Management: What Is It and Why Does It Cost so Much?
The biggest difference between shared ownership and a typical partnership (such as I have with three partners on a 1974 Cherokee Six 300) is that the shared ownership company "manages" the airplane for you. With a partnership, you manage the airplane yourself. Management is a familiar concept for owners of business aircraft and a largely foreign one to owners of small airplanes. Essentially, the management company takes care of the airplane for you, and for that service, you pay that company a fee, typically a hefty fee.
AirShares Elite president David Lee says that he will occasionally have a prospect ask him what's stopping him from rounding up a handful of partners, buying an airplane, managing it himself and saving a lot of money in the process? The short answer is, nothing's stopping him. The longer answer, Lee says, is that people who've been involved in partnerships before know just how complicated they can be and how much work they require to keep things going smoothly. Management service is both the best thing about shared ownership and the most expensive. It's easy to fall in love with management done right. Why is that? Try this experiment: Make a list of everything that's time consuming, annoying, painful, confusing and, when there are partners, a source of rancor among friends. We're talking about things including, but not limited to, scheduling oil changes and annual inspections, ferrying the airplane to maintenance, maintaining databases, getting insurance, making sure you're current and the airplane is too, and much, much more. Then cross out every item on that list, because you don't have to do any of it. It's that sweet.
On the other hand, management is expensive. In a typical program, every month an eighth-share SR22 owner will pay about $750 toward the management fee. That's $750 that you wouldn't be spending, at least not directly, if you were direct partners with seven other pilots. That said, how much does it cost you to fly the airplane to a neighboring airport for maintenance or radio work? That's money out of your pocket, not to mention the time it takes you to do that. Or database subscriptions? They're all taken care of as part of your owner's agreement.
I'm now on my third long-term shared ownership evaluation, and I have to say, the best part of the experience is management. I don't know how I ever lived without it. For more information, check out the companies' websites listed in the chart below. You can find additional information about fractional ownership, including frequently asked questions and archived stories about my experiences flying with OurPlane and AirShares Elite, on flyingmag.com.
|Shared Ownership Programs at a Glance|
|Program||AirShares Elite||OurPlane||PlaneSmart||Cirrus Shares||iAviate||iFly|
|Type||Shared; Lease||Shared; Lease||Shared||Partnership||Shared||Membership|
|Type of Aircraft||Cirrus SR22/SR20||Mixed||SR22/SR20||SR22/SR20||SR22/SR20||Columbia 350|
|Total a/c||50||20||7||Recent Launch||8||6|
|Total Shares||+250||+150||+30||Recent Launch||60||Recent Launch|
|Loc's w/ More than 1 a/c||15||11||2||n/a||1||0|
|Loc. w/ Most a/c||Westchester (15)||CYKZ (5)||Dallas (4)||n/a||Norfolk (12)||Each Has 1 a/c Currently|
|Common Share Size||1/8 (75 hours)||1/8 (75)||1/8 (75)||1/4||1/8 (75)||n/a; Equates to ¼/150 hours|
|Overnights Per Year||21||Varies, dep on plan||21||n/a||Flexible||7 Days per Month Usage|
|Required Pilot exp.||250 Hours; IFR||Varies, dep on a/c||PP/IFR pref.||n/a||150 hours; IFR||150 hours; PP|
|Management fee-1/8 share||$840||$750||$750||$1,000 (1/4 share)||$850||$1,795 (1/4 share)|
|Flight hours||$70 (+Surcharge)||Unlimited w/Surcharge||$70 Wet + Surcharge||$90||$25 dry||$70 dry|
Notes: Initial investment in each program varies widely depending on the type of program (share, lease, membership) and the duration of the term. Initial payments vary from around $40,000 to around $80,000, and most of these companies offer financing services. For specifics about program terms, usage and costs, visit the websites listed above.
Related Articles Fractional Ownership of Small Airplanes: Can It Work? Fractionals for Small Airplanes: Part II Flying a Fraction of an Airplane: Part III Flying for the Fractionals The Jury's In: AirShares Elite SR22 A New Fractional Vision Explored