Having a partner when you purchase an airplane makes it possible for you to share expenses. That’s the bottom line, but beyond that, shared expenses mean that you will be able to afford to fly more—and that’s a good thing.
Most lenders are OK with working with two to four partners. In general, partners help the cash flow; they make the financial situation look better. One important consideration, though, in the underwriting process is that it will take longer according to the number of people involved. As a very general rule of thumb, two partners will take twice as long; three partners will take three times as long, and so on.
But if you’re patient, having partners reaps rewards. Airplanes are built to fly and it doesn’t help anyone for an airplane to sit idle because of money constraints. With an idle airplane, critters can get in wreaking havoc at times, even if the airplane lives in a hangar. More people flying means mechanical issues are more quickly addressed; problems typically identify themselves sooner. And when it comes to turbine airplanes, an aircraft that isn’t being flown makes mechanical issues worse. In fact, some turbine engine programs are made void if the airplane isn’t flown once every 30 days.
The biggest benefit in having partners for your aircraft are fixed costs such as hangar rent, insurance, annual, and avionics software updates. Those are costs that remain the same whether one person owns the aircraft or four people do. Sharing the fixed costs makes aircraft ownership more affordable. Most experts agree an airplane should be flown a few hundred hours a year; that’s ideal and it’s easier to do with more than one person flying the airplane.
Of course, the logistics of financing an airplane as a partnership can get complicated. One partner may be paying for his or her share in cash while another partner (or partners) requires financing. All partners typically need to get approved, even if one is paying cash. That’s why a clear operating agreement is mandatory. This document should spell out exactly what happens in case one partner defaults on the loan or is delinquent within the partnership. These are some standard agreements available on AOPA’s website and Aviation Finance can help navigate you through the process if you’re financing an aircraft in a partnership.
With the benefits of an airplane partnership, AOPA Aviation Finance does its best to expedite the turnaround time for loans that involve partners. We’re standing by to answer any of your financing questions at 800.62.PLANE (75263) aopafinance.org.