Best way to run a syndicate

Great advice above about contracts, but what happens in reality is that you get one very dominant male (there is a very thin line between human and chimpanzee social behaviour) and nobody dares to challenge him.

What you need is the chimpanzee troop set of dominant males – who act together against Betas, and are all willing to challenge – but back down if in a small minority within their Alpha group. That’s why I suggest a group of more than 3. 2 to 1 can just increase the 1’s stubborness. 2 v 2 forces compromise.
Hoping I’ve got the quote right this time.

[I fixed it up – Peter ]

If you want to find people who will fit YOUR plans perfectly – your heading for trouble if they’re equal shareholders.

I think it is a given that anybody going into a syndicate is doing it to get as much out while putting in as little as possible.

That may sound cynical but anybody who can afford sole ownership is simply going to do just that.

Reading UK forums over the years, one sees a constant thread along precisely this line. What can I get out of it, while minimising my obligations?

That’s why the people are the most important thing.

And since money is normally the biggest factor behind syndicate problems, being in a syndicate doesn’t get you away from that. You still need all members to be liquid, and liquid without any problems at the relevant level. The syndicate merely lowers the amount required to play, by a factor x where x is the number of members, but all that does is it attracts people who have less money. It won’t attract “nicer” people. So a syndicate of 10 will attract people who have 1/2 the money to play with than a syndicate of 5, etc. Yet the people in the 10-up one will probably expect the same “level of service” to the people in the 5-up one, even though logically they must know they can’t have it. I know this is all obvious but people setting up syndicates ignore this at their peril.

I think someone setting up a syndicate where he/she retains a majority share (to enable troublesome members to be easily removed) may as well run it as a pure rental operation, because they can just kick off unwanted customers without having to buy back their shares. I used to do pure rental and I had to kick off one chap quite decisively – the CFI of a local school no less. He was doing all kinds of dodgy stuff. You would think that a new TB20GT for £80/hr+VAT DRY would have been a bargain and nobody would abuse the access, but you would be so wrong. Had I been renting it out at £20/hr WET I would still have had this “CFI” (fake ATPL, etc) taking the piss and lying about his flying time, not realising I could download the EDM700 engine log…

The downside of a rental operation is the higher maintenance requirements (certainly if G-reg), HMRC BIK issues (which I dare say can be avoided by the proprietor not having a PPL, never using the plane, and most importantly for HMRC having no interest in aviation because they hate any business which the proprietor might be enjoying) and some other stuff. Plus you tend to attract the worst types of pilots – precisely because it is a zero commitment route.

So, as I keep saying you have to choose the members very carefully.

Great advice above about contracts, but what happens in reality is that you get one very dominant male (there is a very thin line between human and chimpanzee social behaviour) and nobody dares to challenge him. He might be pocketing one duty drawback after another, so getting loads of free fuel from the other members, but still nobody will dare to challenge him.

BTW Maoraigh what device are you posting with? I have sent you a few emails because you seem to have difficulty with quoted text but you don’t appear to have received any of them. It would be useful to know in case there is an issue with the site. Firstly, you need to have a space after the bq. (i.e. a space after the dot). Secondly the word “Quote” should come up selected when you click the quote button so when you type in (or paste in) some text, it should disappear.

I’ve been involved with three groups, all of them disasters. The last one was a group of 6 where one thought he was God, two agreed with him, two kept their heads firmly in the sand and one only turned up once a year for a check ride.
The aircraft had MAJOR technical issues which I regret not reporting to the CAA. I believe they were eventually forced to deal with them by circumstance some years later but certainly not voluntarily and luckily without any accident occurring.
I now own a 50% share in a permit aircraft with someone who is not a mate but we get on well and have mutual respect. It works well, the only downside is that if we disagree on something there can never be a majority vote, but luckily we are both sensible adults and tend to go with whoever has the strongest view. If the matters are of legality we never disagree.

But really the biggest thing is to choose the members very carefully, and it’s going to be a tough task.

If you want to find people who will fit YOUR plans perfectly – your heading for trouble if they’re equal shareholders.
With equal shareholders, everyone has sometimes to give way. As long as they want to have reduced cost flying, it’ll work – though it’s not a social group.
I personally would never be a shareholder in a syndicate where one member had a controlling share.

What to do is really according to what you can afford.

The best setup is owning the plane yourself. It sidesteps a huge pile of potential (actually very likely) hassles and offers loads of advantages as Steve R mentions (and many more).

But not everybody can afford sole ownership.

If you have to do a syndicate (to spread the cost – there is normally no other reason) then I recommend a limited company, and some simple accounting package on which you set it all up. Forget VAT registration. But really the biggest thing is to choose the members very carefully, and it’s going to be a tough task.

I was doing this 2002-2006 and the majority were, shall we say, unsuitable. I think I have written up some notes here in the past on some of the comical characters… I had just two good pilots; one went when he lost his job (marketing i.e. “feast or famine” existence) and the other went when his wife got pregnant and told him to stop flying.

So, to start with, find the people to do this with. Then look at the structure.

I know of just one syndicate which functions – 2 pilots, both IFR.

My aircraft are syndicated in the sense that they both needed an owner so they teamed up to share me Total value for both of them is about $60K USD and they’re very nice for my purposes, so no partners needed. Reading this thread reminds me that I’d rather spend my time playing with the planes than on arcane legal and tax stuff. That’s not living, in my world. To each his own.

Costs are actually lower if you fly less – by which I mean I’ve never personally understood the brain damage that some people go thorough to understand and optimize hourly cost. My objective is to own the things and enjoy them exactly as much as I feel like, no questions asked. Obviously on that basis I’d agree completely that sole ownership is good. I feel very lucky to be flying at a time when aircraft prices are decreasing every year, a gift of demographics that compensates for the demographics that drove house prices up every year when I was younger.

Re Part M – it might be ‘no real problem with the correct maintenance organization’ if you predicate the discussion on hands off maintenance. In my world however annual inspections by an A&P IA cost $200 plus parts, all the parts (new and used) and services are bought by me directly, and the planes have never been anywhere near a ‘maintenance organization’. They are however very well managed and maintained by a guy who cares a lot about them – me.

My experience of 10 years is that the best way, as already mentioned, is a syndicate of one. I have been in a group that worked reasonably, with a low cost aircraft and low expectations whilst gaining experience but there were events that could have lead to problems if the costs had been significant.

When I bought a touring aircraft (5 year old AC11) initially I purchased in one of my companies, recovered the VAT, and charged a commercial rate for personal use. After 3 years I was pleased to buy from the company at the market rate including Vat and remove the BIK concern and the mounting accountant’s invoices.

Sole ownership is the only way to control the safety environment of the aircraft. You as owner know how it has been used, the state that it is left in after a flight, the way the avionics have been set up, the fuel situation. You decide on the maintenance company and the attitude to “on condition parts”. The aircraft is available at whim and you can make trips lasting weeks without reference to others. With my annual usage of 150 hours the costs are acceptable.

The aircraft is G reg and I have an EASA IR which I took some years ago. It is a much simpler arrangement. I own the aircraft personally, no trust as on N reg, no Guernsey company as on 2 reg. The downside is the Part M which in fact is no real problem with the correct maintenance company. There is a restriction on the STCs that are available which can be annoying.

With the changes in training and experience requirements for the EASA CBM IR it should be possible to do the majority of the training in your own aircraft in the UK. I do recommend joining PPLIR as I have found the information that they provide invaluable.

For simplicity, dependent on aircraft type, with the recent changes in the IR training, G reg with an EASA licence and sole ownership are attractive.

Every court case I have come across concerning a Limited Company has ensured that the corporate veil is sacrosanct.

I didn’t say it isn’t. What I said is “anybody suing is going to go after the operator and the pilot, jointly and severally.”

It’s a different situation for a Ltd Co. doing normal trading. The company officers are protected – provided they haven’t done certain really stupid things (loads of case law on that too e.g. offering “personal” warranties re company performance). There is no personal liability on them in normal trading.

Peter writes:
Putting a plane in a limited liability company is never going to protect the pilot or his estate . . . . .
Do you have any evidence of this: Every court case I have come across concerning a Limited Company has ensured that the corporate veil is sacrosanct.
If they were to pierce that for a Pilot, every Ltd company in the UK would be similarly liable.