Airplane Econ 101
Many of our visitors have either owned aircraft in the past or know people who own them today. One of the popular jokes you’ll hear about is the “AMU” — Aviation Monetary Unit. It’s US$1,000 at current exchange rates, and GA owners think in terms of how many AMUs a given exercise will cost.
We’re all encouraged to build up budget reserves for unplanned expenses. Engine rebuild? 50 AMUs. Panel upgrade when Garmin tells you they can’t repair your old unit? 10 AMUs or more. Annual inspection at the local shop? 3, 4, 5, or 10 AMUs, depending on the aircraft and any surprises.
Away from all those, however, are the basic operating costs. Insurance, fuel, a hangar, and basic ongoing maintenance for things like oil changes, the occasional tire, and minor repairs that arise from regular use. There’s a great YouTube channel called Complete Walkaround which goes through a standard analysis (here’s his video about the 177 RG Cardinal) and helps folks figure out what it might actually cost to run an airplane.
The whole point of the club is to amortize all those variable costs over a user group, while keeping the aircraft in more regular use. Thus members pay for only part of the fixed costs, like insurance, and distribute the variability and risk across the larger pool of people.
All that is fine, you might be thinking, but what are the numbers?
The first thing to note is that Highway Flying Club doesn’t own its own aircraft, so it pays a usage fee back to the owner to make the aircraft exclusively available for members. That fee is calculated at 5% of the insured replacement value of the aircraft, annually, divided into monthly segments.
Membership costs depend on which aircraft you want to fly. You can choose any combination, from the fleet at any time, but you need to be have a membership spot in each of the aircraft you will use. Note that there are only a limited number of spots available, to ensure the right balance of cash flow for the club and availability for members to use the aircraft. For the Cardinal, it’s 10 members. For the Bonanza, it’s 6.
The initiation fees for the 182S and the Bonanza are each $3000. If you’re a real enthusiast and want to have access to both, you have to buy spots for both planes, but we will credit you back your first $500 of usage fees within your first 30 days of membership.
Each of those spots is yours until you either sell it to another pre-qualified member (to transfer your membership to someone else) or give notice to the club that you simply want to cancel your membership. In that case, we’ll refund your initiation fee only after we’ve found another new member to sell the spot to.
Your initiation fee goes against the club’s fixed costs: insurance, hangar, and a standard reserve for large-scale scheduled maintenance at standard overhaul intervals: engine, prop, and 100-hour inspections. We do 100-hour inspections for club aircraft, including the IA signoff, meaning the “annual” is actually more frequent. That means all the necessary ADs for the club aircraft, rigging, and major systems are checked significantly more frequently than a single-user aircraft which goes in every 12 months.
Starting in year 2 of your membership, you’ll pay the same amount as your initiation fee, but it will be characterized as your annual fixed costs share. That obligation continues every year you remain a member. If you leave the club, your original initiation fee will be refunded to you if another member joins to take your place within the 12 months following your exit.
Once you’ve paid your fee and you’re confirmed with the club’s insurance, you also pay a monthly one-hour minimum per airplane, use it or lose it. Both aircraft are $225/hr. Those are wet rates, meaning fuel is included. Both the 182S and Bonanza cruise at around 14-15gph, so at $6/gallon that’s around $90/hour in fuel, meaning you’re paying $135/hour to use the aircraft. To be clear, these numbers are subject to change at the club’s discretion.
If you buy fuel away from the home field, we’ll reimburse you at the prevailing rate at KHWY plus up to 10% extra. You need to keep your receipts in order to be reimbursed; otherwise we’ll reimburse you at electronic Hobbs time, 65% Cruise-power fuel consumption.
We also let members prepurchase larger blocks of time at a discount. If you expect to fly at least 20 hours per month, you can prepurchase those hours at a 10% discount. You have 90 days to use the time, after which any remaining credit in your account may be consumed only at the standard hourly rate for the aircraft, and expires fully if it remains unused after the remaining 9 months of the 365-period from which it was first purchased. There are no cash refunds available under any circumstances other than if the airplane is no longer available for club use. If the airplane is down due to maintenance or repairs for 28 contiguous days or longer, deadlines for consumption of prepaid time will be extended in 1-month intervals.
Taken together, let’s say you’re a member who flies 8 hours per month for one year. Since both aircraft have the same member rate for hourly time, the breakdown looks like this:
Initiation Fee: $3000 (becomes annual fixed costs share in years 2+)
Annual usage, 8 hours/mo * 12 months: 96 hours
Usage expense: 96 * $225 = $21,600
Subtotal, year 1: $21,600 + $3000 = $24,600
Effective hourly rate, year 1: $256
A nice benefit is that you’re rewarded for flying more automatically, in the form of a lower hourly rate.