How does a non-equity group normally work? Is it that each member pays either a joining fee and then contributes an even share of the costs and maintenance etc. or would it be more the case that a non-equity member joins a group and pays no maintenance and just a higher hourly rate – like a long term rental agreement?
Appreciate there are probably many different ways of doing it. I’d be interested to hear from anyone who either runs a non-equity group or is part of one. thanks.
In our non-equity group, we each pay a refundable deposit (usually fairly small, in my case £2500) and a monthly fee. You then pay hourly for any flight time. There are no cash-calls for maintenance or unexpected costs, the owner takes care of that.
@vmc-on-top post moved to existing identical thread.
In the (presumed) UK context it tends to mean the flyers don’t hold formal shares in the aircraft, or in a company which owns it. They may hold shares in some nebulous entity like a block of 500hrs. Or it could be pure renting, with the “group” being just a bunch of people who have been authorised / checked out, etc… See above posts also. One example is here.
‘Non-equity’ groups cover a range of different type of arrangements.
Our club is in effect a large non-equity group of about 15 members.
We each pay a fee to join (a few hundred Euro depending on when you joined) a monthly fee and an hourly rate.
Our aircraft is owned by the club (a limited company) and not by any individual. There is no ‘owner’ as such.
We try to budget the costs so that we don’t have any call on members for unexpected maintenance.
What was the source of the money which the Club used to buy the plane? Or is it leased?
As noted in previous threads on this topic, no matter how you shake the numbers, the money extracted from the flyers has to cover the money spent on the plane, with a bit on top for unexpected stuff.
The challenge with “groups” is that most members are in there because they cannot afford to own the plane themselves, and they look at the cost structure to see if it fits their flying. And no matter how you arrange the various contributions, there will always be scenarios where one member is subsidising another.
I ran a “zero equity group” 2002-2006. It was eventually closed due to tax hassles (the UK HMRC took the position that unless all flyers were shareholders, the operator was liable for Benefit in Kind if he was a pilot too) but I had loads of hassles with some of the “customers”. I wrote about this before at some length; some of it was quite comical, like the instructor who had a fake ATPL and used to fiddle the fuel totaliser to get a reduced fuel bill fom me. One could say choosing the people in the group is obviously really important 
but the incentives to save money remain and and most groups have problems as a result. I got criticised for posting about some of it… GA is littered with broken groups and big bust-ups.
Anyway this is getting off the topic of zero equity groups. I am “just saying” that there is nothing magical about them, because money in = money out else the thing must crash, and people don’t really change their attitudes just because the cost structure changes.
I would not do zero equity again because
Not saying it can’t be done but by the time you find several genuinely good people, why can’t they stick their hands in their pocket properly and buy shares?
dublinpilot wrote:
Our club is in effect a large non-equity group of about 15 members.We each pay a fee to join (a few hundred Euro depending on when you joined) a monthly fee and an hourly rate.
Our aircraft is owned by the club (a limited company) and not by any individual. There is no ‘owner’ as such.
First of all it is obviously relevant about which legal environment we are talking “(Non)- equity groups” are no legal terms at least in Germany (and some other countries I know of. Not sure about the situation in the UK.
Clubs, however, would typically qualify as “equity groups” as the club members jointly own the assets of the club (even if in most regulations there are limitations on what/how club members can actually decide about these assets). Most equity groups imply some kind of corporation, as in most regulatory environments it is not possible to reflect fractional ownership in the aircraft registry and therefore one needs a structure to document who owns which part.
Non equity groups are, on the other hand, most often only “glorified versions” of straight forward rental businesses. Very often these “groups” would not even qualify as group in a sense that the “members” of the group know each other and do things together but rather every “member” has an individual contractual relationship with the owner/operator of the plane.
What was the source of the money which the Club used to buy the plane? Or is it leased?
I don’t know. It predates any current member’s joining date. I’m sure it was borrowed at some point and long ago paid off.
This one, at LFAT today, is curious because the “147 group” was a “zero equity syndicate” run in the UK around a bunch of SR22s. N147KA ended up on the bottom of the Channel (a very strange story) and I don’t know what happened to that business.
It was quite pricey; a friend used to rent them and was paying about £500/hr.
