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Organizing an Aircraft Partnership

  by Andrew Czernek, aczernekATcomcast.net

Advantages of Partnerships
Disadvantages of Partnerships
Financial Issues
Other Issues
Legal Organization

Agreement for a Non-Profit Corporation
Agreement for a Lease Corporation
AOPA Resources

Aircraft and boats, both major capital investments that get relatively little use by those of us with full-time jobs, are perfect places for partnerships – if you can find partners with a personality and goals similar to yours.

I’ve been involved with one boat partnership and 3 airplane partnerships, each with between three and six owners. In the case of general aviation aircraft, service experts will advise trying to get at least 150 hours each year of steady use to avoid letting the engine sit too long and open it to corrosion and other problems. So, a partnership can be as good for your airplane’s health as it is for your financial health!

Our six-person partnership in Chicago, which owned a Cessna 172 at Palwaukee Airport, would see 175 to 250 hours per year of use – and most often saw 200 hours per year. For the 10 years that I was involved, two pilots would use the plane 90% of the time, though it would be a different two pilots each year as someone completed a new rating or saw family or job demands increase. Two pilots would use most of the 10% balance – and two wouldn’t fly enough to stay current but stayed in the partnership because they anticipated using the plane more in the future and because shares in the corporation consistently increased in value.

In partnerships in J- and K-model Mooneys, three pilots would use the airplane an average of 180 to 200 hours per year, though being in Seattle our flights were longer than those in the Midwest. Both planes were highly-capable IFR platforms (the Cessna 172 was an IFR plane too) and the three owners spent lots of training time flying together to stay proficient. Usage was much more balanced in these smaller partnerships.

But partnerships aren’t for everyone. I’ve known several pilots who would never let anyone but an instructor fly their plane. And there are the horror stories, such as the case of a former colleague who bought a sailboat with a co-worker. The week after the purchase, this New York-based sales guy got a call from his partner aboard the boat – on his way to Key West for months.

Most of those involved in successful partnerships will advise:

1. choose your partners carefully: you’ve got to like and trust them when they’re your right-seat in hard IFR or on a long trip across the Rockies
2. make sure that your goals match. Remember, it could be your plane on the way to Key West. Consider when you’ll be flying and what kind of upgrades you want to plan for the plane.
3. set the partnership up for financial stability. This includes foreseeing the likelihood that one partner will want to sell their share at some point.

The balance of this article treats each of the issues in more detail.

 

Revision: 10/28/2010