It’s understood that costs differ by airplane type and with the passage of time, but a good valuation framework facilitates discussions, cost measurements, and process improvements. Our five-year case study on “The Value of Shared Aircraft Ownership” involved a $400,000 high-performance airplane, but the methodology can be applied to most aircraft co-ownerships. The study also included information gleaned from hundreds of pilot discussions about airplane expenses and co-ownership issues.
Three co-owners each realized $169,000 in value through shared ownership of a high-performance Cirrus Turbo airplane over a five-year period. The study identified $74,000 in direct expense savings per member compared to single-pilot ownership over five years. The analysis also quantified the value of member-contributed capital for airplane acquisition at $90,000 and goodwill from co-ownership formation at $5,000.
A three-step quantitative method was applied, which included establishing a valuation framework, organizing costs, and calculating values. The valuation framework included four categories: variable costs, fixed costs, acquisition capital, and co-ownership goodwill.
Variable Costs were items which increased or decreased relative to flight hours, such as fuel, oil, magnetos, brakes, tires, and engine. Fixed Costs included expenses incurred regardless of flight hours. These costs typically expired based on calendar months, for example, hangar, insurance and life-limited items, such as annuals, AmSafe airbags, CAPS, etc. Acquisition Capital came from member contributed capital. Goodwill was derived from the formation of a successful co-ownership.
“The Value of Shared Aircraft Ownership,” by Jeffrey S. Brewer was published in Cirrus Pilot Magazine, April 2020. You can receive the “The Value of Shared Aircraft Ownership” 5-year case study for free, which includes information not previously published. Get the free Case Study
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