Sport Pilot Talk

Wm.Ince wrote: Paul,

What is your formula for a successful aviation enterprise?

It's very simple, Bill. You decide a priori how much money you want to lose. When you achieve that goal, you quit.

drseti wrote:

Wm.Ince wrote: Paul,
What is your formula for a successful aviation enterprise?

It's very simple, Bill. You decide a priori how much money you want to lose. When you achieve that goal, you quit.

Guess you’re not there yet, eh?

Wm.Ince wrote: Guess you’re not there yet, eh?

Nope, still working on it!

For a more detailed answer, see this flowchart:

http://avsport.org/graphics/flight_school.pdf

And for a totally frank answer to your original question, Bill, standby for a couple of weeks. As soon as my 2018 Annual Report is completed, I'll post a link to it here.

drseti wrote:And for a totally frank answer to your original question, Bill, standby for a couple of weeks. As soon as my 2018 Annual Report is completed, I'll post a link to it here.

That should be interesting.

Im fully aware this is not a get rich quick scheme.... Just want to male sure it is not a get poor quick scheme. If i can reduce the price of a 60k plane to 30k then im in. As an accountant in my day job nothing scares me more than uncertainty. Knowledge reduces uncertainty and in my current state... lets say I'm very uncertain.

Atrosa wrote:Im fully aware this is not a get rich quick scheme.... Just want to male sure it is not a get poor quick scheme.

It's more like a get poor slowly scheme.

As an accountant in my day job nothing scares me more than uncertainty. Knowledge reduces uncertainty and in my current state... lets say I'm very uncertain.

As an accountant, you will appreciate that the higher the marginal tax rate your income puts you in, the more beneficial an aircraft leaseback arrangement can be. But IMHO, unless you need (and can benefit from) a tax shelter, it probably makes very little sense.

That said, I do have some experience with this matter. You can see a sample leaseback contract at:

https://www.avsport.org/docs/leaseback.pdf

Atrosa wrote:Im fully aware this is not a get rich quick scheme.... Just want to male sure it is not a get poor quick scheme. If i can reduce the price of a 60k plane to 30k then im in. As an accountant in my day job nothing scares me more than uncertainty. Knowledge reduces uncertainty and in my current state... lets say I'm very uncertain.

A $60,000 airplane will cost you $60,000 regardless. It's the monthly operating cost you would hope to subsidize by renting out your airplane. I have considered doing a lease-back of a Cessna SkyCatcher but concluded I'm not willing to take on the risk factor.

Another option you might want to consider is a partnership or club situation. In that case, you can get someone to share in the $60,000 purchase price and can set your own pilot requirements. I have been in two aircraft partnerships and one beach condo partnership. All of them worked exceedingly well. The key, of course, is to know your partner(s) and draw up a detailed agreement before hand.

I am not an accountant, but have an MBA in Finance from Wisconsin. I too dislike uncertainty and prefer to minimize risk. One thing I am convinced of is you are better off renting vs owning unless your flying budget is $1,000 per month or more. Of course, if you can't find an airplane to rent, that changes that equation.

drseti wrote:

Wm.Ince wrote: Paul,

What is your formula for a successful aviation enterprise?

It's very simple, Bill. You decide a priori how much money you want to lose. When you achieve that goal, you quit.

I think this goes for flying in general! LSA is just a lower cost alternative, so slower bleeding of assets. In all seriousness, risk is a factor in any decision. Having to deal with the trucking and logging industry on a daily basis I can say that anything is insurable for the right price. That price is, in some cases (log trucks or saw hands) more than you could ever recover through revenue generation and you either have to transfer money from other revenue sources to make up the difference, shift the liability to another (think sub-contract or different LLC), or don't participate in the activity. I live in Louisiana which is probably the most litigious state you could ever find, which translates into very high insurance premiums. Some companies will not write policies for our state. For two vehicles and a 1 million umbrella policy it's 4K a year with stellar credit and no tickets/accidents in the last 5 years. I'd definitely do my homework on insurance and if your getting into a leaseback then research the FBO/School's insurance and those of flight instructors (who in some cases are actually independent contractors). I'd be leary of anything with waivers of subrogation, hold harmless clauses, or anything where a lawyer can try to pin liability on you. Remember, if you have the deepest pockets, your the target for the lawsuit. I don't mean to sound alarmist, but you really have to know what your getting into with leasebacks. I considered it as a way to finance the purchase of an aircraft until my lawyer (my best friend of 15 years who's father taught me to fly) looked at me and asked if I was "crazy or just stupid." That pretty much put an end to that idea.

That is a good summary of risks.

If you can break even on a leaseback, you are doing well. But if there is an incident or two, it won’t turn out well.

Even the wear and tear would drive me up the wall. Upholstery cuts, dented skin, scraped wingtips... You get the idea.