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I plan on owning my own plane in the coming years and using it to get my PPL. I've recently been turned on to leaseback with flying clubs. The pros seem to heavily outweigh the cons, but I always wonder. What are the common (and uncommon) downsides to employing a leaseback with your own airplane?

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up vote 12 down vote accepted

A leaseback can be advantageous, especially when you use the aircraft for your own flight training and travel. But there are some things you need to watch out for:

  1. Other people will be using your aircraft - whether people admit it or not, nobody will take care of the plane as well as you do. If you think you might take issue with trash in the cockpit, a scratch on the panel, or a tear in the seat, you might want to give this a second thought. In my experience, flying clubs seem to have pilots that take better care of the aircraft, since membership is controlled.
  2. You'll have to schedule your flights - just like everyone else (though some concessions are usually made for the owner). The bottom line is, you won't be able to just get up and go fly somewhere at a moment's notice anymore.
  3. You have to play by someone else's maintenance rules - While you have to comply with FARs in any case, the lessee typically will have stipulations that they (or their designee) will perform any required maintenance on your behalf and your say in the matter will be limited. Of course, you still have the honor of paying for any maintenance performed (typically at little or no discount).
  4. Your capital is tied up - This can be a good or bad thing. It's good in the sense that aircraft tend to be a good hedge against inflation risk. It's bad because you're precluded from using the money on something else. This is one of the main reasons that flight schools/clubs LOVE leasebacks.
  5. If you're looking to make money... it won't happen - most leasebacks only help offset the expense of operating the aircraft. If you're looking for a return on your investment, better to look somewhere else. Do it only to reduce the cost of ownership on something you want anyway.
  6. Finally, YOU take on the financial risk of the aircraft - in most leaseback situations, you are reimbursed for any use, but are still responsible for any finance and indirect (and sometimes direct) maintenance costs. These have to be paid, whether the aircraft is flying or not. And if business starts to slow down... well, I'll give you a hint: it's not the flying club that has to pay to keep your plane airworthy. This is the main other reason flight schools/clubs LOVE leasebacks.
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How long do the leases typically last? – Garrison Neely Jun 11 '14 at 19:45
I think 1-2 years is typical, but it's whatever you're able to negotiate. You can also have a termination clause added that allows you or the flying club to cancel the arrangement, with proper notice. – newmanth Jun 11 '14 at 20:00
Another item to bear in mind is insurance: An aircraft on leaseback is usually required to have commercial insurance (since it's used for rentals and the insurance company doesn't know who the pilots flying it will be). The owner is often responsible for paying for that insurance, and the premiums are significantly higher than non-commercial (personal-use) aviation policies. – voretaq7 Jun 11 '14 at 21:49
Another potential disadvantage: the aircraft is going to rapidly clock up flying hours, reducing its potential resale value and increasing fatigue and other wear and tear. This might be offset by the income from the lease, but do the math carefully... – jwenting Jun 13 '14 at 7:09

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