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Many people dream of owning an aircraft, but this dream may be out of reach for people who cannot afford the steep costs of ownership. These days, pilots aren’t giving up on their dreams of owning an aircraft just because of the costs. Instead, they are entering into agreements to co-own a plane with one or more other people. Is this is a good idea? What are the pros and cons of co-owning a plane? Here’s what you need to know about co-ownership:
Formal vs. Informal Agreements
If you’re interested in co-owning a plane, you can go about it in one of two ways. Either you can form an official partnership or limited liability company with the person or people that will also own a part of the plane, or you can agree to a more informal arrangement with one or more pilots. If you know the other pilots well, creating an informal agreement rather than formally establishing an LLC should work out just fine. But, you should know that if an accident happens, an LLC provides each partner with some protection from liability, but an informal arrangement does not. This means each partner could be held liable for damages if they had an informal co-ownership agreement. Regardless of which option you choose, be sure to clearly outline what percentage of the plane each partner owns, and the responsibilities that each partner has in maintaining the aircraft.
The Benefits of Co-Ownership
To decide whether this is the right choice for you, it’s important to understand the benefits that come along with co-ownership. First and foremost, sharing ownership of a plane reduces the amount of money you will have to spend on supplies, repairs, and maintenance. Your agreement should include information on how the costs will be split up. For example, it is common for partners to split the cost of the plane and fixed costs of owning the plane evenly, and then pay for their own fuel separately when they use the aircraft.
If you enjoy flying but don’t have much time to commit to it, it may seem like a waste to own a plane when you rarely get to use it. But, it makes more sense to enter a co-ownership where the plane won’t go to waste just sitting in a hangar.
Co-owners of a plane may also get the opportunity to fly new aircrafts. For example, if you can afford an inexpensive plane on your own, but you dream of flying a more expensive model, entering into a co-ownership agreement can help you reach this dream without breaking the bank.
The Downsides of Co-Ownership
Before you enter a co-ownership agreement, it’s important to understand who your partners truly are. You shouldn’t enter into an agreement with people you don’t know well, otherwise you may soon find out they can’t be trusted with such an expensive investment. You can avoid many issues that may arise with a detailed agreement that outlines rules each pilot should follow. For example, you can include in your agreement that every pilot should follow a specific pre-flight inspection checklist before take off. You can also include that all partners need to be made aware of any issues found during inspection as soon as possible so you can decide how to handle repairs as a group.
Scheduling can also be a problem if you don’t plan ahead. How will you decide who gets to use the plane and when? Talk this out with your potential partners before signing an agreement. Some partners agree to alert other pilots that they are using the plane at least 48 hours ahead of time, but if you want to be able to spontaneously take off and jet away, this arrangement won’t work for you.
Insurance may cost more if you have multiple pilots using the same aircraft. However, this shouldn’t change the fact that owning an aircraft with one or more other people is still less expensive than owning it all by yourself.
Issues to Include in Agreements
Besides determining who will pay for what, rules that must be followed by each pilot, and when each pilot is allowed to fly the plane, there are other issues that must be mentioned in a co-ownership agreement. Every agreement should have a clause that discusses the procedure for terminating the arrangement. For example, if three pilots partner together to buy a plane, but one pilot continues to send payments late or ignore the rules of the agreement, there should be a procedure in place to remove him as a co-owner. It may even be wise to include a section in the agreement that discusses how you should handle conflicts before terminating the partnership. Perhaps you can visit a neutral third-party mediator to try to work out your issues before legally terminating or kicking one pilot out of the agreement.
The agreement should also go over who is responsible for maintaining the aircraft. Aircrafts need to be routinely inspected, cleaned, and polished, so the agreement should state who is responsible for scheduling maintenance, repairs, and cleanings.
Will one person be responsible for authorizing every expense related to the aircraft? Or will any partner be able to sign a check to buy supplies, fuel, or pay for repairs? Will each partner have to get the other partners’ approval prior to writing a check? This also needs to be included in the agreement to ensure everything runs smoothly down the road.
Now that you know the ins and outs of co-ownership, you have enough knowledge to decide whether this is right for you. Many people embrace the idea of co-owning a plane, while others can’t imagine sharing their aircraft with someone else. Ultimately, it’s up to you to decide whether you want to co-own a pilot with friends, family members, or other aviation lovers.