Rent vs. Purchase

Is there a rule of thumb that pilots use to determine whether they
should buy or rent a plane? For example, I know the fractional
companies argue that if you fly private between 50-400hrs/year, then
you're an ideal candidate to own a fractional share. Fewer hours and
you should charter, more than 400 and you're better off owning a
plane. I'm not saying it's right or wrong, just saying it's out
there. I'm sure they just take the annual costs to operate and
divide by the number of hours to come up with the per hour cost.

Is there anything similar for GA? If I'm considering buying a plane
for training/ownership vs. renting (specifically a lightly used
DA40), what is the minimum number of hours I'd need to fly per year
to cover the fixed costs (estimates welcomed - I realize there are a
lot of specifics that would be needed to make the exact
calculation)? Also, what are the opportunity costs to owning a
plane? What are the hassles I'd potentially need to deal with?

Thanks.

-- Justin Toner, March 8, 2010

Answers

These numbers are hard to find because owners avoid accounting fully for their indulgence/mistake. When people ask how much it costs to own a Cirrus, I say that it is no worse than waking up every morning and lighting a few $100 bills on fire.

It really all depends on your mission. If your mission is to fly in 1-4 hour blocks and return to the base airport, the flight school rental is going to be ridiculously cheaper and easier than owning. If your mission is to go away every weekend, flying to an island that is 1 hour away on Friday and returning on Sunday evening, the owned plane (or shared plane with someone who flies only on weekdays for business) is going to be ridiculously cheaper (though not easier).

How much does it cost? Let's say that for hangar, maintenance, insurance, cost of capital (if borrowed) and depreciation you're looking at $40,000 per year for a $200,000 DA40. Then you spend maybe $100 per hour for engine/prop reserve and Avgas. So if you fly 200 hours per year it will cost $300 per hour.

-- Philip Greenspun, March 8, 2010

Typical aircraft owners put 100 hours/year on their planes. I've had some years at 300 and some at 60. If you're planning to fly fewer than 100 hours, then I would rent. A plane needs to be flown to keep the engine from corroding and the seals from drying out and leaking.

I prefer owning over renting because I get to know the airplane inside and out.

Even though it is cheaper to fly coach just about anywhere, I still prefer owning and flying my own ship.

-- Don Shade, March 8, 2010

I went through the same decision you are when I was completing my PPL. After I got my license, I purchased a 2008 Cessna 172SP which I use for my own use and further training (instrument/commercial) and have on-line at the flight school/FBO I use. So far, I am very happy with how things have worked out.

As you might guess, owning a plane puts some burdens on you. Here are some things you have to pay for in addition to the plane:

1) Required maintenance, including the annual and maintenance at various intervals (every 50 or 100 hours typically) (At least several thousand $ per year) 2) Insurance (Depends on your experience and how the plane is used) 3) Tie-down fee/hangar rental (Maybe $150 per month) 4) For G1000, database subscriptions, including Jeppesen NavData, SafeTaxi, Obstacle, and FliteCharts or ChartView (A little more than $1,000 per year) 5) Property tax (Depends on your state, about 1% of value) 6) Plane detailing (Maybe $100 per month or you can do it yourself) 7) Fuel ($4 per gallon) and oil

Whether these things are "hassles" depends on your point of view. I have enjoyed owning my plane and learned a lot having to be responsible for its upkeep.

Also, you get to have the plane you think is the best choice available for your use.

My suggestion would be to make a spreadsheet of these expenses together with your monthly payment. (If you can pay cash, the analysis isn't changed that much because you are giving up what your cash could have earned.)

You can then compare the monthly amount to what you pay to rent.

If you are looking to put your aircraft on-line at an FBO/flight school, I can tell you a little more about my experience.

Todd

-- Todd Ramming, March 8, 2010

Instead of looking at the rent vs. buy from a strictly financial point of view (renting will almost always win) consider the opportunities to rent. I received my initial training at a flight school that didn't rent, so with my new ticket I was in effect out of business. I ended up going to another flight school for instrument training and they allowed me to rent a 172. Not a fun way to travel, so I ended up buying a 182. I sold it sometime later and looked again at renting. I looked around and found that I could rent a 2008 T182T for $235 wet, a 2008 T206H for $300 and three different 1980's F33A Bonanzas for $150 wet. Being able to rent a 300 HP retract that cruises at 170-180ish for $150 is hard to beat. If I didn't have these options I would have already bought another aircraft.

I estimated it cost me over $2000 per month not including the capital cost of the aircraft BEFORE I flew hour 1.

Just food for thought.

-- Alex Baker, March 8, 2010

The question is the same as asking whether you should buy the cheapest car on the market or enjoy looking at it and sitting in it, and driving it. By the way, if you drive less than 12 to 15,000 miles per annum, you're better off renting a cheap car. Owning a plane is totally unreasonable...same as flying. IT IS A PLEASURE, not an economic decision. If you own your plane, you know how well it is maintained. You can gradually improve it when you have the money. You don't need to make reservations and pay a penalty if, due to flue or taking your dog to the vet, you cancel at the last minute. If, as Ph. Greenspun wrote, you fly one hour each way and stay 4 days, you are not asked to pay for one or two hours a day. All of this only makes sense, of course, if you fly more than 80 or 90 hours a year. I'll bet you that you will fly more if you own than rent: it is a simple and human reaction: "if I rent, each extra hour costs me more. If I own, each extra hour reduces my cost per hour". The rule of thumb is that the hourly cost will be 3 times the cost of fuel used in said hour, if you fly 100 hours a year. It will be 2,5 times the cost of fuel if you fly (or your plane flies) 200 hours a year. Finally, last week, I flew from Cannes in the south of France to Miami, via Scotland, Iceland, Greenland and Canada. 25 hours in the air in 3 days. Thus far my most memorable flying experience in all those years. Do you think that I could have done it on a rented plane? Good luck. Whatever you decide, you'll be poorer in your wallet, and richer in your head.

-- elie vannier, March 9, 2010