Aircraft ownership – taking the plunge

It seems to me that one should get a pilot’s license before buying an aircraft, but not everyone does it that way. So be it. My story is that I had been flying on and off for many years before taking the plunge. One day it occurred to me that I was not getting any younger, and if I was going to be an airplane owner I had better get on with it.

There are several ways to look at such a proposition. Yes, airplanes are expensive. Flying has always been expensive, and will remain so. That is a fact of life we cannot change. There certainly are ways to make it more expensive or less. The assumption is that you have to be rich to own an airplane. “Rich” is relative. Owning a recreational vehicle, boat, or vacation home can be just as much or more of a financial commitment. Does that make one “rich?” I suppose it depends on who you ask. All of these things are luxuries, but taken together they are not all that uncommon.

Airplane for sale
Should you buy it? Ask yourself some questions first.

So let’s say you have worked through those issues and your life situation allows you to seriously consider purchasing all (or part of) an aircraft. Begin by asking yourself what sort of flying you intend to do: solo or with passengers? If with passengers, how many and with how much baggage? Will you most often be staying in the local area or going cross-country? Do you want to do aerobatics? Do you need IFR capability? How many hours per year do you expect to log? What is your operating budget?

Answering these questions honestly is the key to figuring out the range of possibilities for specific makes and models. Speed is certainly a factor when wanting to go cross-country, as is IFR capability. When I was shopping I was given some very sage advice: “Anything that adds speed to an airplane also adds cost, so don’t buy any more speed than you really need.”

If you expect to fly less than 100 hours per year then renting or fractional ownership may make more sense, but these are not without problems. Rental selection is limited in smaller metropolitan areas. Frequently used rental aircraft often become unavailable due to the required 100-hour inspections. Then there is the minimum-hours-per-day thing plus whatever other operating rules are imposed. Fractional ownership is great if you have exactly the right partner(s), but I have heard horror stories.

I will be limiting my discussion to the purchase of used aircraft, since that is the only realistic option for most of us. Airplane prices seem to make no sense whatsoever at first glance. Upon closer examination, it eventually becomes apparent that market prices are driven by several factors such as

  • Make, model, and year of manufacture
  • Engine and/or airframe modifications
  • Time on the airframe
  • Time on the engine since new, rebuilt, or overhauled
  • Type of avionics installed
  • Interior and exterior appearance
  • Damage history

Your acquisition budget and personal preferences will determine the tradeoffs between these factors. A fixed amount of money will buy either an older but more capable aircraft, or a newer but less capable one. An airplane that is both newer and more capable will be significantly more expensive.

Closing hangar door
Hangar rent is an important fixed cost – how much you spend depends on airport location and construction quality.

The operating budget must cover both the fixed and variable costs of ownership. The fixed costs are those which do not depend on the number of hours flown per year. These include things like hangar rent, insurance, and base rate of the annual inspection. Variable costs are tied directly to operation of the aircraft, such as fuel, oil, and reserve for engine overhaul/replacement.

There will be a certain amount of scheduled and unscheduled maintenance as well. If you are going to fly 100 or more hours per year you can get a rough idea of the total hourly cost by looking at rental rates for the type. Obviously you can save money if you do the maintenance work yourself, but there are regulations governing what an owner can and cannot do without an A&P license.

Choose carefully when it comes to engine or airframe modifications. In aviation the well-travelled road is the safest one. I personally would not consider any aircraft with a “one-off” type of modification. This can inadvertently be created when two separate mods are combined for the first time. On the other hand, there are many after-market mods with an established track record. Take the time to learn which is which for a particular make and model.

A factory-rebuilt engine is considered superior to an overhaul, but it does not seem to make much of a difference in market value. It is common to see “SFRM” in a listing, which stands for “Since Factory Re-Manufacture/” Engine parts can only be manufactured once of course, but the engine can be rebuilt. It is worth noting that the chance of engine failure is greatest in the first few hundred hours after entry into service. One might be better off buying an engine that has been running for a while.

The beauty of avionics is most definitely in the eye of the beholder. Most used personal airplanes offered for sale are equipped anywhere between first-generation solid state and Garmin G1000. An airframe more than twenty years old should have had at least a partial avionics upgrade somewhere along the way. Garmin GNS 430/530’s are by far the most common. Again, it depends on what sort of flying you intend to do. One does not need an all-glass cockpit with a fully-integrated autopilot to go around the pattern on sunny days. Nonetheless I would recommend avoiding the panels that are filled only with boat-anchor gear.

Crashed airplane
The ad says “no damage history.” Better make sure before you buy.

An aircraft with a damage history is not necessarily a nonstarter, but questions must be asked and answered satisfactorily. What type of damage occurred? When did happen? Are the repairs fully documented in the logbooks? How many hours have been flown since the repairs were completed? Some prospective buyers will automatically reject an airplane with a damage history, so that is a resale issue to be considered. If a listing claims there is no damage history (NDH) it should be verified.

The market value of a given aircraft is a combination of many factors which must be weighed both relative to one another and against other aircraft. There is no magic formula for this. Conventional wisdom says to buy the airplane with the features you want already installed rather than pay to install them yourself. The closer you can get to this ideal the better. Once you know what you want, start camping out on the aircraft-for-sale sites. Many aircraft are also sold by word-of-mouth, so it can’t hurt to ask around. Be ready to move as quickly as possible if a strong candidate shows up.

There are two major prerequisites for closing an aircraft deal: a title search and a pre-buy inspection. The title search is to make sure the owner is really the owner. There are various firms around the country who will do this for a nominal fee. It is cheap insurance. A somewhat more expensive form of insurance is the pre-buy inspection, but this too is money well-spent. There can be tens of thousands of dollars in needed repairs lurking beneath the surface. Any experienced airframe and powerplant mechanic is likely to have a story or two about someone not doing a pre-buy inspection and ending up with the proverbial lemon. Find one who is knowledgeable about the make and model of interest, but has no association with the seller. The mechanic will expect to be paid whether the deal goes through or not.

An important part of the inspection is going through the logs. I was a bit overwhelmed during my purchase process when presented with a box fill of various papers and books. The prevailing philosophy seems to be the more paper the better. Having lots of manuals and invoices may be nice, but the log books need to be in there somewhere. Are they complete? Do they tell a consistent story? Have all of the applicable Airworthiness Directives been addressed? These are some of the questions you are paying your mechanic to answer.

Mechanic working on airplane
Pre-buy inspections can be expensive. Pay for it anyway.

There are a few other things that can tip you off to steer clear even before shelling out for a pre-buy. How much has the airplane flown in the last few years? The biggest threats to mechanical condition are abuse and lack of use. Every pilot is taught to avoid abuse, but lack of use can be just as bad. Oil drains off of cylinder walls, seals dry out, batteries and tires go flat. I can actually tell when my plane has been sitting too long. Things just don’t work quite as well at first. A good rule of thumb is at least one hour in the air every thirty days. Is the annual inspection current? An expired annual means the airplane is legally grounded until the inspection is performed or a ferry permit is issued to get it to a maintenance base. Where has it lived for most of its life? Beware of saltwater environments. They eat aluminum.

Airplanes are no different from most other purchases in that you usually get what you pay for. Markets change, and some folks are better negotiators than others, but a sale happens only when the buyer and seller get together on price, so be realistic. Once an agreement on price has been reached the sales contract can be drawn up. I imagine these get more elaborate as the amount of money involved increases. It should for sure include a provision for successful completion of a pre-buy inspection. There may have to be further negotiation if the pre-buy discovery produces a list of previously unknown repairs needed.

Beware the tax man when buying an airplane. Every state is different when it comes to sales, registration, and property taxes. You may find it is advantageous to take possession somewhere other than where the aircraft is currently based. Make sure you understand the tax implications of ownership in your home state.

A relationship begins once you find the bird of your dreams, but you first have to get it home. It is a good idea to have someone with you who is already comfortable in the make and model. If you are taking out hull and liability insurance the underwriter will dictate what constitutes “comfortable.” After that, the relationship involves the care and feeding of both airplane and pilot. As the owner, you will be responsible for both. A big part of that equation is flying enough to stay reasonably proficient. After all, that’s a part of why you became an owner, right?

I tell people that I have learned more about flying in the time I have owned an aircraft than all the years before. Do your homework, and the day you become an aircraft owner will likely be one of the happiest of your life without another being the day you sell it!

14 Comments

  • All good and sound advice, but I would add that I really don’t understand the less then 100-hours-a year so go rent “rule”… If you own a plane you WILL fly more, that’s a simple fact, so if today you rent 50h a year, then spend the extra $3000 and fly your own.

    If you buy a clean, within your budget airplane, you can easily go a year (or more) without a “$1,000 repair” bill. I have owned three airplanes so far (a champ, a mooney and a cherokee six) and only got a surprise bill twice in 5 years, and both under $1,000… If u do the math, I paid less by owning. The most critical thing here is to buy a good airplane within your budget… That 210 maybe only $50,000 but insurance and annual alone may cost half the cost of the airplane. Start small.

    My 2 cents

    • Would a few of you comment on annual maintenance costs? I rent a PA-28-160 out of KABQ @5300′. Considering ownership of an Arrow, likely turbo, for 400-900 nm trips with very young family of 4. I currently rent 50 hours but want to step it up and also get IFR trained. I would consider a partnership but after initial ownership. Thanks in advance.

  • This read a lot like what I did when I got tired of renting. However, I found a guy willing to take on a partner. I have been in two airplane partnerships and both have worked out great. Sharing the fixed costs of hanger, insurance and the annual makes owning much easier on the budget.

    Just like any relationship, there are good ones and bad ones. So like searching for the right plane, search out the right partner.

    However, since an airplane partnership involves a lot of money the best thing to do is put things in writing. The agreement that Frank and I have was not drawn up by lawyers, but it does lay out things like how expenses are shared, where the plane will be based and what happens when one of us wants out.

    I only fly 20-30 hrs a year and could not justify owning my own plane. Partnerships are a great option for pilots like me that want the flexibility of ownership.

    • I agree wholeheartedly! Co-ownership is a severely underappreciated option that often provides the right balance between cost, availability, and utility/performance. I have been in highly successful co-ownership arrangements on three different airplanes over the past 40 years. Yes, as the article suggests some problems can arise (although I believe that true “horror stories” are very rare). But look at it this way: with co-ownership you are balancing the risk of possible interpersonal conflicts against the benefits of dramatically cutting purchase and fixed operating costs, to say nothing of the financial trauma of upgrades and unplanned major maintenance.

      To be competitive with the cost of renting, an airplane typically has to be flown at least 150 hours per year. Few individual pilots who fly for personal transportation (and maybe the occasional business trip) fly that much, But two or three pilots very often do. And with just one or two other users there will be few if any scheduling conflicts (unlike the rental situation). A simple online scheduler will generally keep everyone happy.

  • Owning an airplane isn’t cheap, as everyone knows, but as the author pointed out, it’s no more expensive than many if most other hobbies and non-essential pursuits that people engage in. You can buy a good, serviceable legacy aircraft for about the price of a good new car, and how many homes do we see in a typical middle class suburb with three, four or more cars sitting in the driveway? Try buying a boat, otherwise known as “a hole in the water into which you pour all your spare cash”. Add in the fancy fishing gear, trips to hot fishing or hunting or skiing destination, along with appropriate outer wear, guns, boots, skiis, apres-ski wear, overpriced hotels/lodges, etc.

    I can fly my four place IFR-equipped 125-knot Cherokee 180 for under $10K a year, all expenses included, which is about what the average family of four spends on a one week vacation at one of the Disney resorts here in my home state of Florida. And my form of recreation lasts all year. Plus, being a typical airplane geek, I just love spending time on and around my airplane, other folks’ airplanes, small airports, and the thrill of discovering new flights and new destinations that cannot be replicated any other way but in the cockpit of a light aircraft.

    There are other aircraft, from experimentals to ultra-lights and weight shift, that are significantly cheaper than mine to own and operate. And of course, there’s plenty that cost a lot more.

    The only thing to complain about the cost of flying is that it is the Federal government, in the form of the FAA., that unnecessarily drives the cost of flying so high with its strangulation of innovation, competition, and technological advancement of the private sector. If we could get FAA out of its heavy hand of regulation, we could easily cut the cost of flying in half.

    • It’s “conventional wisdom” that heavy-handed FAA regs are largely responsible for the high cost of airplanes and flying, but I’m not so sure. The planes we fly were mostly certified years ago. How does over-regulation figure into the fact that they now cost vastly more (even taking inflation into account) than they did, say, in the 1970s. Another example: The regs governing light sport aircraft are much less stringent that those for Part 23 certified airplanes, yet light sport models are not appreciably less expensive.

      The real reason that airplanes and their parts cost so darned much is that they are built in very low quantities. If Ford only built 200 vehicles a year instead of hundreds of thousands they would each cost well over $100,000. (Think Ferrari.)

      The one exception that I can think of is complex avionics systems. TSOed systems cost vastly more than comparable systems intended for non-certificated aircraft even thought the TSOed units are probably manufactured in larger quantities.

      • Elliott,

        It’s not just “conventional wisdom” that FAA over-regulation is a huge contributor to today’s high cost of flying. FAA certification is a huge barrier to development of constantly-innovating and improving aircraft – from airframes to engines to avionics.

        The Europeans already use a much more streamlined process, which is why most of the newest engine and airframe designs are being certified now not by FAA but by EASA, and only gain FAA certification via the reciprocity agreement between FAA and EASA. Just consider how long the certification process has been for a new 100LL avgas replacement – a process that has gone on for well over a decade and is still a long way from completion. The TSO process for certified avionics is absolutely ridiculous – all you have to do is compare the cost of advanced tech glass panels for certified vs. for experimentals – the ratio is between times 5 and times 10, despite identical internals, and is entirely due to the high cost of certification.

        The other aspect of high aircraft cost is of course product liability. The FAA is not responsible for that, but the Federal government certainly is, by its failure to modernize the so-called “product liability relief” from the early 90s. This process should be taken to its logical conclusion by eliminating any legal manufacturer’s liability for aircraft that are out of warranty and which, ironically, have been FAA certified. If the certification process is relaxed, as it should be under the pending Part 23 rules reform, then certain other actions can substitute for the FAA seal of approval, such as placing funds into a bond or insurance pool, and providing strict guidelines limiting litigation recovery, just as the Federal government has done for commercial airline liability to its passengers.

        As for the low quantities argument for high unit costs, I don’t buy that as an argument any more. Technology is easy to do these days in small quantities – particularly with emerging “digital printing” technology that greatly reduces the cost of producing new products via computer aided design. Micro-manufacturing can be performed today at economies unheard of even ten years ago.

  • I’m relatively new to the GA scene (3 years) and am interested in buying an airplane. I pretty much fit the profile; older white guy, kids through college and now have some money in the bank.However, I am reluctant to pull the trigger in what I perceive to be a badly unbalanced market. There appear to be thousands of 25-40 year old airplanes for sale. Does anybody really know how many potential buyers there are for those airplanes? Somebody would have to show me some hard data to convince me it’s not a three digit number. Yet owners continue to price their “babies” at prices that virtually guarantee their heirs will left with disposing of an out of annual relic after they go west. I see airplanes that have been on the market for two years yet the asking price hasn’t budged! I’ll make a rash generalization and surmise the vast majority of GA airplanes are owned by old, relatively wealthy guys that don’t necessarily need the money so they aren’t willing to “take the loss” on what is surely a depreciating asset. If the cost of entry wasn’t so out of whack with normal market forces the cost of entry would be significantly lower and certainly lead to a much more vibrant GA environment.

    “That’s what I think about that.”
    FG

    • Mike,

      I think you have it backwards a bit. It’s definitely a buyers market and that depresses the value of aircraft to the advantage of a buyer like you. That some owners are unwilling to recognize the true value of their aircraft isn’t an obstacle – just don’t waste time on them.

      You have various resources to help you in finding, evaluating, and pricing an aircraft purchase. VRef is available free (go to aopa.org) to provide the buyer an equivalent “blue book” value. You can come up with a fair value on any aircraft you see listed, and if the value vs. asking price are far apart, you can either call the owner and tell them what VRef says their aircraft is worth and then they can react by dropping their price or holding firm, in which case you move on.

      Once you find one that you like and the price is agreeable, then certainly spend the money for a pre-buy inspection. To cut the net cost of the pre-buy, have a mechanic you select actually do the annual, even if it’s not due yet (you restart the 12-month period whenever the inspection is completed). You can also do like I did when I bought my Cherokee – agree with the seller to split the cost of the pre-buy/annual inspection. You both benefit – whether the sale closes or not, either the buyer or the seller ends up with an aircraft with a fresh annual, which increases the value of the aircraft and also helps you as buyer to control your risk of buying an aircraft with an unidentified major problem.

    • Mike,

      A couple other tips on buying a legacy aircraft:

      1) If you avail yourself of aircraft sales brokers, the listing price is more likely to be within a reasonable range, because reputable brokers aren’t going to waste time listing grossly-overpriced aircraft.

      2) One reason for a lot of overpriced aircraft in the listings is that updated panels are very expensive … it’s easy to drop $25 or $50K or more on panel upgrades on airframes that simply aren’t worth that much. If you look at VRef valuations, they allow only a small fraction of the value of upgraded avionics in the value of the aircraft. The best values available, then are aircraft that have already got the upgraded panel and their owner/broker understands they cannot recover but a small fraction of what they actually spent. That of course spares the buyer from having to spend the bucks on a panel mount GPS/com, new digital autopilot, or glass panel display.

      3) The single biggest driver in the value of an old legacy aircraft is the engine time since overhaul. That is one cost factor that is virtually dollar for dollar recovered in the value of a used aircraft. If you don’t mind having your new aircraft down for a couple months, you might get a very good value with a run-out engine and then immediately overhaul it. Or, on the other hand, some engines like the so-called “bullet-proof” Lycoming O320 and O360, if they’ve been well maintained, can fly many hundreds of hours beyond TBO. Get an aircraft with an engine at or near TBO and you can get a good value, and if the engine passes inspection, why not fly it for a few more years and then spend the dough on an overhaul?

      • Duane,
        I don’t disagree with anything you’ve said. However, it still seems to me there are far more airplanes for sale than potential buyers, even at VRef prices. With the number of pilots decreasing every year, I foresee a time in the next 10-15 years when the majority of legacy airplanes will be worth little more than scrap value. The Gen Ex’ers and millennials that will be needed to sustain GA are simply not interested or don’t have the disposable income. I hate to say it but GA is a house of cards and the winds are picking up. The only solution I see is to accept a large write down on the value of legacy airplanes and get them in the hands of the younger generations. Simply my observation as a relative newcomer to GA.

    • I totally agree! Plenty of renters wanting to be owners and the price of a worn out plane keeps creeping out of reach to the point that you look like a fool buying one even in the eyes of the insurance companies. The FAA is doing a good job keeping un-airworthy aircraft out of the air. The inflation comes from greed period!

  • Well I fly helicopters and looked at purchasing a used Robinson piston R44. What I found was taking into account the hours already on the aircraft and the cost to rebuild it at its scheduled time you might as well buy a new one as you would spend as much or more as the cost of a new one anyway and probably in less time. Now we all know helicopters are expensive to purchase and to operate so I put aside my desire to own my own, at least until I win the lottery.

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