To Buy or to Rent?

The other day I posted the following Facebook status: “2012: Buy an airplane or rent an Extra 300L for $372 per hour. Hmmmmmmm.” I had many responses that argued in favor of each option. Why even think about this now?

I want to move up to Intermediate competition in 2012. To do so I will need a more capable acro plane than the Decathlon. I could either buy an airplane or rent one. There are very few aircraft capable of such performance, and even fewer available for rental. Both options are expensive. I wanted to explain all the stuff that goes into this type of decision. It is not as simple as “write the check.” ("Write the check attributed to Brian Falvey.)

There are two aircraft that I could purchase that would be up to the task of higher level competition aerobatics: a Pitts S1S or a DR-107 One Design. Both aircraft are in the same general price range with the 107 being a little more expensive but packing even more of a punch. The price range on a Pitts is about $30k - $40k; a One Design is somewhere between $40k and $50k. That is just the purchase price and is probably the easiest aspect of this whole thing.

Airplane ownership is broken down into two expense categories; fixed and direct operating costs. Fixed costs are those things that need to be paid for regardless of how many hours the airplane is flown. These include hangar, insurance, and loan payments. The direct operating cost (DOC) is the money it takes to get the airplane up in the air; fuel, oil, and maintenance reserve. Setting aside several dollars towards maintenance each time you fly is a good, if not mandatory idea.

A cream puff One Design popped up on Barnstormers this evening. I love it. I want it. Here is how much it would cost me:

Purchase price: $43,500

Loan payment: $400
Insurance: $166
Hangar: $0.00*
FOC: $566 per month


Fuel: $60.00
Oil: $ 7.00
MX reserve: $30.00
DOC: $97.00

To buy the airplane and park it in the hangar, I will have to fork out $566 each month. The second I want to fly it, the credit card comes out and I am out $97. If my acro budget allows for $1000 to be spent on acro, I can own the airplane and fly 4.5 hours each month. If I take the total cost, FOC’s and DOC’s and divide that sum by the number of hours I fly I can determine that it will cost me $222.22 per hour to fly that airplane if I fly 4.5 hours each month. If I only fly it two hours in a month, those two hours cost me $380 each. If I flew 10 hours in one month, those ten hours would cost me $153 each (but total expenditures go up to $1536.) Since $1000 is my current max, and only if I am earning that extra income I’m looking for, the DR-107 will run me $222 per hour to fly.

The trouble with ownership is realized the instant something breaks. This is an acro plane. Stuff will break. An engine cylinder is $1000. Radios can break. Tires are $60. I could have to replace any number of things that could send this budget into a tailspin.

If things got bad, I could sell the airplane. The way this thing is priced, I could probably sell it without taking a big hit if nothing major happens to the airplane or engine. If I have a tight month, tough luck. I still have to pay the FOC’s.

I will follow up with the argument for and against rental. For now I am going to go drool over that sweet little One Design.