Private Plane Lease Back To Flight School - any ideas?

[rese.archer]

Not sure where to put this question so general it is. Apologies in advance - new to flight training, lovin' it, gonna ask alotta noob questions.

Flight training is fun - still scary, but thrilling too. Its also costly - who knew? While shopping for a used headset, I saw some ads for C150s in the $30-45K range and was wondering if buying one, and leasing it back to a flight school that needs more of the type is a thing.

My understanding from overheard conversations is that many flight schools don't actually own all their planes, and some are leased back from owners with revenue sharing arrangement. If not a path to profitability, it might offset the cost of owning the plane, and the money can be used to keep the plane maintained, and the flight school gets an aircraft on their roster. Sounds great, but that seems too easy.

I know aircraft ownership usage isn't cheap, a pre-buy inspection is a must, and repairs and overhauls etc. cost small fortunes by middle-class standards. I've been trying to find information online and on the Transport Canada site, but its a bit thick to navigate.

Does anyone know about or have any link to resources on the economics and process of buying a small plane and leasing it to a flight school to offset the costs? Is this a common practice in Canada? How do you do it and what kind of capital expenditures & regulatory hoops do you have to plan for? Do you set up a holding corporation for the aircraft etc., what kind of terms/conditions should be in the agreement and what to avoid?

Thanks in advance for your insights and links.

[photofly]

Common in the US; I've never heard of it being done in Canada.

I saw some ads for C150s in the $30-45K range and was wondering if buying one, and leasing it back to a flight school that needs more of the type is a thing.

$45k is very small beer for a flight school; if they need that extra plane, they'll just outbid you for the one you're thinking of buying to lease to them, and then they save themselves the trouble of having to deal with you. (And, no offence, but by your own admission you're a know-nothing noob who's likely to be a nightmare to manage, when, for example your not-very-shiny but new-to-you pride-and-joy 1969 C150 collects some hangar rash etc.)

Then they'll put it into service as many hours as they can, which means if it were leased from you you wouldn't get to fly it on any of those sunny Saturday or Sunday afternoons when you want it for yourself.

Now, if you want to set up a business with a fleet of commercially-maintained 150s and 172s available at very short notice for very short leases ("we've a plane in the shop for a couple of weeks waiting for parts, send us one of yours for two weeks") then I can see a market for that.

Alternatively if you have something really nice (and expensive) that a flight school might need rarely - and you're already complying with commercial maintenance requirements - a DA62 perhaps - that you can lease to a flight school for an hourly rate for when they need it, that makes sense.

But a single $35k 150? Not worth the bother.

Of course if you want to find out what your potential lessee thinks about this, you should call some flight schools and ask if they're interested in leasing a plane from you. This forum really isn't the place to ask.

[TrilliumFlt]

Another requirement that will need to be considered is it's current maintenance status. If the airplane intended for purchase and leaseback hasn't been maintain to the commercial standards bring it "up to standard" could be pricy.

[photofly]

Another requirement that will need to be considered is it's current maintenance status. If the airplane intended for purchase and leaseback hasn't been maintain to the commercial standards bring it "up to standard" could be pricy.

This is quite correct. For a 1970's era airframe that's always been operated privately It's likely to cost as much or more than the airplane itself.

[photofly]

Flight training is fun - still scary, but thrilling too. Its also costly - who knew?

It's a worthwhile exercise to price this out, because when you do, you start to see exactly why flight training is so costly. You're not the first person to start looking for how to either save or make money on it, and you won't be the last. But the scarcity of such schemes actually in existence is strong evidence against their practicality.

[goldeneagle]

The other thing to look carefully at, engine times. A c-150 airframe with private CofR and a runout engine is not worth much, and has a negative value with respect to trying to bring it online commercially.

[Bede]

What everyone else said about commercial maintenance^.

I had a deal with a school when I owned a C150. They paid me nothing, but I could fly it for the price of fuel and they paid for maintenance, insurance, hanger, etc. They got a free plane. I got flying without any fixed expenses. (Engine overhaul was covered on a power by the hour basis. Whoever flew paid an hourly rate into the account.) It worked out really well for both of us.

[Pilotdaddy]

Might be easiest to join or form a plane share, and then hire a freelance instructor. When you start splitting the fixed costs with 4-5 other people, it becomes a very reasonable proposition.

[Big Pistons Forever]

A lease back is almost certainly not going to be a good deal for you for the reasons stated in the posts above. So the next option is to buy your own airplane and find an instructor. I tell non pilots to get their PPL at a Flight Training Unit before thinking of buying an airplane for several reasons including


1) Students are hard on airplanes. Better to practice on a school airplane until you get good

2) Most FTU's won't train you on your airplane, If you buy your own airplane then you will need to find a freelance instructor. IMO good freelancers can be hard to find

2) You don't know what you don't know. Unless you have access to a very experienced airplane owner than you won't be able to navigate around the numerous gotcha's of finding a good airplane. FWIW if the person "advising" you has never owned an aircraft themselves they probably don't have a clue about the realities of buying and owning an airplane

3) What airplane you buy should fit your needs and budget. You probably won't really know what you want until you have some experience

4) Now is not the time to buy. Pretty much everything is overpriced. I think airplanes will be available at more reasonable price points in a year as inflation and a tanking economy starts to force owner to sell

[Found]

Heard of a few schools that do what your looking at. Talk to your local school to see if they are interested.

https://flygenesis.ca/about-genesis-fli ... leaseback/

[photofly]

Heard of a few schools that do what your looking at. Talk to your local school to see if they are interested.

https://flygenesis.ca/about-genesis-fli ... leaseback/

That’s an $800k airplane. A bit different from a ratty c150.

[Bede]

Heard of a few schools that do what your looking at. Talk to your local school to see if they are interested.

https://flygenesis.ca/about-genesis-fli ... leaseback/

Ugh. That sounds like a terrible deal. According to their numbers:
Revenue $110/hr * 500 hrs/yr = $55,000/yr
Expenses
Maintenance $50/hr * 500 hrs/yr = $25000/yr
Engine Overhaul $30k/2000hr = $15/hr * 500 hrs/yr = $7500/yr
Prop overhaul $7000/2400 hrs = $2.92/hr * 500 hrs/yr = $1458/yr
Insurance $6000/yr
Hanger $7200/yr

Gross Income = $7842/yr minus taxes, optimistic costs for insurance, overhauls, etc in exchange for them getting access to $300k-$350k asset with absolutely nothing but fuel costs. Best case is a <2.5% ROI, with a high probability of being <0. Sounds like a terrible deal for the owner.

[rese.archer]

Thank-you all for your feedback and comments.

Yeah, its a pretty pie-in-the-sky idea that probably won't work - it seems to be a US thing.
The flight school is always short of training aircraft these days - everything is booked now that aviation college students are back, so I thought it might be a mutual benefit exercise if the initial capital expenditure was the stumbling block. As noted, if that's all it was, it probably would be common.

Pricing it out and figuring out all the regulations involved is still something I will do just out of curiosity - its certainly complex.
Otherwise, I'll just stick to the basics for now and learn to fly one first.

[co-joe]

The C-150 just isn't that useful as a trainer for a school, two full size men and half tanks and you're just about full, with 2 hours of fuel. Fine as a personal machine to train on though. Now if you have the 120k to buy a decent 172 I bet you could lease it to a school tomorrow. One thing to remember, most schools can run an engine past TBO or what's known as "on condition" but it has to be below TBO hours when they put the plane on their OC.

[digits_]

The C-150 just isn't that useful as a trainer for a school, two full size men and half tanks and you're just about full, with 2 hours of fuel. Fine as a personal machine to train on though. Now if you have the 120k to buy a decent 172 I bet you could lease it to a school tomorrow. One thing to remember, most schools can run an engine past TBO or what's known as "on condition" but it has to be below TBO hours when they put the plane on their OC.

Depends on the size of the men. Most young instructors I have seen would definitely be successful in teaching in a c150. I can see a market for a cheaper 150 training option for the lighter students.

But not as a leaseback option, as photofly already pointed out.

[broken_slinky]

Maintenance $50/hr * 500 hrs/yr = $25000/yr

I find that number highly suspicious unless they're talking US dollars. To keep a 150 or 172 to commercial standards requires a 0.65 to 0.85 maintenance multiplier for every hour flown. The "new" corrosion inspections required will chew up 24 - 40 hours a year alone. You're also not going to find anyone who will wrench your plane to commercial standards for less than $90/maintenance hour. $105 to $110 is more realistic. You're no longer just doing an annual but following an event based maintenance schedule. Some are date related and some are based on hours. Whether the plane is flying or not, you'll be doing the date based events.
Add on top of that, the day to day snags you're going to get caught with. If it's full of vacuum pump driven equipment, be prepared for those aging components to fail regularly. Radios, transponders and GPS all have components that age out. Capacitors, etc... only last so long before they start becoming troublesome. Each time it's in the shop, you're getting hit with maintenance costs. Realistically, you're going to be close to $32,500 to $40K a year in maintenance costs. Add into that the COVID price increases for parts. We're seeing some parts priced double what they were 3 years ago. Some things like oil filters, you can't even source right now. You'll need to be right on top of scheduled parts or you'll suffer long down time periods where the plane is unserviceable. That comes at a cost to have your AME do that for you. That's going to eat into your profits every time.

[co-joe]

Depends on the size of the men. Most young instructors I have seen would definitely be successful in teaching in a c150. I can see a market for a cheaper 150 training option for the lighter students.

But not as a leaseback option, as photofly already pointed out.

I think altitude is a big factor as well. In YBW at 4000' ASL a 150 is just not up to the task, especially not in the summer. I instructed on one for a bit, and I loved it, I think it's a great aeroplane to learn on, and have some fun with locally. It's cheap too, run it on mogas, 5 gal per hour, it can handle more crosswind than a 172 can, perfect for learning. But there's just not enough useful load as a rental. If you live somewhere at sea level it might be better for what OP wants.

[digits_]

But there's just not enough useful load as a rental.

Why not? Solo time building? Perfect airplane. Even if it's only 10 dollars an hour cheaper (in reality it could be much cheaper), that's significant for CPL time builders! Or even when just flying for fun.

[Big Pistons Forever]

But there's just not enough useful load as a rental.

Why not? Solo time building? Perfect airplane. Even if it's only 10 dollars an hour cheaper (in reality it could be much cheaper), that's significant for CPL time builders! Or even when just flying for fun.

Yes IF and it is a big IF, if you get a good airplane. There is a lot of junk C 150's for sale.

This is the story of a fellow I knew that bought a beater C 150 a few years ago with an on condition engine to use to build up his time. He bought it for "only" 18 K but after about 20 hours the engine started running very roughly. When the AME pulled the screen it was full of metal, the engine was toast. His AME found another very high time but cheap engine that looked OK, but the engine mount was cracked and the carb air box needed a repair etc etc. He was lucky in that it only cost him about 10 K to get back in the air (an overhauled engine installed would have been over 25 K), then his radio died and the radio shop said it was too old to repair. He got another unit off E-bay but it never worked, then he lucked out and found a working unit for $1000 but he lost a month of summer flying screwing around, then he needed a new shimmy damper, then new brake discs, then a new elevator trim cable.........He finally finished his CPL and then tried to sell his airplane. A year later it was still for sale and he was desperate so he took a low ball 12 K just to get some money back. Bottom line when all his costs were totaled each hour he flew the aircraft coat him 295 $ an hour plus what he paid for his instructor........

[photofly]

This is the story of a fellow I knew that bought a beater C 150 a few years ago with an on condition engine to use to build up his time. He bought it for "only" 18 K but after about 20 hours the engine started running very roughly. When the AME pulled the screen it was full of metal, the engine was toast. His AME found another very high time but cheap engine that looked OK, but the engine mount was cracked and the carb air box needed a repair etc etc. He was lucky in that it only cost him about 10 K to get back in the air (an overhauled engine installed would have been over 25 K), then his radio died and the radio shop said it was too old to repair. He got another unit off E-bay but it never worked, then he lucked out and found a working unit for $1000 but he lost a month of summer flying screwing around, then he needed a new shimmy damper, then new brake discs, then a new elevator trim cable.........He finally finished his CPL and then tried to sell his airplane. A year later it was still for sale and he was desperate so he took a low ball 12 K just to get some money back. Bottom line when all his costs were totaled each hour he flew the aircraft coat him 295 $ an hour plus what he paid for his instructor........

This may not have been the case when this story occurred, but $18k for a 150 in need of an engine overhaul, with dodgy avionics and needing miscellaneous parts (like the brakes, shimmy damper, trim cable) to be replaced is about right. All those things would be fixed up by the FTU as part of putting the aircraft on the line on a proper maintenance basis, giving the plane a book value of about $50-60k.