Leaseback/instruction questions

[CalifDan]

We flirted briefly with the idea of doing a leaseback on our Duchess when we bought it last year. I suppose it can make some economic sense if you can use the depreciation to offset other income and that depreciation is suffcient to more than cover the cash shortfall that will likely occur with the leaseback.

As i investigated it further I decided that the benefits just did not outweigh the downside.

There are no twins to rent within about an hours drive of my location. I would driveover an hour to rent a twin and had to schedule it sometimes weeks in advance to get an afternoon. The maintenance on it was marginal. The local FBO was very interested in having me put one in leaseback and we did talk about it.

What I relized was that my insurance would be 11,000 annual and I would be locked into 100 hour inspections (essentially complete annuals) and my ability to schedule the aircraft would be limited by their use. On top of that, since it would probably be used for ME training, it would be subjecting the engines to consant shut-downs and shock cooling. It also has become apparent to me that the typical renter pilot just does not take care of an aircraft like it was their own. that is too bad, because over time, the opportunity to fly anything but junk will go away unless you are an owner. With 37 years flying some as owner, some as a renter, I've watched the overall fleet deteriorate unless you are willing to spend in excess of 200 an hour for a newer single.

We passed in the leaseback opportunity and have the aircraft all to ourselves. Our maintenance is impecable and we are gradually turning it into the aircraft we want regarding equipment and looks.

I see posts on here looking for cheap twin time or complaints about the cost of renting. At the same time I see complaints about the lack of proper maintenance and trashed interiors, etc. You all have to decide which way you want it. I can tell you that the real cost of providing a Duchess in excellent mechanical shape at $4 an hour fuel would be in excess of $250 per hour. Anything less and something is being deferred into reduced value or a future maintenance shock.

 

[TrafficInSight]

I've got a couple of nice horror stories too.

One of the guys I went to college with bought a Seneca to build time with and in order to offset the cost put it on leaseback at a flight school. He wasn't looking to make any money, just cover some of the ownership costs. He did alright until student and instructor creamed a runway sign with it at an away airport during a simulated single engine go around. Insurance covered the cost of repair to the damage from that incident but while it sat there out in the open being repaired some corrosion started showing and avionics/instruments went bad and the loss of revenue from it not being on the flight line pretty much bankrupted him.

The twin still sits there, with new skins and repairs... but little else.


This one may or may not be true, I heard it secondhand from one of the flight instructors. It seems really bizzarre but could be true... we did have a 337 online for a while and it did disappear for a while and when it did come back 2 to 3 months later it was not available for rental anymore.

This guy bought a 337 for his personal use and put it online at the club, again just to offset costs. One day a guy rents it for like 2 weeks, takes off, and isn't seen again for at least a month. When he did come back, it was sans airplane. Finally the owner got a call from an FBO in Europe saying the repairs were done a while ago and when would he like to come pick the airplane up and pay his extensive bill. Something like $10,000 for exhaust repairs.

I honestly think that insurance costs are so high that many airplanes are unsafe as a result. I know a couple of airplanes that are almost scary because the owners are just trying to stay afloat.

 

[NuGuy]

Hey Calif,

If that's your bird in your avatar, it looks VERY nice.

I saw a Dutchess up north of TPA that someone had restored lovingly. It was one of the last ones to roll off the line (81 or 82?), and everything about it was cherry.

Nu

 

[CalifDan]

NuGuy,

That's it. The only change since that picture is we replaced the standard clock with a Davtron. We spent most of our effort this past year getting the aircraft mechanically sound. We pretty much did not pass over anything that needed to be done and a did many that could have waited.

We got the aircraft with a single GNS430 and the Garmin Audio Panel along with some other avionics. We took those out and added the 2nd GNS430, the MX20, a Garmin 327 transponder (digital), a GDL69 for XM weather and a Ryan TCAD. The MX20 also has Chartview. While doing the work we re-arranged some of the instrument panel and also added the JPI760. It all makes for a very efficient and complete IFR panel. Those of you with Duchess time will probably notice the substantial changes.

As I said earlier, mechanically, we have really gone through it. It was a training aircraft at some point in the past and while overall it was sound, I doubt if it had a really good annual in at least five years. We found much of it at pre-purchase, but like all things, some gets by. The trips to the shop are getting farther apart all the time. Since purchase we have followed a strict fix-it on suspicion poilicy rather than a fix-it when broke policy.

It is probably over-improved for a Duchess, but it is probably our last airplane and it is nice to have two motors. That was particularly true last night as we flew home from Southern California after dark and mostly over the Pacific Ocean coming up the coast. We could go faster in a Baron, but that would be more initial cost, more maintenace, lower TBO's and more gas. All we need is four seats (90% of the time we only fill 2) and building multi time at my age is kind of rewarding.

This thread has accurately hit the highlights of why leaseback aircraft are pretty much the way they are. I'm sure that most leaseback owners are pretty disappointed people. The dollars are probably not working out the way they prefer and the are constantly coming back to their aircraft after others have flown it for 10-20 hours and finding things broken, scratched, torn, or just plain abused. They pay for maintenance and yet when they want to fly it something is still broke. They reach a point where they tell the FBO to do no more than necessary to keep it flying. They will take the depreciation while they can and hope that the engines make something near TBO without some other major expense before they can get out of the thing.