The Jury’s In: AirShares Elite SR22

After a year of flying a share of an AirShares Elite SR22, we weigh in on the future of small airplane fractional ownership and what it might mean to you.

For the past couple of years I have been flying shared ownership airplanes with two different companies, first a new Cessna 182 as part of the OurPlane program and later a Cirrus SR22 as part of the AirShares Elite program. During that time I've flown approximately 150 hours in these airplanes on all kinds of missions, some near, some far, some with a couple of hours notice and some with several weeks'. Flying a new airplane is easy to get used to, and that's even truer for one that's as nicely equipped as the C182 and SR22. It's been great.

So, why isn't everybody flying a fractional? Good question.

Ask anybody who makes a living selling airplanes. They'll tell you that while there are a lot of pilots out there who can afford a good used airplane, there aren't many, much to their consternation, who can swing a brand new one. Which is why owning part of an airplane makes so much sense. At least on paper. And there are traditional ways to share an airplane, but not very satisfying ones. Partnerships sound like a good idea, but because of all the complications inherent in them-cost sharing, partners moving, unexpected bills, to name a few-it's hard to make them work. The use of a professional management company to administer sharing of light airplanes makes sense-bizjets are shared that way all the time-but until recently there hasn't been the option for small airplane pilot-owners to make use of such services.

Just a few years ago, however, a few companies emerged seeking a way to expand the pool of potential small airplane buyers by selling them just part of the airplane. These companies were very loosely styled after bizjet fractional providers like NetJets that provide a part of an airplane, the pilots to fly it, and the organization to watch over the investment. Would the same idea work for piston-powered airplanes from Cessna and Cirrus?

Not necessarily. For starters, the business model is inherently different in two very important respects. First, fractional owners of bizjets don't fly their own airplanes; professional crews do that. Second, bizjets fly really fast (which is why they're so popular with those who can afford them), allowing them to be ferried cost effectively to where the owner is based.

Neither condition applies to small airplanes. They are, for one, relatively slow and, hence, hard to reposition from any distance, and they're typically flown by their owners. Also, bizjets are, note the name, flown mostly during the week on business, whereas small airplanes are flown more typically for pleasure on the weekend, so scheduling shared ownership of light airplanes would seem, at first blush, more problematical. Because of these factors and more, the bizjet model, which has been successful, doesn't necessarily transfer to light airplanes.

In fact, because of these differences, as far as the FAA is concerned, programs like OurPlane and AirShares Elite aren't technically "fractional" programs at all (see sidebar), though they will certainly be referred to as such for some time to come.

As I've said before, I went to the "fractional" experience skeptical about it. The logistics didn't seem to be there, and I worried that my experience would largely consist of trying, unsuccessfully, to get the same airplane that four other pilots were trying to get at the same time. I also worried that the costs would be too high; still, the folks who run these programs insisted I was wrong. I was curious to see who was right.

Other pilots sometimes ask me how this kind of fractional ownership is different from a flying club. I tell them that it's very similar and completely different. Let me explain. With both approaches you're sharing a pool of airplanes with a group of other pilots, but the similarities pretty much end there. With shared ownership, you're flying brand-new airplanes. For years I was a member of a large flying club operated in the Northeast, and it was my best option at the time. The maintenance was good, scheduling too, the people behind the counter were friendly, helpful and knowledgeable, but the airplanes were old. Even though they were high value aircraft, Trinidads, Saratogas, Arrows, 182s and the like, most were 25 years old or older. And, to top it off, the rental fees were quite high.

Moreover, with a flying club or rental outlet, you don't get the financial advantages of shared ownership. When you buy a share-you can also lease one-you have real equity in the airplane, which you can use toward a new model when the lease period, normally around four years, is up. This isn't true with a flying club. Your rental money just goes away.

In my view, the shared approach combines the best of renting and owning and leaves out much of the downside of each. You fly new or near new airplanes, and they're completely taken care of for you. It's not just the lack of maintenance concerns; it's the scheduling, the fueling, the tiedown, the regular inspections and the recurrent training. All of these things are handled for you by people whose job it is to do only that. Don't get me wrong, I like hangar flying as much as the next guy, but there are some trips to the airport, like to work out the logistics of a prop overhaul, that are really nice not to make.

The economics of shared ownership, as long as you can live with the usage limitations, are very attractive. I received an e-mail from a reader recently who questioned this. He owns a Cherokee, which he's had for a few years, and he claimed that he spends around $5,000 a year on it. Now, without going into a total cost accounting of the different ownership options, that seems to me a naively optimistic figure, one that probably represents the costs of fuel and oil, tiedown and maybe a lucky, low-cost annual. It probably leaves out reserves, insurance, recurrent training, and more, all of which are taken care of for you when you're a fractional owner. Moreover, all it will take is one major overhaul of that Cherokee's O-320 to double or triple the costs involved for a given year. And that's not even factoring in the once-a-decade nightmare annual that might be just around the corner.

More important, such cost accounting misses the point. Is owning an older airplane cheaper than owning a share of an SR22? Yeah, but not as much as our reader claimed, and he's still flying a 30-year-old airplane that's 60 knots slower than a SR22 and lacks nearly all of its advanced safety features. Still, if cost is an overarching factor for you, renting or belonging to a club makes more sense.

As I mentioned, another beauty of shared ownership is that you know going in how much it's going to cost. If the engine breaks, apart from the immediate concern of finding a place to land, it's not your problem. The company takes care of it for you. (Actually, in most cases, the manufacturer covers the costs under warranty.) And new airplanes don't break that much. In the nearly two years I've been flying fractionals, I've had just one mechanical problem, a worn nosewheel bearing that reared its ugly head on my arrival at Sun 'n Fun a couple of years ago. I made one call, to AirShares, and they made sure the problem was fixed before I was ready for my return trip. Nice.

Some people worry that they'll miss the pride of ownership inherent in having a 100 percent share of an airplane. I worried about that too, but it took me exactly one flight to realize I was missing nothing. I guess I'm just not that sentimental about airplanes, at least not about a particular one. In my view, the one I'm flying, whatever its N-number, is the one I own, and when you're doing 180 knots, looking at a plethora of safety of flight information utilities on a couple of huge flat-panel displays, the last thing I think about is how lucky I'd be to own a lesser airplane all by myself.

Pros & Cons

Pros: • It's not renting. • You fly a brand-new airplane. • The airplane is managed for you. The hassle factor is near zero. • It is a lot cheaper than owning your own new airplane. • Training, both initial and recurrent, is an integral part of the deal.

Cons: • It's a lot more expensive than renting. • You're limited to how many hours you can fly the airplane each year. • You're limited to how many overnights you have the airplane each year. • Last-minute scheduling may or may not work out. (It almost always does, though.) • It's not an option unless you live near a location served by one of the few operators, and such locations are still few and far between.

Shared ownership has been a nearly unqualified success for me, and the AirShares experience has been an excellent one. I get the airplane nearly every time I want it, the service, including instruction, has been top notch, and I've found that the 75 hours a year I have available to me is adequate. Likewise, the 21 overnights a year I have allotted through AirShare's plan is workable. Sure, these are compromises, but they're compromises that I've found I can live with. Overall, I'm a happy camper.

So, if I'm so happy, the question is, will shared ownership work for other pilots? I wish I had a definite answer to that question, but I have to conclude that it depends. Perhaps the biggest problem with shared ownership is availability, and I'm not talking about the availability of the airplanes in the program. In my experience, that has been excellent. I'm talking about the availability of the programs themselves. Because you need to be near one of the home base airports to take part, most of the pilots in the country can't participate. But if you're lucky enough to live near an airport that's served by a shared ownership program, if 75 hours a year is enough flying, and if you're willing to spend more for the privilege of flying a new airplane, the answer is very likely, yes, shared ownership makes a lot of sense.

Today, the two largest shared ownership companies, OurPlane and AirShares, account for the vast majority of the shared ownership airplanes flying. There are, by our estimates, around 50 shared ownership airplanes in North America with roughly six times that many share owners.

What will the future hold for these companies and others like them? It's hard to say for certain, but my guess is that we're getting close to a tipping point, a point at which existing companies will begin to sell large numbers of new shares. When this happens, new companies will emerge, and airplane manufacturers will probably get more closely (perhaps directly) involved. Then shared ownership will become available at dozens of new locations around the country. When this happens-and I think it will-a lot of pilots will start flying the kind of airplane-a new one-that they couldn't dream of affording by themselves.

What is a Fractional?

The FAA and small airplane "fractional ownership" operators are working together to formulate an advisory circular that addresses the issue what to do with small airplane "fractional" ownership companies. Few substantive changes are likely to result from the guidance.

I put "fractional" in quotes above because the FAA wants companies like OurPlane and AirShares Elite to stop calling themselves "fractional" providers. The term the FAA is promoting for such non-fractional companies is Owner-Pilot Shared Ownership Programs, which has the unfortunate Dr. Seuss-sounding acronym "OPSOP."

The problem isn't with the term "fractional," however, which everyone agrees is both apt and descriptive, but with the creation of a new section of the FARs, Subpart K of Part 91. Subpart K concerns itself with regulating fractional operations. Of course, in order to do that, it has to say what exactly a fractional operator is. Part of that definition is the operator employs and provides pilots to fly the airplanes, which has never been a critical part of the business plan for either AirShares or OurPlane. Both companies provide management services for pilot-owners, so Subpart K is applicable to neither. And because Subpart K gives the term "fractional" a specific, regulatory meaning, it wrecks the term for anyone else who wants to use it, no matter how descriptive it may be.

The new advisory circular (which may or may not be published by the time you read this) is intended to educate regional FAA personnel about the differences between owner-flown management operations, like AirShares, and full-blown fractional operations, like NetJets or Flight Options. The point of the proposed advisory circular is that such owner-pilot targeted programs do not need to be regulated under either Part 135 (on-demand charter) or Subpart K of Part 91, but simply under Part 91.

You've just read Part III - The Jury's In: AirShares Elite SR22 - June 2004: Click here to read Part I - A New Fractional Vision Explored - August 2003: Click here to read Part II - A New Fractional Vision Explored - February 2004