Cost per hour of airframe time.

[Bruce Fenstermacher]

I'm considering entering into a partnership in a 170A. It's pretty easy to figure fixed costs. And we have agreed more or less to share equally in any maintenance cost as they come done the road. But that only works if we both fly the aircraft the same amount of time which for the most part we probably will.

We are not interested in building a fund for engine overhaul, it's already at TBO, or even for repair for that matter as we will just take care of it when it comes up if it ever does.

Our flight time break down in the 170 will probably be as follows. He'll probably fly 10 hours by himself. We will probably fly 20 hours together and I will probably fly 20 hours myself. I don't have a problem paying more for the routine maintenance like oil changes, tires and such. But eventually we might find I've flown the plane 100 hours more than he has. How to we rectify this.

I guess what I'm asking is not including the engine hours or any cost for repair, routine maintenance or fuel, what is an hour of 170 aircraft time on the airframe worth?

[GAHorn]

$48/hour total mx costs, half of which is engine. But perhaps a better way to approach your fair-share costs would be to simply keep a running total of your useage and divide all mx costs on a percentage basis. If you fly 20 hours and he flies 10 hours and you fly 20 hours togther, then you have used 30 hours (60%)and he has used it 20 hrs.(40%). If the annual mx costs are $1,000 then you owe $600 and he owes $400 for the "kitty".

[Bruce Fenstermacher]

George the percentage thing works for the cost of keeping the airplane airworthy. I've been thinking about it but you writing it down makes it clear.

What it doesn't do is even out the airframe hours. I looked at AOPA's Vref. They say that an hour or airframe time on an '49 A model is 72 cents per hour. In other words they seem to think a 170 of this age should have 4270 hours. If it had 100 hours less it would be worth $72 more and with 100 more $72 less. Didn't matter how many hours it was still 72 cents per hour. I don't know how I feel about 72 cents an hour. Says to me that a few hundred hours doesn't make much difference but of course a few thousand hours adds up.

George could you break down your $48 per hour cost? You say half of that is for the engine. Vref wants $10 and hour figuring on a 1800 hr TBO and overhaul cost of $19K.

Also how does the $24 per hour after the engine break down?

[Robert Eilers]

The tricky part to a partnership and to calulating hourly costs - to the satisfaction of both partners - is the accounting of whatever costs the partners have agreed to have calculated into the hourly rate. One co-owner must be the accounting partner, unless the partners farm the task out to some agreed third party, and maintain the aircraft cost account in a way the other partner can review, should they feel it necessary. The partners should agree on when, how often, hourly use costs will be reconciled, i.e, monthly, quarterly, etc. I recommend the accounting partner do the work up and arrive at the costs per partner and present it to the co-partner at a meeting between the two. The meeting gives the co-partner the opportunity to review the work up and exhaust any questions he/she may have before reconsiling. Aircraft partnerships are after all relationships and expereince the ups and downs of most relationships. The relationship can be strictly a business relationship or more like the relationship you describe between yourself and your friend. Even when dealing with a good, close friend it never hurts to put important agreements into some sort of writing that each of you can sign and document agreement on.

[GAHorn]

George the percentage thing works for the cost of keeping the airplane airworthy. I've been thinking about it but you writing it down makes it clear.

What it doesn't do is even out the airframe hours. I looked at AOPA's Vref. They say that an hour or airframe time on an '49 A model is 72 cents per hour. In other words they seem to think a 170 of this age should have 4270 hours. If it had 100 hours less it would be worth $72 more and with 100 more $72 less. Didn't matter how many hours it was still 72 cents per hour. I don't know how I feel about 72 cents an hour. Says to me that a few hundred hours doesn't make much difference but of course a few thousand hours adds up.

George could you break down your $48 per hour cost? You say half of that is for the engine. Vref wants $10 and hour figuring on a 1800 hr TBO and overhaul cost of $19K.

Also how does the $24 per hour after the engine break down?

Vref (and Bluebook, etc) are wildly incorrect in some ways. (You already know this, I am posting it for others who are reading.) They presume that all the 170s on the market are essentially the same aircraft and that they only differ in minor ways, which is wildly untrue. Also, they assume that their "average" airplanes actually EXIST and are available for purchase somewhere. Of course, THAT is completely untrue. Take 20 airplanes and NONE of them actually compare well. None of them have the same equipment, or corrosion issues, or previously-replaced elevator brackets .... etc etc.... so a comparison is not nearly as simple as they'd have you believe. There is NO used aircraft yard you can go find their "average" airplane sitting for purchase.

Anyway...their $10 per hour of engine "value" is actually WRONG by a factor of two. Why? Because they are trying to give a potential buyer a basis to appraise an engine that is so and so many hours away (before OR after) the so-called "mid-life" of 900 hours. When was the last time you actually knew an engine that made 1800 hrs without major repairs? And since when is a 900 hr engine worth $9,000 with no trade and without consideration of accessory conditions? (and notice they totally overlook the mount and prop.)

My past experiences with this airplane fleet-wide is that it operates at $96/hr wet. Half of that is fuel and the other half is maintenance. The engine is going to require about $24/hr for reserves and regular mx. Individual airplanes can operate for less but only if they start out in excellent, restored condition. (Their owners will realize about 10-15 years of unrealistically low maintenance which will begin to catch up in years after that for about 5-10 more years, and then their costs will rise rapidly until restoration occurs again. Aircraft that are hangared in dry hangars (closed doors/concrete floors) do better than that however. (And of course, the airplane any real person is likely to be examining/considering is not one that was actually "restored" just a few years ago....it's more likley one that has been ridden hard and seen some wet nights.)

The engine costs are:
oil/filter change @ 25 hrs = $65 parts, plus labor if you don't do it yourself. If there are 4 changes per 100 hrs, by TBO that will be $4680 in oil changes, divided by 1800 hrs equals $2.60/hr (plus any oil used during the changes averages out to $3/hr)
Spark plug change @ 400 hrs is $240 times four changes til TBO = $960, round it off to $1K.
Top ovrhaul at mid-life is $4800 in parts. (Yes, some engines won't require extensive cyl repair, but they'll go thru mags, oil sump, accy case, etc etc before its over and it's about a "wash" costwise.)
This means the average engine will require $10,480 in maintenance per overhaul period, just to maintain a healhty engine... this is completely seperate, over and above the overhaul costs now that it's worn out, ....and Vref/Bluebook doesn't say a thing about it. They only talk about $10/hr for overhaul costs. Well that equates to an additional $18K ...besides the $10,480 already spent on ongoing mx. The total costs that I believe should be budgeted for is about $16/hr as a minimum. I add $8/operating-hr for the labor the average owner will end up paying for that routine mx, and that totals up to my suggested $24/hr. (This is largely a WAG that has worked out pretty close in my experience: Every 4 hours of ops will require about 1 hr of mx. and my local guy charges $32/hr for general A&E work if I help.) *
Match that for airframe mx, and you have $48/hr.

(Yes, I expect the response some of you have already thought of... "How much less would he charge if you got out and stayed out of his way, George?")

[n3833v]

Bruce,
After all agreements are made, it is necessary to have something in writing to reference for what was agreed on. You know in the aging process, we forget what we agreed on .

John

[Bruce Fenstermacher]

Yes John I agree. As I've said this is a very good friend of mine. We see pretty much eye to eye on most stuff. Our friendship is more important than an airplane which is something we have to keep in mind.

I like to keep things simple yet even simple things need to be documented. Actually I've found trying to document something brings up lots of good questions that can be asked before the partnership is formed. We're working through this slowly.

[Bruce Fenstermacher]

George your numbers for maintenance make sense.

Care to give your thoughts on the VREFs 72 cents an hour airframe time?

[GAHorn]

George your numbers for maintenance make sense.

Care to give your thoughts on the VREFs 72 cents an hour airframe time?

They've simply taken a few examples of airplanes that had differing total times and divided the hours versus their reported sales prices. This is absolutely unrealistic because it completely ignores the other issues involved in reported sales, such as the actual condition-differences of the actual airplanes. Example: A rotten corroded airplane with a new engine and fresh paint/interior that failed to be properly inspected prior to purchase...but the reported sales price was high..... against the cream-puff sold by the unknowlegeable widow tired of seeing the tie-down fees.

As you know, Steve Jacobsens airplane is quite a bit different than 9149A was,...so how can their flight time differences be compared? Oh...wait! Steves airplane had a LOT more recorded time on it than yours?
That 72-cents is clearly an unrealistic method, of course. Vref simply does not accurately take into account the many variables possible.

[hilltop170]

Bruce-
A written partnership agreement is needed not only to quantify how the plane will be operated, insured, maintained, fueled, who can fly it, who is responsible for what (damage, etc), and what you both agree to pay for, but also to deal with what will be done if one or both decide to sell or especially if one partner passes away. It should not be filed in county records but both partners should have signed originals.

Of the several partnerships I have been involved with, clearly stating the agreed conditions of ownership up front have eliminated problems and hurt feelings down the road no matter how good a friend the partners are. Just go back to the agreement and settle the issue.

I have always kept a spiral notebook in the plane that flight time and any comments can be logged at the end of each flight.

[W.J.Langholz]

Bruce-


I have always kept a spiral notebook in the plane that flight time and any comments can be logged at the end of each flight.

My son and I do this also. At a glance you can review the last several flights.

W.

[Bruce Fenstermacher]

OK it is difficult to figure value of an airframe hour by comparing two different airplanes.

But in this case we aren't comparing two airframes but the same one in the same condition it was other than you just flew one hour. We will assume the airframe was airworthy which means it meets a standard and that one hour later it would meet the same standard. It would have the same dents and scratches as before. Is it worth the same or less because there is one hour more on the airframe clock?

Or another situation. Your in the market for an airplane. You find one that meets your standard and inspection. It reportedly has 4000 hours on the airframe and you decide the asking price of X is appropriate. Just before you make your offer you discover a math error made 60 years ago and the airplane really has 4500 airframe hours. All other hours are correct. The condition of the airplane has not changed. Is the value of the plane worth less than the X amount you decided just minutes ago was appropriate?

Maybe I'm asking an impossible question. It seems to me that the VREF number seems low and at $72 per hundred hours is really like splitting hairs. Or perhaps we are trying to split hairs in which case VREF's number is just as valid as say $1 and hour or maybe even $2.

[N2255D]

Bruce-


I have always kept a spiral notebook in the plane that flight time and any comments can be logged at the end of each flight.

My son and I do this also. At a glance you can review the last several flights.

W.

I have one also and it has every flight since I picked up the plane in 1996.

[GAHorn]

OK it is difficult to figure value of an airframe hour by comparing two different airplanes.

But in this case we aren't comparing two airframes but the same one in the same condition it was ...perhaps we are trying to split hairs in which case VREF's number is just as valid as say $1 and hour or maybe even $2.

OH, I understand your question better now.

Well... Vref/Bluebook figures are only useful "in perspective" of other airplanes of similar make/model/year of mfr. Most aircraft in that class of service will have similar airframe times. Of course, there is the occasional aircraft with markedly higher or lower total times, and that is really the only consideration that I believe is worth placing a different value upon.

If we are talking about a 170, we are talking about an airplane with between 3500 and 7500 hours, fleetwide average. Lots of folks simply choose 5000 hours and then view anything higher or lower as exceptional (but I believe that is too narrow a "band" and use 3500-7500. Since no "standard" exists... you will have to choose your own range.)

The classic observation to which I subscribe was offered me 40 years ago by the DM of a small airline, retired M. Sgt Ray Lindsey, who spent an entire career maintaining Air Force equipment, and then a second career as DM of the airline. His job was to acquire DC-3's and DC-7's for an upstart airline in the late 1960's: "If possible, when faced with a choice, buy an airplane with very LOW time...or very HIGH time"(compared to the rest of the fleet.) Reason: The very low time airframes are not worn out. The very high time airframes have had their major airframe inspections and life-limited/worn-out major assy's replaced already.

I don't think 500 hours on a Cessna 170 worth attempting to quantify in value. The overall condition of the airframe/engine is more subjective than that.

[DaveF]

So you get 10 more hours a year than your partner? I'd ignore that and split expenses equally. Your partner is already getting a great deal having you buy in. A lot of the maintenance you'll be paying for is on hours that he's already flown. I think the cost of an extra 10 hours a year is lost in the noise and impossible to quantify, or at least not worth the brain damage of trying to calculate. Buy him a tank of gas once in a while.

I've been in two partnerships that worked that way. We were all good friends and didn't even have a written agreement (though I don't necessarily recommend that part). We each kept a running total of our airplane expenses and evened it out each year on the annual bill.

But if you really want to try to divide expenses evenly, assess yourselves a fixed amount plus an hourly, and put it in a bank account. The fixed is pretty easy to estimate, and the hourly is a guess. After a couple of years you can adjust the amounts you're paying to match expenses.