Dry rate M20E

[NJMac]

One of my good friends reached out to me last night. He has been working with his instrument instructor while flying his dad's ultra cherry A36. Guess the insurance cancelled the open pilot portion and his CFII can't fly / train in his dad's bo any more. They're willing to add my friend to the policy for an extra $12k! I'm told he has 95 hrs tt.

 

They need to see 150 hrs tt and 50 retract before the insurance becomes reasonable for him to fly his dad's bonanza. He reached out to me to see if he could get that time, and probably his IFR, in my M20E. Instructor used to own a Mooney, reportedly 2000+ hrs in type.

 

I was going to check with insurance to see how it would impact the policy and if it was even doable. Not intending to rent it out for flight instruction, just let a personal friend build hours. What is a fair dry rate for me and him?

 

Want to be fair with him. His dad plans to surrender his license in less than 5 years, gift the plane to his son, and then I'll buy in as a half partner.

 

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[alextstone]

19 minutes ago, NJMac said:

What is a fair dry rate for me and him?

My 95 Mooney Bravo is owned by one of my businesses and it is used more than 50% of the time for business travel.  So, when I use it for personal trips, I dry lease it back from the business to keep everything clean and neat should the IRS decide to check.  I therefore have a dry lease agreement in place and the rate that was determined to be a fair market value for my aircraft was $200 per hour, dry.  I literally write a check back to the business every quarter for every hour of personal use as per the lease terms and I verify that the 51% rule is being followed.  I do not know what fair value would be for your Mooney but  my assumption is somewhere in the neighborhood of $140-175 per hour dry.

[N201MKTurbo]

When I had a partner, I kept meticulous records. The cost was dependent on how many hours were flown. I flew about 150/year and he flew about 20/year. My cost was ~ $90/hr his was about $160.

That was with me doing all the maintenance for free. 

[NJMac]

When I had a partner, I kept meticulous records. The cost was dependent on how many hours were flown. I flew about 150/year and he flew about 20/year. My cost was ~ $90/hr his was about $160.
That was with me doing all the maintenance for free. 

Thank you for a starting point, I did about 180 hrs myself last year.

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[NJMac]

I do not know what fair value would be for your Mooney but  my assumption is somewhere in the neighborhood of $140-175 per hour dry.

Appreciate your feedback and ballpark

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[Mooneymite]

This thread should be immediately terminated!

Everyone knows that to keep Mooneyspace a happy, vibrant, ignorant community, the hourly cost of our flying should never be figured, discussed, explored, or divulged to our spouses!

[NJMac]

This thread should be immediately terminated!
Everyone knows that to keep Mooneyspace a happy, vibrant, ignorant community, the hourly cost of our flying should never be figured, discussed, explored, or divulged to our spouses!

You know, my wife actually said this was an answered prayer. We're a matter of weeks away from our first child and I really don't want my plane to not fly for any extended timeline. This may solve that problem no matter the rate

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[RLCarter]

I'm not sure but I think if you "lease" your aircraft out it now needs 100hr inspections just like a rental. Another option is your friend buys into what ever he will be training in. I looked at adding a low time pilot to my policy for the same reason, insurance would have gone up just south of 6 grand more

[tigers2007]

I’m curious why the cost to add a low time pilot costs more than double versus if the low time pilot insured for their self. Could you make them a 1% ownership partner? Would that help?

[Bolter]

Can't the CFII become named on the Bo's insurance instead of using the Open Pilot clause?  You do not need to own a share of the plane to be on the policy.  I had my good friend as named on my Mooney for 7 years, until I moved to Seattle last year.  He had more ratings and time than me, so there was not even a cost to keep him on.  

[skydvrboy]

I don't think you can even start to answer the dry rate question until you determine what it will do to your insurance.  If it causes your insurance to go up $6k and he only plans to fly it for 50 hrs while getting is IR, then the cost of the insurance alone is $120 per hour.  The total dry rate would need that added to all the other costs that you wish to share (annual, hangar, maintenance, etc.).

[gsxrpilot]

I'd agree that sorting out insurance is the first step. But I wouldn't consider that in the dry rate. @Denver98 is flying my 252 and so for the insurance, I just put him in touch with my insurance agent, @Parker_Woodruff who got him added to my policy as a named pilot. It turned out there was no cost difference, but any cost difference would have been covered by him.

I would consider adding both the student and the CFI as named pilots on your insurance. Assuming that all works out, then work out a dry rate.

[Hank]

5 hours ago, N201MKTurbo said:

When I had a partner, I kept meticulous records. The cost was dependent on how many hours were flown. I flew about 150/year and he flew about 20/year. My cost was ~ $90/hr his was about $160.

That was with me doing all the maintenance for free. 

I've never understood how the hourly costs vary so much. The first hour that I flew this year cost just as much as the last hour that I flew last year . . . . .

[RobertGary1]

I wonder if your friend was ever actually covered. My understanding is that open pilot warranty only allows for occasional use. When friends have allowed me to use their planes my agent suggested I not have keys and go to them each time to request the keys as one way to establish its not regular usage.

 

-Robert

[RobertGary1]

35 minutes ago, Hank said:

I've never understood how the hourly costs vary so much. The first hour that I flew this year cost just as much as the last hour that I flew last year . . . . .

Its the standard "how to account for fixed cost" argument that accountants have been discussing for centuries. If you allocate fixed cost across all hours you may think you are saving money at the end of the year by reducing your flying when in fact you're just changing the books.

-Robert

[Hank]

32 minutes ago, RobertGary1 said:

Its the standard "how to account for fixed cost" argument that accountants have been discussing for centuries. If you allocate fixed cost across all hours you may think you are saving money at the end of the year by reducing your flying when in fact you're just changing the books.

-Robert

"Flying" the plane isn't a fixed cost, "owning" a plane in airworthy condition is.

Flying for 200 hours, my costs will be four times as much as flying it for 50 hours, while hangar, insurance, GPS updates, etc. are the same . . . .

[gsxrpilot]

Just now, Hank said:

"Flying" the plane isn't a fixed cost, "owning" a plane in airworthy condition is.

Flying for 200 hours, my costs will be four times as much as flying it for 50 hours, while hangar, insurance, GPS updates, etc. are the same . . . .

Engine hours and TBO...

[N201MKTurbo]

49 minutes ago, gsxrpilot said:

Engine hours and TBO...

Hangar rent, insurance, periodic inspections, subscriptions, debt service are all fixed costs. You have pay them if you don’t fly at all.

Fuel, oil and wear items are used up by actually flying the plane.

 

BTW, not picking on you, you just gave be a good starting place for my rant....

[jetdriven]

The marginal rate is ~35-50$ per hour plus gas.  But you have to buy a 60-150k airplane first and commit to 4-10ka year in fixed cost before you turn a wheel 

[Hank]

1 hour ago, gsxrpilot said:

Engine hours and TBO...

Hour #1 depreciates the engine just as much as Hour #100 and Hour #1000

[Hank]

37 minutes ago, jetdriven said:

The marginal rate is ~35-50$ per hour plus gas.  But you have to buy a 60-150k airplane first and commit to 4-10ka year in fixed cost before you turn a wheel 

So if you wants to borrow my plane, how much of the capital acquisition costs will you pay?

[skydvrboy]

I like to only include true consumables (fuel & oil) in my variable cost to fly the plane.  Everything else goes into fixed costs.   That way I can tell my wife, I'm already spending $3,000 a month just to own the plane and it only costs $40/hr to fly it, so we might as well fly it every chance we get!  

[RobertGary1]

2 hours ago, Hank said:

"Flying" the plane isn't a fixed cost, "owning" a plane in airworthy condition is.

Flying for 200 hours, my costs will be four times as much as flying it for 50 hours, while hangar, insurance, GPS updates, etc. are the same . . . .

There are entire chapters in accounting books describing when and where you use the different approaches.

-Robert

[Ragsf15e]

I’m asking... I’m definitely not raining on your parade or your planned usage... doesn’t “leasing” require 100 hour inspections and much different insurance?  Like not just adding him to yours, but specifically insurance to lease the airplane?  It’s not like you’re “sharing operating costs” which is specifically allowed.

I guess I’d feel more comfortable if he bought in as a minority owner and then paid the insurance difference.  You guys could work out the $$ details however you like in the partnership - fixed, operational, both, etc.

[Ragsf15e]

Just now, skydvrboy said:

I like to only include true consumables (fuel & oil) in my variable cost to fly the plane.  Everything else goes into fixed costs.   That way I can tell my wife, I'm already spending $3,000 a month just to own the plane and it only costs $40/hr to fly it, so we might as well fly it every chance we get!  

Definitely.  My same approach.  And, it’s kinda true!