Saturday, January 17, 2015

1871 Member Company Open Airplane Featured on FLYING

Shared Aircraft Ownership for the New Millennium

By Stephen Pope / Published: Jan 07, 2015
Shared Ownership Feature
There's no getting around the fact that general aviation
is expensive. but new business models 

centered on 
economy ideas are helping spread the costs 
around, making flying more affordable for more pilots.
Challenging Old Assumptions

If you don't fly enough in a year to justify full ownership, fractional programs like these can be a great fit. How do you know if your flying warrants full ownership versus buying a share? From his experience, Larkins said the sweet spot seems to be around 160 hours per year. If you fly more than that, owning an airplane outright starts to make economic sense. Any less, and a share just might be a better option. 

John Armstrong, founder of LifeStyle Aviation and the creator of the DiamondShare program agrees. He said he envisioned DiamondShare as a way of getting a new generation of pilots involved in general aviation, not necessarily by providing them with the lowest-cost solution to their travel needs but instead by introducing them to modern, glass-panel airplanes that represent the future of aviation rather than its distant past.
"When somebody who's interested in learning to fly shows up at a traditional flight school, a lot of them are turned off by what they see," Armstrong said. "They see lots of old airplanes, and frankly an old way of thinking. A lot of potential students turn around and walk right back out the door never to return because the airplanes are 50 years old and the school's methods and process of training are 50 years old too."
DiamondShare seeks to make each member's experience as close to whole ownership as possible while spreading the costs around. Here's how it works: One member in the program buys a new DA40 and turns around and leases flight hours (based on tach time) to two or three other members. Online scheduling and rules about how many reservations each member is permitted to hold at a time ensure the airplane has high availability. Members leasing hours in the airplane pay a monthly fee, plus for the fuel they use. Aircraft owners receive payment at the end of each month, which usually covers the loan payment on the airplane.
The idea of a "free" airplane certainly piques the curiosity of many pilots. But why not take the same concept and apply it to a 1967 Skyhawk? Armstrong said he's in the process of adding used airplanes to the program, but only nearly new models. Older airplanes like those preferred by many flying clubs and flight schools, he said, don't serve the needs of the new wave of younger pilots who want to go fast in an airplane that's packed with the latest technology and looks good taxiing up to the fuel pumps.
"That's really where flying clubs miss the mark," he said. "They're taking the economics of 30 people and pointing it at a 1970s airplane. They squeeze a penny, but at the same time ignore the potential of drawing in a new generation of pilots. Clubs aren't participating in general aviation's renaissance, and that's the problem."
What GA really needs, he said, is a way to provide unfettered access to modern, well-equipped airplanes at prices that a larger pool of private pilots can afford. The airplanes don't all need to be brand-new $400,000-plus models, but by the same token, a ratty 1970s-vintage Cessna or Piper single for rent at the local FBO doesn't herald aviation's future, he said. 

Shared OwnershipBased loosely on the business jet fractional ownership model pioneered by NetJets, high-end providers like PlaneSmart and ascension air have made shared-ownership programs built around fleets of Cirrus singles.
Technology Renaissance

To see GA's potential future direction, look no further than what's happening online. One of the fastest-growing new economy companies — which you've probably heard or read about by now — is OpenAirplane, a service originally created to meet the needs of a niche aviation client who wanted to be able to rent airplanes while away on business or vacation without spending precious time getting checked out by a flight instructor at each new FBO location. The idea was to offer pilots access to multiple aircraft at a variety of locations with a single rigorous annual checkout. The start-up has developed into more than 70 locations in less than two years, with more than 250 aircraft in a network that continues to grow.
"We started the company with the idea that everyone's pilot certificate could be more valuable," said Open­Airplane co-founder Rod Rakic. "The way we approached that was by making renting airplanes as easy as renting a car."
Launched in 2013 at six locations, OpenAirplane began by working with the insurance industry to create a program that would cover renters who booked through the company's online scheduling site. The start-up received major votes of confidence from Cessna and later Cirrus, both of which have made the company an endorsed partner. Five of the first six OpenAirplane rental locations, in fact, were Cessna Pilot Training Centers. Cirrus, meanwhile, is collaborating to offer full rental privileges through OpenAirplane for pilots who complete Cirrus factory training.
Pilots who rent through Open­Airplane pay a single charge, which includes fuel and renters insurance. One annual checkout ensures users can rent similar airplanes from any location in the country just by scheduling the airplane online. All the airplanes available in the network undergo 100-hour inspections, ensuring they're in good mechanical shape.
Sensing an opportunity to extend the concept to individual aircraft owners, OpenAirplane now offers rentals of privately owned airplanes, expanding the available options for members while also giving owners a way of bringing in revenue to help offset fixed operating costs and ensuring their airplanes fly more often — a potentially important consideration for pilots who own aircraft they don't fly as much as they'd like to.
"We wanted to change the value proposition for aircraft owners," Rakic said. "Working with insurance providers to keep policy costs in check, now you can have an airplane, list that airplane on Open­Airplane, and have well-qualified pilots occasionally come rent that airplane to help you defray the costs. You charge them a wet rate and bring in revenue you otherwise wouldn't."
Ride Sharing with a Twist

Another idea for helping defray the costs of ownership centers on the ride-sharing business models of companies like AirPooler and Flytenow. You can think of them like virtual online bulletin boards where pilots can list the date, time and location of an upcoming flight and a traveler seeking to fly to the same destination can fill an empty seat and chip in for the cost of fuel. Under long-established FAA regulations there's absolutely nothing wrong with a private pilot sharing the pro-rata costs of a flight with passengers — until you advertise the flight on the Web, this is.
The FAA issued a ruling that these online matchmakers violate commercial aviation regulations by allowing pilots to "hold out" for air transportation services — in effect making anybody with a Cessna and a private ticket a de facto charter pilot. You can understand the FAA's concern. The founders of AirPooler and Flytenow, however, argue that what they're doing is really no different from bulletin boards at airports where pilots will occasionally advertise that they'll be flying to, say, Oshkosh and are looking for passengers to ride along and help pay the costs.
"The FAA wants to have it both ways," said Steve Lewis, co-founder of AirPooler. The agency wants "to allow pro-rata cost sharing among private pilots and passengers when the flight is arranged face to face, but prohibit that same flight from occurring when a website is involved. From a general legal perspective, you can't have it both ways."
The FAA, not surprisingly, disagrees with that characterization. There's actually legal precedent for its decision, when it ruled in the 1980s that a company that planned to arrange shared flights using a toll-free 1-800 number also ran afoul of air charter regulations.
What's certain is that innovative entrepreneurs with unique ideas will continue to push boundaries in the coming years as the GA industry benefits from concepts of the sharing economy, colored with their own aviation-centric twists.
Clearly the old way of doing things isn't working for everybody. The big question centers on how quickly the rest of GA might catch on to this new way of thinking. Will the marriage of tech and collaborative consumption truly herald an industry renaissance? Or will shared ownership programs and plane-sharing apps remain on the fringes of aviation as little more than niche curiosities? The answers could have an important bearing on the health of general aviation for years to come.


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