Question about Cirrus "airshares"

[Alin10123]

Hey guys,
I was looking at some cirruses when they came to Atlanta for a show. There was this guy there that talked about the "airshares" program. I actually thought it was a really nice concept until i actually did the math. Here's the airshares brochure page:
http://www.airshareselite.com/airportsServed/documents/atlanta_SR22AAG.pdf

If you go down and look at the "payment and fees" section.
Lets just take the 100 hours per year thing into perspective.

Lets not even take the "purchase price" into perspective. If we just look at the "monthly fee" and the "hourly use fee (essentially gas)".

Monthly fee is $1100 x 12 month = $13200
Hourly fee is $93 x 100 = $9300

$13200+$9300 = $22500

If you take $22500 and divide it by the 100 hours you are allowed to fly you get $225 per hour. That's not even including the purchase price you have to fork over and then you have to eat the depreciation value distributed among the fellow owners.

I dont get how this is cheaper than renting one? I thought the idea of owning one was that you save money long term if you fly alot? But i guess not.

aeroatlanta.com in the Atlanta area rents cirruses out for $216/hour. That's an SR22 rate too. They have been the only people that i've been able to find on the internet that rent out SR22's in the Atlanta area.

So... what gives??? If it's so much cheaper to rent one and i dont even have to fork over that huge 5 figure advance to purchase the aircraft... why are people going with airshares elite instead of renting? That $93/hour cost also changes daily with the fuel pricing as well. So we all know it's gone up significantly.

Then if you want a new plane after the 4 year term is up, you have to pay the difference between trade in and a new plane, and also pay a $1500 upgrade fee.

So why dont these people just go rent a cirrus when they want to fly? In places like texas i think the cirrus rental is even under $200/hour for an SR22. Then joining the club at AeroAtlanta even lowers your rental rate to like $209. I think when you plunk down the 5 figures for your share of your plane, you probably have to pay sales tax too.

So... what's the scoop? If one actually had the money to do that, should they rent or buy?

Discuss.

 

[Pantherjon]

I am inclined to say rent..But ,then again, there may be a way to make that down payment and other associated costs for the share program a tax deduction? If a group went into the share program as an LLC and said plane then becomes a 'business' entity/property? I am no way a tax expert, but that is the only real logical conclusion I can see of people doing the share program..Same as people leasing cars, you really only do it if you can justify it as a legitimate business expense and get a write off..Leasing for regular people doesn't make sense, you are just essentially renting it and don't get any return on it when it's time for trade in.

Just my $0.02 worth.

 

[Alin10123]

I am inclined to say rent..But ,then again, there may be a way to make that down payment and other associated costs for the share program a tax deduction? If a group went into the share program as an LLC and said plane then becomes a 'business' entity/property? I am no way a tax expert, but that is the only real logical conclusion I can see of people doing the share program..Same as people leasing cars, you really only do it if you can justify it as a legitimate business expense and get a write off..Leasing for regular people doesn't make sense, you are just essentially renting it and don't get any return on it when it's time for trade in.

Just my $0.02 worth.

Well... i mean not everybody actually owns a business. But for the ones that do when it comes to cars, people usually lease instead of purchase because during the purchase you can only deduct the interest whereas when you lease, you deduct the entire amount of the lease. So... if that were to apply to planes... and you rented an airplane for a business trip... that trip could be deducted then...

If you were doing the airshare for personal stuff, you can't deduct that even if you own a business. The only way you can deduct it is if you use that particular thing for 100% business use.

That's why you can't deduct your actual gas used in your car becuase that personal car is being used for business and personal use so there's not really a way to tell which is which.

 

[Alin10123]

Anyone? :erm:

 

[gflyer]

AirShares Elite

I spent a year flying for a company that provides pilot services directly to AirShares in Atlanta. I am also the Chief Pilot for a company now that still has a share of a Cirrus on top of our other company aircraft. Please PM me if you have any questions.

 

[Alin10123]

I spent a year flying for a company that provides pilot services directly to AirShares in Atlanta. I am also the Chief Pilot for a company now that still has a share of a Cirrus on top of our other company aircraft. Please PM me if you have any questions.

Not really questions persay. Just wondering why people would buy into the airshares thing when it's cheaper to rent??? That's not even taking into consideration the depreciation yet. Then it will be much more expensive to buy.

 

[DrewBlows]

It obvioiusly doesn't make sense for you to buy, but it may for someone who flys more than you. If I were a regional salesman and I wanted to be home every night or just make myself more productive, I might ellect to buy instead of rent. Under this circumstance you would fly more often (300-500 hours/year), and the airplane would always be available (it may not be if you rent), so it would make sense. Also don't discount the fact that some people have enough money to buy but don't want to deal with the upkeep issues, so it's really not a monetary decision, but a convenience decision.

 

[Alin10123]

It obvioiusly doesn't make sense for you to buy, but it may for someone who flys more than you. If I were a regional salesman and I wanted to be home every night or just make myself more productive, I might ellect to buy instead of rent. Under this circumstance you would fly more often (300-500 hours/year), and the airplane would always be available (it may not be if you rent), so it would make sense. Also don't discount the fact that some people have enough money to buy but don't want to deal with the upkeep issues, so it's really not a monetary decision, but a convenience decision.

Well... accoridng to the airshares i believe their maximum package is 175 hours or something/year of ownersship. The more hours you fly, the bigger ownership % you have to buy which means larger down payment, then the larger monthly fee you pay too. You also pay more fuel. No matter how many hours you fly with them, it doesn't get any cheaper when you break it down into how many hours they get. It always works out to be around $210/hour when you haven't even factored in depreciation.

With renting this place i'm looking at has a few planes available and they usually arent' booked. It you book 24-48 hours in advance you can almost always get a plane. Plus if you rent there's no upkeep, no paying for fuel, and none of that.

So... still dont understand why one would do that instead of renting. Even if yuo've got the money to burn... still doesn't make sense. One doesn't get rich by making poor decisions like that.

 

[DrewBlows]

Are you trying to start an argument? You asked why someone would sign on with Airshares and I gave you my perspective (well not mine, see my profile:bawling. People have their own reasons for doing things, apparently it's not cheaper to own with airshares, but it's undoubtably easier than owning outright, just write your check and go flying. Maybe you should buy a Cirrus and sell shares, you could probably make a lot of money.

 

[Alin10123]

Are you trying to start an argument? You asked why someone would sign on with Airshares and I gave you my perspective (well not mine, see my profile:bawling. People have their own reasons for doing things, apparently it's not cheaper to own with airshares, but it's undoubtably easier than owning outright, just write your check and go flying. Maybe you should buy a Cirrus and sell shares, you could probably make a lot of money.

No, not trying to start an argument. I was legitimately curious as i could not find a reason to own one and spend that much money. Just writing a check and flying can be done at the rental place too. Oh well... guess rich folks have nothing else better to do with their money.

 

[gflyer]

It's important to note as well that many of the AirShares clients are not pilots themselves. So by "owning" your own aircraft you can hire a pilot to fly for you.

 

[Alin10123]

It's important to note as well that many of the AirShares clients are not pilots themselves. So by "owning" your own aircraft you can hire a pilot to fly for you.

Wait... if you rent a plane you aren't allowed to hire a pilot to fly it for you?
Can't he get checked out and rent it and fly you around?

 

[BluDevAv8r]

Well... accoridng to the airshares i believe their maximum package is 175 hours or something/year of ownersship. The more hours you fly, the bigger ownership % you have to buy which means larger down payment, then the larger monthly fee you pay too. You also pay more fuel. No matter how many hours you fly with them, it doesn't get any cheaper when you break it down into how many hours they get. It always works out to be around $210/hour when you haven't even factored in depreciation.

With renting this place i'm looking at has a few planes available and they usually arent' booked. It you book 24-48 hours in advance you can almost always get a plane. Plus if you rent there's no upkeep, no paying for fuel, and none of that.

So... still dont understand why one would do that instead of renting. Even if yuo've got the money to burn... still doesn't make sense. One doesn't get rich by making poor decisions like that.

Just some clarification on the subject. At Airshares, the price of fuel is embedded into the hourly rate (same as renting at an FBO). There are two ways to fly at Airshares. One is the equity avenue where you pay for a piece of an airplane than have a monthly management fee as well as an hourly rate. The second is the lease option where you pay a non-refundable lease fee up front (much smaller than if you put down money for the equity piece) and then pay higher hourly rates to compensate for the fact that you are leasing and you don't own the aircraft. The experience is the same, however, whether you lease or own...it is just your all in costs that will be different. Some people just don't want to plop down 1/6th of the price of a Cirrus and would prefer to retain their capital in their pockets for other uses (and don't mind the incremental cost increase to lease as a result).

Why go with AS over renting? Several reasons. The planes will generally be kept in much better condition, better availability, more relaxed rules as far as how long you can have the plane, sense of community with the other owners, good training, the ability to use any Airshares plane at any Airshares location around the country (they are growing fast), etc. Is it cheap? Absolutely not. Is it cheaper than owning a Cirrus outright? Yes, if you only fly 50-100 hours per year. Is renting easier and cheaper? Could be. Depends on your mission and how often you need the airplane and for how long. There is no blanket right answer.

I used to instruct for Airshares. I have no ties to the company whatsoever anymore. Overall I think it is a great company and they are doing very well right now. I hope it continues.

Let me know if you have more specific questions and I'll do my best to answer them. If I can't, I'll forward them to a director at Airshares that I know very well and I'll post his response.

-Neal

 

[Alin10123]

Just some clarification on the subject. At Airshares, the price of fuel is embedded into the hourly rate (same as renting at an FBO). There are two ways to fly at Airshares. One is the equity avenue where you pay for a piece of an airplane than have a monthly management fee as well as an hourly rate. The second is the lease option where you pay a non-refundable lease fee up front (much smaller than if you put down money for the equity piece) and then pay higher hourly rates to compensate for the fact that you are leasing and you don't own the aircraft. The experience is the same, however, whether you lease or own...it is just your all in costs that will be different. Some people just don't want to plop down 1/6th of the price of a Cirrus and would prefer to retain their capital in their pockets for other uses (and don't mind the incremental cost increase to lease as a result).

Why go with AS over renting? Several reasons. The planes will generally be kept in much better condition, better availability, more relaxed rules as far as how long you can have the plane, sense of community with the other owners, good training, the ability to use any Airshares plane at any Airshares location around the country (they are growing fast), etc. Is it cheap? Absolutely not. Is it cheaper than owning a Cirrus outright? Yes, if you only fly 50-100 hours per year. Is renting easier and cheaper? Could be. Depends on your mission and how often you need the airplane and for how long. There is no blanket right answer.

I used to instruct for Airshares. I have no ties to the company whatsoever anymore. Overall I think it is a great company and they are doing very well right now. I hope it continues.

Let me know if you have more specific questions and I'll do my best to answer them. If I can't, I'll forward them to a director at Airshares that I know very well and I'll post his response.

-Neal

Hmm... interesting prospective.
However... are you sure about the no hourly charge thing? If you look at the following link, it will say that you have to pay "equity" and then "monthly maint" and then "hourly use fee" which fluctuates with the fuel prices.

http://www.airshareselite.com/airportsServed/documents/atlanta_SR22AAG.pdf

 

[U-I pilot]

Wait... if you rent a plane you aren't allowed to hire a pilot to fly it for you?
Can't he get checked out and rent it and fly you around?

Thats a back door 135 operation. Nobody is really gonna rent an airplane to someone who can not fly it. In a sense, it would be the pilot renting and then flying the trip which would be holding out and therefore not a legal commercial 91 operation. If a person owns the airplane, they can hire someone to fly it and that is not holding out since the pilot can not offer that service to anyone....its not his plane to do so....If he rents, he could rent for anyone....

I have seen people attempt to get away with this stuff at FBO's but really not a legal thing to do.... Now if the guy wants a flight lesson that goes somewhere logging dual, you might get around it as a cross country....

 

[Alin10123]

Thats a back door 135 operation. Nobody is really gonna rent an airplane to someone who can not fly it. In a sense, it would be the pilot renting and then flying the trip which would be holding out and therefore not a legal commercial 91 operation. If a person owns the airplane, they can hire someone to fly it and that is not holding out since the pilot can not offer that service to anyone....its not his plane to do so....If he rents, he could rent for anyone....

I have seen people attempt to get away with this stuff at FBO's but really not a legal thing to do.... Now if the guy wants a flight lesson that goes somewhere logging dual, you might get around it as a cross country....

I see. That's actually quite interesting.
So is it actually legal if i was a standalone CFI and a student wanted to fly so i went and got checked out at an FBO and they let me rent the plane?

 

[B-J-J Fighter]

The SR22 is a bad little dude. It is one of the few airplanes you will fly that is totally overpowered.

 

[BluDevAv8r]

Hmm... interesting prospective.
However... are you sure about the no hourly charge thing? If you look at the following link, it will say that you have to pay "equity" and then "monthly maint" and then "hourly use fee" which fluctuates with the fuel prices.

http://www.airshareselite.com/airportsServed/documents/atlanta_SR22AAG.pdf

That is exactly what I said - "At Airshares, the price of fuel is embedded into the hourly rate." That hourly rate is the hourly use fee. In other words, you pay for 3 things - your equity piece, the monthly maintenance fee (which covers fixed costs) and then you pay for the direct hourly operating costs (fuel and oil) in the form of the hourly use fee. That fee will obviously change as fuel prices change but they don't change it that often. I thought you were implying that you pay an hourly rate and then, on top of that, pay for fuel yourself. You pay the hourly use fee and that covers fuel...so if you go on a trip and buy gas, you bring the receipt back and they credit your account for the gas bought. I hope that clears things up.

It works out to $229/hour for a 75 hour share...and that doesn't take into account the cost of capital and equity piece. Just the fixed and the variable over 75 hours.

-Neal