy anything, most people in syndicates do so because they can’t afford to buy a whole plane (and they don’t like funding “surprises”), most people who can afford to buy a whole plane have already bought one (because everybody and their dog knows the huge advantages that brings), most people with an IR have either allowed it to lapse or they own their own plane, most airline pilots (which one would think would be a fertile hunting ground for high-end syndicate members) don’t fly GA and those that do usually dislike IFR and prefer “rag and tube” types (or RVs, etc).

So somebody trying to run a syndicate around a high-end aircraft will be fishing for the small number of exceptions to the above.

The operation also attracts a high % of dishonest people.

So I would start with assembling a group and moving on only when you have done that and are really happy with it. You all need to

• get on well (not just over a beer or wine, when everybody gets optimistic and chucks caution out of the window)
• be adequately funded
• be appropriately qualified
• be capable of being it in for the longer term (i.e. family support, etc)

etc.

I was one of a group of 15 who bought a Pa28. (In 1994, if I remember correctly.) I sold my share a year later, but the Group is still operating, and it is kept basic IFR. In the UK the maximum number in a Group was (still is ?)20.
At present it is underused, and always there are members who realise they aren’t flying enough, and look for someone to buy their share.
(When the Group formed, I put my Jodel share up for sale. After a year, with no interest, and someone looking for a Warrior share, I sold it and stayed with the Jodel. Almost 27 years now in that Group. Groups can work.)

My experience is that the larger groups in fact work better than the smaller groups, and there may be obvious reasons, including the following:

• Shares in larger groups are of course proportionately smaller so the monthly fixed cost is less for each member: Fewer money worries from flying!
• Shares are less expensive to buy and sell so change hands more easily – fewer stuck, broke, unhappy group members.
• Small share members often seem happy to remain “owners of a plane” even if they don’t fly much or indeed at all. I was surprised when I learned this but it’s true!

I know a very long-standing big group at an airfield near London and those few members that fly regularly in that group seem very happy for the above reasons and because there are many of their members who don’t fly, but who do pay their small monthly subs, thereby subsidising the true flyers’ hobbies. It seems to work remarkably well.

Many smaller groups (groups of four, five, six) seem to suffer from the opposite of the above – more expensive monthly subs so a greater number of money issues (including arguments about what to fix on the plane!), harder to sell say a 1/4 share than a 1/12 share because of the price etc.

I couldn’t find a happy group with a plane I liked, so I bought my own plane three and a half years ago. Last year my plane cost me 80% more than my annual flying budget. I laughed and cried. (I’m an accountant.) It’s funny having a money pit that one loves. I fly about 50 hours a year (47:30 so far in 2016) and would hate to work out the hourly cost compared with renting, but I do love my plane… I know others get precisely as stuck as me. If had a very good buddy, who flew well and who wanted to share my plane, I’d sell half. Otherwise I’m staying as I am until I do something even more stupid and buy an old twin.

My advice to Frequent_Flyer is to either (i) form a group first and then find a plane (I have seen that work) or (ii) buy a whole plane and then advertise shares (I have heard that that can work and if you don’t like the sharers, you can sell your last part-share leaving the plane to the others and then start a new group later! Someone even told me that that have done that at a profit – buy 100%, gradually sell 4 × 25% and make money/ fly for free. )

Have fun.

Hi Frequent Flyer,
Giving advice on forming syndicates is as difficult as advice on a happy marriage. There are so many variables. My own experiance is that I have been in a syndicate of 9 pilots for over 20 years. Three of us are founder members and the rest have been with us for over 8 years. The first and obvious point is that you all are happy with the choice of aircraft. You can compromise on the equipment levels. All our members are in a certain age group, so we have all grown old together. If we were to replace a member it wouldn’t be someone who was of a vastly different age and temperament. If you can raise the funds, I would suggest you start your syndicate with a small number of pilots of like mind and then advertise shares. Good luck.

I think large and small groups can work very well – and of course very badly. The question however is specifically about large groups.

The biggest drawback with large groups is availability. This will always be true, because one of the reasons most pilots migrate from club ownership to group ownership is they are lifted from the restrictions than often prevented the aircraft being taken away for a night (or more), or even used for an entire day, but with only a few flying hours.

However you appear more concerned with the quality of the aircraft, than its availability.

Of course the reason why most clubs dont operate more complex aircraft is because the clubs primary role is usually ab initio training for which a complex aircraft isnt needed, and will prove more costly to operate. In the UK there are clubs and schools that operate more complex aircraft, but all too often these are used for instrument training and there is the inevitable conflict between private use and the school or clubs training timetable.

That means there is an obvious gap in the market BUT you need to be certain that the gap isnt just the need for a complex aircraft BUT a complex aircraft that a lot of pilots will want to use for a few hours or a day at a time, with poor availability, becasue, with a large group this inevitably follows. There may well be that need, but you need to be certain, becasue in my experience the single biggest criticsm of large groups is that the aircraft is never available when you want it or at short notice.

Of course the term large is relative. In my experience things change very nicely with a group of between 4 and 6. Now availability is high, the aircraft can be booked for a week at a time, and availability, especially during the week, is very good. Now the usual problems come into play about having the right mix of reliable people, and it is true it is often difficult to find 4 or 6 pilots that wish to make a significant investment in an aircraft.

There is one other alternative. You purchase the aircraft yourself and form a small group around the aircraft that covers all the operating costs, BUT not the initial capital. If you have the funds that can work very well, but again you need to be very careful about the pilots that are included in the Group.

The advantages are obvious. Most of the cost of a complex aircraft are fixed costs, and almost every privately owned aircraft is significantly under utilised. All of a sudden the members are able to fly a comlex twin for example, a proper pilots aircraft with real all weather potential, reliability, load carrying and comfort at a sensible cost. There are few of these available so it can fill a very real gap in the market. Also it is often the older more mature pilot that no longer wants to scramble around in a small cockpit, flying at night or in weather or over the sea with just one engine and icing equipment that is either not up to the job or barely works, and would like the challenge, and these are exactly the pilots that are more likely to look after the aircraft . A goal that is worth while.

Another drawback of a group is that usually shares trade at a discount to the fair value of the aircraft, at the cost of the founders who paid the full value.
Fuji_Abound wrote:

There is one other alternative. You purchase the aircraft yourself and form a small group around the aircraft that covers all the operating costs, BUT not the initial capital.

I certainly would be a client. I’m now looking for a twin around Paris (where I live now) that would be available for periods of one week or one month. A DA42 would be fine but all of them seem to be operated by flight schools and hence not available for renting.
I cannot fly a N reg because I’d have to take the Instrument Foreign Pilot knowledge test. It’s not possible anymore to take it in Europe.

There is one other alternative. You purchase the aircraft yourself and form a small group around the aircraft that covers all the operating costs, BUT not the initial capital. If you have the funds that can work very well, but again you need to be very careful about the pilots that are included in the Group.

This is what I did 2002-2006. The issue seems to be that people tend to value stuff according to how much they paid for it. No investment = no taking care of it. Well, obviously that is a generalisation, but it reduces the pool of quality customers.

Also, in the UK, there are tax issues with Benefit in Kind, especially in a non-shareholder syndicate. BIK and its rules is a UK thing but every modern country must have an equivalent otherwise every businessman would get his business to finance his private life.

Also no investment = minimal incentive to fly the plane – because you pay only for flying time.

The partly successful SR22 groups which existed (some still do?) in the UK operated a “zero equity” system but got people committed to a large degree by making them pay for a block of hours. It was quite a lot, too – a few k a year IIRC. N147KA was one of these, based at my base. That sort of hour-block purchase keeps people coming back to fly because they feel they need to get value out of their purchase, whereas with a zero committment they will cancel a flight for any small reason.

Another drawback of a group is that usually shares trade at a discount to the fair value of the aircraft, at the cost of the founders who paid the full value.

Here in the UK it is usually the other way round i.e. a 1/10 share in a 40k plane might sell for 6k. The argument is that a share is more affordable therefore you can sell it for more However that may change in a weak market.

As I said earlier, it is the people that matter by far the most.

Big syndicates, say 20-30, work well here in the UK because the whole thing is cheap. Some people own shares in several planes. But the plane has to be a very simple type, which even a 5hr/year pilot can fly safely.

Hi frequent_flyer,

welcome
another recent IR here (still not on my license…), but a bit further west !

Do you think you can land an M20J a Neuhof ?