Has someone done the calculations of the number of flying hours needed per year when buying becomes cheaper than renting for the vision jet?
Is there a cheaper way to buy like a lease back or partnership?
Wouldn’t that depend mainly on your rental price? You are basically asking for the ownership cost, correct? If somebody rents you a Vision Jet at a price that’s not covering the full cost of the hour but exceeds the variable cost, renting is always cheaper. Only if someone rents based on full cost plus margin, there is a cutoff somewhere. But I guess it’s very late, several hundred hours per year. I was offered an arrangement for a helicopter where it was 300 hours per year.
In short: if you find a good arrangement, renting is almost always cheaper, but you loose the freedom to go whenever, wherever, however long and compete for the best flying slots.
Gowtham,
I think along with calculating the break-even point renting vs. purchase (sole ownership or small group 3-4 compatible owners) it was helpful for me to think about what the benefits of ownership are vs. additional costs AND responsibilities. I stopped flying when my son was 3 because I was in a flying club that had 5 aircraft but maybe 100 members. Scheduling needed to be done weeks or months in advance. Sometimes I wanted to go somewhere, but the weather was bad for a couple days, and even if I was off work and could still make the trip later, the plane was scheduled for someone else before my new estimated return date. Likewise, some individuals would block out vast swaths of time, only to cancel a day or two ahead and by then alternative plans had been made.
My flights then devolved into short $100 hamburger flights, currency flights (IFR was still 6 approaches and 6 HOURS in the past 6 months), night currency, IPCs and Biennial Flight Reviews (oops date myself again). I lost interest, eventually quit flying. Contrast to owning my plane (sole ownership). The plane is there for me anytime I want it, flying 12-15 hours per month, have made a few trips to FL, the NJ shore, Heber Valley UT near Park City to visit my brother. Was able to visit my mother frequently (sometimes 3 times per week when off work) flying to Detroit from Columbus when she was ill with metastatic breast and lung cancer her last summer before she passed away. Last Easter my sister could no longer get a direct flight from Detroit to Asheville NC. She timidly said, “you wouldn’t want to fly me, would you?” I said any excuse for a mission, flew from central OH to Detroit, then to Asheville, back to OH and home in time for Easter dinner.
But I’m also responsible for ALL the maintenance, insurance, hangar rent (fixed costs) and all variable costs, etc. I do all the database updates, dual VOR checks, ELT checks, etc. When you are the sole owner of the plane, you don’t need any other hobbies: you have a lot of them rolled into one! My wallet was too thin back then to own, but just thick enough now. I’ll never own a turboprop or a jet but I can fairly comfortably own my plane myself. However, I could’ve done it with 2 or 3 compatible partners back then, but it all hinges on the word compatible. Think compatible like marriage. Everyone feels the same about maintenance, panel upgrades, when it’s time to overhaul, etc. Everyone flies the plane LOP by the book, good pilots not likely to cause damage resulting in AOG with loss of use of the plane to ALL partners, etc. I could step up to a DA-62 or m350 with one partner right now, or probably an m500 with 2 partners. But then I’m no longer making all the decisions or doing all the flying.
Bottom line: with partners you split the fixed costs usually equally but could be pro rata, usually some of the scut work like database updates, etc., is shared also, and each person generally is responsible for their variable or hourly costs like fuel, oil, hourly reserve for engine overhaul, equipment upgrades, emergency fund (unplanned unscheduled maintenance). That’s my opinion, there are others who will no doubt chime in with things I’ve forgotten. If you can afford it by yourself, it’s very time and dollar consuming, but rewarding as well. If you can swing it with partner(s) it can still be a good way to go with the right partners. It comes down to what the right decision your finances can bear and the stage of life you’re in. I’ve always said nothing makes you feel so wealthy as owning your own plane, whether it’s a 2022 G6 22T with glass panels or a 50 year old V-tail Bonanza and steam gauges. My first plane was a Piper PA38-112 Tomahawk. I flew the wings off that thing. It was a 1978 model I purchased in 1983. I was so proud of that plane! It was still flying a few months ago! Conversely it can also make you feel poor if one of those unplanned maintenance events occurs. YMMV, good luck with your decisions!
Best,
John
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This is it.
It’s very difficult to reduce owning vs renting to a meaningful numeric spreadsheet, because real world convenience is challenging to quantify.
Having a good charter service can be a fantastic option- until you find they often can’t do what you want and when. Whether you’ll be satisfied with a charter service depends highly on the services they provide and your specific needs.
That can certainly be possible. Have you talked to Mike?
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I emailed him that day. Did not get a reply
Looking over about 30 months of data covering ~700 hours, I am averaging a direct operating cost of about $250/hr with an $800/mo hangar, $1000/mo commercial insurance, and 100-hour inspections for leaseback. This is for an SR22 G5 NA/FIKI/AC.
You could add $50 for engine reserve and call it $300. I got lucky and bought in early 2020, so I don’t have depreciation, but that’s dumb luck, and some people see a cost of $100 or more per hour depending on your timing. Call it $50 for something and you’re at $350/hr.
Alternatively, you can rent my plane for $430 per hour.
My hourly costs are inflated by the leaseback insurance and 100hr requirements but my plane flies 250-300 hours per year which minimizes the fixed costs. At a generous 150 hours per year as a sole owner, the hourly cost will be higher, let alone the fleet average which is more like 75-100.
My leaseback is a bit of a Goldilocks scenario both because I got lucky on timing of the purchase and because I had a 20-year relationship with a high quality operator. The result of it has been that owning the plane has been better than cashflow-neutral. It is at times dismaying to watch the Hobbs time roll up, but the flip side is that planes that fly multiple times a week are happy airplanes.
I went into this knowing that I could afford to own the plane by myself without too much difficulty and counsel anybody who asks that if they’re not 100% sure they can afford the plane on their own, beware of leasebacks. I would also 100% not do it as a first-time owner or with an unknown operator.
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Those are pretty good numbers, and your situation is in fact goldilocks.
I would strongly caution anyone considering doing a leaseback to a typical flight school - your plane is going to get beat to shit in short order.
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I am perpetually on the knife-edge between renting and owning. What keeps me on the straight and narrow (renting!) is that I rent from a good FBO who does not use leaseback 22’s for primary flight instruction. The leaseback fleet seems well respected and maintained. They protect the leaseback planes from endless hours of primary flight instruction. There are rigorous checkouts and recurrent trainings for renters. I think it’s a win-win. I just wanted to mention this so as not to discourage owners from making their planes available. As an owner, do your research for sure, but if you find a good FBO, Colin’s situation isn’t all that unique and can work well for both parties.
As for the OP’s question, I have struggled with it for years and truly, seriously, the only one who can answer the question is YOU. Do what you’re comfortable with, can afford, and choose to do, but you will the rent/buy decision is mostly NOT about about money. It’s about lifestyle, choices, availability, and tolerance. Partnership is an excellent way to reduce fixed ownership costs.
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Nonsense, Dan, my plane has only been involved in two low-speed collisions with stationary objects in the past 12 months. Renters seem to be more careful in the air and with the engine. I think that qualifies as merely “beat to piss.”
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I think the current situation with aircraft AOG due to supply chain issues and limilted availability of mechanics changes the calculus a bit.
If you have a rental option (or more than one) near you that can usually meet your mission requirements then you may well wish to stick with it. I think the main reason to own is almost never to save money but rather when you need to go on trips that are often short-notice and/or of long duration such that no rental is available.
No matter what your calculus on rent vs own options, if you wind up with an AOG plane and still have to pay the fixed costs of the plane while you come up with some Plan B, that is incredibly frustrating. With renting if the plane is not available then you pay nothing. That is an immense difference.
In the era of parts delays taking months and many shops booked out for weeks or months for maintenance, I think this is a valid consideration.
And as a bonus - if you rent then you can vary the airplane based on the mission - which can both save money on less ambitious missions and add capability on more ambitious missions.
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In my math on buying (as sole user) versus renting, the breakeven was around 100-125 hrs/year. Many factors in that math, but I did a fairly deep assessment of rental and ownership costs at various levels of vintage and they generally all broke out around 100-125 hours / year as the breakeven considering a period of at least 3 years as the basis. This is for an NA SR22
The OP was asking about a Vision Jet, and I have zilch-o idea if the 100-125 hrs/yr also holds for that, but for what it’s worth, I got the same answer as you when looking at the rent/buy equation for a 22NA. I’d be curious if it’s the same answer.
I think you’ve hit the nail on the head. This has been a continuing source of frustration for me even though my bird is for pleasure only. I can’t imagine the level if my use was primarily business and my livelihood depended on it! It really does change the calculus.