Buying Piston Single and actually make money...?

As a I consultant, I make money when I fly myself to a meeting or a job (my time is billable). Typically, my clients are happy to pay SEP rates as long as it saves them money in the long run. This works best when you are going to an awkward place, i.e. an island. Once example is a trip which takes 30 minutes by air, but 6 hours by ferry and car. My clients will pay whatever I suggest for the use of my aircraft, as long as it costs less than 5 hours and 30 minutes of my time. This is profitable for me, and saves them money, a win-win situation.

In some countries there are many SEP charter businesses, for example, float planes in Alaska and the West Coast of Canada, or bush charters in Africa. In the UK or central Europe, I suspect not. Why would a prospective client pay to fly in a small GA aircraft, if you can pay £29 to go on Easyjet or take the Eurostar?

So can you make money while flying SEP? Yes, but it really depends on the unique set of circumstances.

Is there anyone out there who actually bought a solid, used single and is marketing it in a way that it at least offsets the running costs?

Well, you can ask every aero club or flight school. There may be some parachute ops that are able to make money out of an SEP, too, or commercial charter companies, but here in Germany they are almost all connected to a flight school or an aero club. Aero towing is almost always a subsidized “business” and banner towing is done largely with microlights in these days, because for some reason they don’t need a commercial license or commercial maintenance. I could imagine aerial photography is done largely with autogyros.

My research leads to the conclusion that it is almost impossible to generate cash flow with sep aircraft.

Replace “sep” with “any” and you are spot on. As the old, old, old, old, old saying goes: “You can make a small fortune in aviation – if you start with a big one.”

Is there really no more market for sightseeing flights, banner towing, air taxi, aerial photography (drones took over?)?

There is a market, but it is very small and already served by more suppliers than it can feed.

Is the above true also for business turboprop/jet aircraft?

Yes, and your losses will be proportionally bigger.

The only two ways to make money in this business are:
1) As charter broker (almost no capital required, low running costs and a sure profit with every flight sold, whether the aircraft owner makes money or not)
2) Operating other peoples (business) aircraft

Yet again, this is a very small market that already feeds more than it can really support.

But maybe you will come up with a new recipe that actually works? (Would be the first one in 112 years of powered flight!) My best advice would be: Whatever you do in aviation, don’t do it with your own capital. Always find an investor first…

I’m afraid I agree with What Next.

And even if you do manage to make some money – it’ll get wiped out the moment you have an unexpected large bill (or worse any sort of insurance claim).

The potential profit is just not interesting when compared to the risk analysis…

So go flying, but just accept you’ll be out of pocket after every flight!

Cheers, Sam.

You need a large fleet for one so that these “highly unlikely” but in fact regular catastrophic events do not kill you immediately.

Airplanes are very similar to boats. I operate a fleet of commercial boats and while the business can be expressed in numbers, it is those catastrophic events that come like there is no tomorrow that make it so difficult. More so if you run engines from an incompetent Swedish company. It’s not just that you have high repair bills, it’s that you are completely without revenue when AOG and even worse: you have to compensate customers/partners, pay fines, suffer a reputation risk, etc.

PS: I’m now buying a brand new Volvo engine just to put in the storage and making sure the f*cker in the machine room knows that the next time he wants to die on me, it won’t impress me. I learned it the hard way: you have to allocate huge amounts of capital to be prepared for even the most unlikely event. Reaction time is everything, I have mechanics H24. Same thing with airplanes.

There are a few threads here on roughtly this topic. This one (among others) is worth a quick read for some ideas of what to look out for.

During the economic boom when everybody who could count £50 notes called himself a banker and there was a lot of froth bubbling around, you could rent out an SR22, for an hour block costing a few k a year, plus about £200/hr (wet). You had to be un-fussy about who flies it (anybody with a PPL who had a check flight – forget any Cirrus specific training). A number of these were around the south east UK but AFAIK all have collapsed. The last one – N147KA – got ditched in the English Channel by … a “banker”. In normal times, that business model would not have worked because far too few blokes want to pay £500+ to impress a girl with a lunch at Le Touquet (well, she would have to be ultra classy and at the same time the payback would have to be pretty well assured… a risky proposition ).

On a private aircraft, there is a good case for ignoring the depreciation if you plan to keep it for a long time (because just about everything you buy in your life is worth near-zero the next day, except big things like cars) but in a business you can’t do that in the long term. You have to build that into the model, and you use the maximum capital allowances to write the value down so as to avoid corporation tax. But there lies another problem: after capital allowances have been taken care of, the company won’t be making a taxable profit, and the tax people (who hate that) are going to start giving you hassle. We have had many threads on this here (Benefit in Kind is the UK name for it) and the owner of the business can get into trouble if he is a pilot himself.

The only scenarios I have seen which work, since I started flying in year 2000, have been

• You rent an old plane to a school, put in under their business insurance and maintenance, accept some hourly rental on it, and be prepared for it to be totally shagged. I used to rent one such (PA28-181) which belonged to an accountant who flew it for a few weeks’ holiday, once a year.

• You are an engineer, own a small fleet of similar planes, make maintaining them your day job, and you rent them out. That works because you aren’t paying some outsider for labour, you buy the parts in bulk (mostly from the USA), and if the planes are say C152s and worth only say 10-20k, the depreciation is nearly zero. It would not work with a nice new plane worth say 100k.

I don’t think it can be done with a nice plane because just about all the pilots who would rent it and who are good enough to fly it already own a plane, or are in a syndicate. There are a few “high end renters” but far too few to support a plane which needs to fly say 100-200hrs/year.

The only way to make a small fortune in aviation is to start with a large one…

You rent an old plane to a school, put in under their business insurance and maintenance, accept some hourly rental on it, and be prepared for it to be totally shagged.

We did that in the nineties with a Piper Seminole (1/3 of which belonged to me). Worked nicely two years in a row, then came a year when some idiot hit a prop against something and we couldn’t prove it was him. So the new prop was on us and this year there was no revenue. Nor the next year. Then came another year with a small positive result and then one engine needed to get overhauled 300 hours short of TBO. That ruined the whole business plan and that fact that the overhaul took four months didn’t make things better. The four months were because it was the OI-360 engine that turns in the opposite direction and one camshaft was worn outside the limitations. Unfortunately, these are only produced in batches, so we had to wait. After that we sold it to another flying school which operated it until very recently – when they went bankrupt themselves…

far too few blokes want to pay £500+ to impress a girl with a lunch at Le Touquet (well, she would have to be ultra classy and at the same time the payback would have to be pretty well assured… a risky proposition ).

That girl would probably run off with the first bloke that has a jet or a big yacht anyway. So this is a ricipe for a quick divorce. (she’s not worth it)

It would not work with a nice new plane worth say 100k.

I am looking to buy such a plane but cannot find anything under 200k.

There are a few “high end renters” but far too few to support a plane which needs to fly say 100-200hrs/year.

The hourly rate for a plane that flies that little is probably way to high for most renters anyway. They would be better off owning with two others.