Partnerships

Richard Frank

Richard Frank

Filing Flight Plan
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Cherokee 235 Driver
Howdy! New guy here. I'm a relatively new pilot (got my PPL last year and working on my instrument now). I'm looking at buying a plane (think Comanche, Bonanza, or something like that) and I could probably afford it on my own, but someone I know has talked to me about going in 50/50 on something. Any thoughts either way on doing something like this? I know this person pretty well and am fairly certain that he is in the same boat I am financially. Anything I should look out for or questions I should ask out of the gate? Good idea? Absolutely horrible Idea?

Thanks!
 
I was once given what is probably very good advice for an airplane partnership…ensure you have a good written exit strategy in case either of you needs to get out of the partnership for any reason. In my case, I partnered with my brother a couple of times, and we had a verbal agreement that if either of our financial situations changed such that we had to get out, the other could absorb the cost of ownership, at least temporarily.

I’ve seen more than one friendship destroyed because they had different opinions on what was the “right way” to operate and maintain an airplane.
 
With partnerships on large assets there's seldom a true 50/50. The closest you get is 49/51. The original owner of the asset always considers it "his/hers", and your vote is never 50%.

Same goes with 3-way and 4-way.

That said, there's more ways that this ends poorly than well. But hey, have your eyes open and give it a try.

How are upgrades decided on with two votes?
Can you use the airplane for a 3-week trip to (___) to visit family?
If you are planning to be home on Sunday, but plans change, how easy is the change to your partner?

A written contract would be helpful here.

As I'm writing this, I'm leaving Thurs on a trip, and am not sure when my wife and I are coming back to AZ. (seriously not sure. A week? Three weeks?) That'd be unthinkable in most partnerships.
 
MauleSkinner said:
I was once given what is probably very good advice for an airplane partnership…ensure you have a good written exit strategy in case either of you needs to get out of the partnership for any reason. In my case, I partnered with my brother a couple of times, and we had a verbal agreement that if either of our financial situations changed such that we had to get out, the other could absorb the cost of ownership, at least temporarily.

I’ve seen more than one friendship destroyed because they had different opinions on what was the “right way” to operate and maintain an airplane.
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What MauleSkinner said. I partnered with my brother on 6 aircraft over the decades. It worked quite well and we didn't have a written agreement. But if I were to do it again, I would want something in writing. Partnership definitely works to spread the fixed costs of ownership. And the airplane is flown more, which is usually a good thing.
 
Rgbeard said:
With partnerships on large assets there's seldom a true 50/50. The closest you get is 49/51. The original owner of the asset always considers it "his/hers", and your vote is never 50%.

Same goes with 3-way and 4-way.

That said, there's more ways that this ends poorly than well. But hey, have your eyes open and give it a try.

How are upgrades decided on with two votes?
Can you use the airplane for a 3-week trip to (___) to visit family?
If you are planning to be home on Sunday, but plans change, how easy is the change to your partner?

A written contract would be helpful here.

As I'm writing this, I'm leaving Thurs on a trip, and am not sure when my wife and I are coming back to AZ. (seriously not sure. A week? Three weeks?) That'd be unthinkable in most partnerships.
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I should also point out that the partnerships I had with my brother involved us living several hundred miles apart. I had the airplane for a year or so, and then he had it. Pretty much total operational control for the one in possession.
 
I sold my Arrow into a partnership with two others last year. So far, It has been really good. I made every effort to point out that it is no longer my plane, but our plane. I view it like a marriage, if it is good it is the best thing that you ever did. If it is bad, it is worst thing that you ever did. And yes, have a reasonable exit strategy. And like marriage it requires a little bit of flexibility and everyone needs to be pulling on the same rope.
 
I'm in a 5-way partnership on a Super Viking. Has worked out great. We acquired it as a group, so there was never any "it was mine first" issues. Highly recommend a partnership if you can be confident you have good partners (the partners matter more than the plane).
 
I'm a little rose-colored-glasses here, because I've only been in one partnership and it's a great one (three pilots, one C182; it existed before I joined in). Agree with those who say you should have a written agreement of some kind (some of this can be more or less formal depending on how risk tolerant you are) that covers at least:

1. Money
- How do you bill yourselves for flight time? Dry/wet, hobbs/tach? Separate bill for monthly costs?
- Do you have to buy fuel at a certain cost? Do you reimburse yourselves for fuel bought? Full tanks or to the tabs?
- How do you handle expected and unexpected maintenance? Balance bill at the end of the year?
- Planning a bank account for overhaul / big ticket items that builds over time, or planning to assess yourselves when that expense comes?
- How do you handle upgrades? Who is on the hook to pay? Who gets to pick the next fancy GPS? Can one partner object to an upgrade?
- Who is handling database subscriptions? Going to share an iPad for ForeFlight?

2. Scheduling
- Two people on one plane isn't likely to be a big issue, but common structures include
- Priority flipping by month or week
- "Book as much / long /whenever you want, but you can only have two future trips on the calendar at any given time"
- If the plane isn't booked and you want to grab a burger after work, do you check with the other pilot or just go?

3. Contingencies
- What if somebody wants out, just because?
- What if somebody wants out because the bill for the early engine overhaul comes and they can't pay?
- What if somebody dies or gets sued or gets divorced and the court assigns their ownership interest to somebody else? Can that person sell the share? Can they fly the plane?
 
Thank you, everyone, for the replies so far. I'm glad to see it's worked/working out for all of you. Written agreement is a must for me, but you all gave me some things to think about when it comes to what's in it.
 
I'll do the jerk post again. Your friend talked you into thinking about a partnership, when you can maybe afford it yourself. Could be a great deal. Could be they figure they can get you to go their way on any conflicts. Like when to overhaul the engine - how much over TBO? When to upgrade the avionics. Never? Or we need to get glass right away. And a million other things. Could be that's great, too. Some people are ok with deferring decisions, and maybe you're on the same page with things.

To me, most pilots are kinda control freaks. I think it goes along with flying the plane, rather than being flown. So to me most partnerships start out shaky by design. But sometimes they work.

I wouldn't do it without an exit plan, and if you're not sure you can afford the aircraft yourself, that exit plan may not be reasonable for you.
 
I think everyone had good advice here. I will say for myself, I look for structure, organization, and things in writing. Almost two years ago I talked to someone about a 1/3 share in an archer, and there was nothing in writing. He couldn't even tell me much about the other owners. I asked how paying bills and surprise costs were handled, and he said the other guy pretty much took care of it, and they paid their share once or twice a year. I ran away fast. Devil is in the details.
 
I'll give you another option that's worked for me - a non-equity partnership (ie. a named renter). You maintain sole ownership of the plane and can terminate the agreement just as you would any rental agreement. They pay an hourly dry rate plus a monthly fee to cover fixed costs. The downside is that you need the initial funds to buy the plane outright, and any major repairs or upgrades likely have to come out of your pocket as owner.
 
Albany Tom said:
I'll do the jerk post again. Your friend talked you into thinking about a partnership, when you can maybe afford it yourself. Could be a great deal. Could be they figure they can get you to go their way on any conflicts. Like when to overhaul the engine - how much over TBO? When to upgrade the avionics. Never? Or we need to get glass right away. And a million other things. Could be that's great, too. Some people are ok with deferring decisions, and maybe you're on the same page with things.

To me, most pilots are kinda control freaks. I think it goes along with flying the plane, rather than being flown. So to me most partnerships start out shaky by design. But sometimes they work.

I wouldn't do it without an exit plan, and if you're not sure you can afford the aircraft yourself, that exit plan may not be reasonable for you.
Click to expand...

Not being a jerk as far as I can tell... :) I'm not sure I want to go this route yet so this is all good stuff. Thanks!
 
I think there are some pilots that work great in partnerships, and others who are more, "you want me to let somebody else fly my airplane??" Make sure you're not in this second group before you go into a partnership. When I decided to leave the club I was in I almost bought a plane with a friend. Then I realized that the real reason I wanted out of the club was that I hated sharing an airplane. Pretty sure I dodged a bullet and saved a friendship.
 
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