When I first started writing about small airplane shared ownership options back in 1998, there weren't a lot of choices available. OurPlane had been doing business for a while and had locations (and an airplane or two) at several airports in the United States and Canada. Down in Atlanta, another company, AirShares Elite, was just getting started. Its model, to put several airplanes in one area instead of just one or two, was a different take on the business. But unless you happened to be in one of the very few locations served by one of these two companies, shared ownership was a dream.
Today, almost nine years later, both of those companies have expanded greatly, in terms of both numbers of airplanes and locations, and they've been joined in the market by a handful of other serious players, including Texas-based PlaneSmart, which has a business model very similar to that of AirShares. Another startup, iFly, positions itself as a high-end aero club and doesn't even sell airplanes, just time in them and management services. Even airplane manufacturer Cirrus Design has gotten into the act, establishing a service intended to find partners for would-be airplane sharers.
The fact is the concept of shared airplane usage - not all of these companies offer ownership per se - is an idea that is finally flourishing. Today, would-be airplane sharers in dozens of cities around the United States can get into a new airplane for a fraction of the cost and hassle of sole ownership.
The numbers still aren't big. There are only about 100 airplanes being used in programs like these, and maybe 500 share owners, but the rate of growth is great-AirShares added more than 100 share owners just last year. And the market is ripe. The success of Cirrus has proven that there are a lot of potential airplane owners out there, many of whom aren't even pilots yet, who are willing and able to spend around half a million dollars for a fast and capable transportation airplane. If that's the case, how many potential customers are there who would be able to pony up half that amount, or a quarter of it, for the same or similar ownership experience? You don't have to be an economist to realize the numbers are promising.
What Is Shared Ownership?
The basic concept of shared ownership isn't a new one. Ideas were floated as early as the 1960s, and probably earlier, for a timeshare approach to airplane ownership, though when it comes to small airplanes, OurPlane and AirShares were the first successful examples.
The general idea behind shared ownership (though new business models are emerging) is to take an airplane and split it among several owners, very much like a timeshare on a vacation home. For the sake of argument, let's say it's a $400,000 airplane split among eight owners. One-eighth of $400,000 equals $50,000, though the customer pays more than that, since the shared ownership company will charge more than the exact split price. It's part of the business plan. Investment in a one-eighth share runs from between $60,000 and $80,000.
For that price, plus some for profit's sake, you can get a brand new airplane with a shared ownership company, and they'll manage it for you, too. It's this management fee that throws off a lot of potential share owners. While the concept is well known in business aviation, it's brand new in the world of piston singles. These management services (see sidebar) consist of doing everything an owner would have to do to take care of the airplane, from insurance to washing and waxing it.
And it's not cheap. A typical price for management of a one-eighth share is around $750 a month, though some companies charge more and some less.
On top of that, you pay to fly the airplane by the hour. This seems very strange to some pilots coming fresh to shared ownership because they wrongly think of their flying as being free once they paid everything else. In fact, whether you like it or not, every time you fire up the engine, you're paying for gas and oil and wear and tear on the expensive equipment. For an airplane like the Cirrus SR22 (by far the most popular shared ownership airplane), that fee might range from $75 to $100 an hour. Typically that money goes, as is partly the case with whole owners, to buying gas, oil for the airplane. Most shared owners don't pay for the gas themselves when they pull up to the pump. You use a credit card provided by the company, though some shared providers have the customer pay for the fuel.
If shared ownership sounds expensive, you're right. The cost of a one-eighth share of an OurPlane or AirShares or PlaneSmart airplane is a lot more than if you just split the cost among eight friends (which is a great idea in theory and mostly an unworkable one in practice). Then again, shared ownership is really cheap compared with owning a whole airplane by yourself-AirShares advertises that one of its one-eighth shares costs about a third of owning your own airplane, a figure that jibes with our experience in the market.
A Growing Industry
Five years after I first began personally evaluating shared ownership programs, I've become quite a veteran of the process. I've done long-term evaluations of both OurPlane, in 2000, and AirShares Elite, in 2003/2004. The experiences, while different, were both successful, though I preferred the AirShares model of having multiple airplanes, although the availability of the OurPlane 182 I was flying was excellent, too. I'm currently doing a long-term evaluation of the PlaneSmart program. (See December 2006, page 78)
My experiences flying shared airplanes convinced me early on that the shared ownership model, the general idea anyway, had tremendous potential. The cost of new airplanes is higher than many pilots can afford. When coupled with the fact that owning your own older airplane can be unpredictably expensive, shared ownership seemed a natural. But there were and have been barriers to growth. Market acceptance was an early hurdle. Pilots were understandably reluctant to hand over 60,000 of their hard-earned dollars to a new company offering a new product in a marketplace notorious for companies coming and going. While the shared ownership concept is still a bit of an unknown for most pilots, it's becoming better known. David Lee, founder of AirShares Elite, says that his salespeople see a lot less reluctance from prospects than they used to.
If a shared ownership company that sells actual shares of actual airplanes were to go out of business, the customer would still have his airplane fraction. It's a real asset.
Back when I started writing about shared ownership, each of the major players said that they didn't expect growth to happen quickly. Instead, they expected it to be a steady process, and by all appearances, they were right on both counts. Today, AirShares has more than 250 customers and has more than 20 locations around the U.S. In the past year it has added locations in Tampa, Columbus, Fort Lauderdale and Minneapolis.
OurPlane is experiencing growth too. It took delivery of five new airplanes (four SR22s and one new Cessna 182) this year, and it plans to add the same number next year. It's also started a leaseback program, where a new airplane owner can lease his airplane back to OurPlane for use in its programs. And OurPlane is turning its eye to jets, too. It currently has orders for 21 Eclipse airplanes and plans to launch service as soon as the airplane is available. And iAviate, a shared ownership provider in the Airshares mold, is celebrating a full year in business in Norfolk, Virgina. In that time it's grown to a dozen Cirrus airplanes in one form of management or another and around 60 total owners. The company plans to expand to Burbank and Scottsdale, and should have airplanes and owners in both places by the time you read this.