Now that the Vixxen is back from its latest maintenance, I thought a quick note as to what work was done, is still upcoming, and what was a surprise, would be of...
Is Renting Your Airplane a Moneymaker?
As an airplane owner, I am often asked if an airplane can be a moneymaker. The question usually arrives as an assumed positive, as in, "Wow, you rent out your airplane... that's gotta be a moneymaker!" As with most things, reality may not always match expectations.
To illustrate, here is a recap of the "numbers" from last year for my favorite little airplane, my Aeroprakt A32 Vixxen. She's a beautiful 2-seat, 100 MPH, flyer with jaw-dropping visibility from her large glass door windows. She's the perfect low and slow or fast and fun airplane, a capable long-flyer and a near-perfect airplane for training.
However, my accountant will rather sourly point out that while last year's rental of the Vixxen brought in $14.3k on the revenue side of the ledger, the expenses tallied $21.3k on the other side meaning my "moneymaker" generated a not insignificant $7k loss instead of the hoped for profit.
On the revenue side, in 2021, the Vixxen rented out for 168 hours, plus I flew her for 16 more hours (mostly to and from scheduled and sometimes unscheduled maintenance) for a total of 184 hours. So the rental hours alone produced an average $85 per flight hour in revenue. Don't get me wrong, there were also plenty of smiles generated throughout those hours and with 168 rental hours, lots of other people also got to enjoy the Vixxen, but it wasn't a "big moneymaker" by any stretch.
How did that happen you ask?
Well, over the course of the year, there's insurance, hangar, and maintenance expenses, let alone gas and such.
- $5,900 for Insurance fees
- $5,900 in Hangar fees
- $4,200 in Maintenance
- $2,600 in AVGAS
- $1,400 in Supplies
- $1,300 in Property Taxes
Thus, total expenses tallied $21.3k.
Here's the view on a per flight-hour cost:
- $32 per flight hour for Insurance fees
- $32/hour in Hangar fees
- $23/hour in Maintenance
- $14/hour in AVGAS (I love the fuel efficiency of the ROTAX engine!)
- $8/hour in Supplies
- $7/hour in Property Taxes (the taxman gets you at every turn!)
All of the above means that every flight hour in 2021 cost $116 per hour versus revenue of just $85 per hour. Enough said?
Note that the published rental rate for the Vixxen in 2021 was $110 per hour. However, to help ensure we had enough CFI's ready to train in the Vixxen, I offered CFI's a lower rate to help them through the insurance qualifications so they could provide training to others in the Vixxen and be properly insured.
Want more of the details behind the costs?
- Those insurance fees are hard to swallow. Can't fly without them though. The airplane is a 2018 model so it being "newish" is part of it, as is the fact that it's a light sport airplane, but the biggest element in the insurance cost is that I choose to rent the airplane to others so they can experience and learn the wonders of flight. Sharing it in this way means higher insurance costs without a doubt.
- Hangar fees vary wildly by geographic region, but here in San Diego, I've got a good hangar at a "fair" price. I could save about $4k per year if I simply rented a tie-down space and let the airplane sit outside in the weather, but that just seems cruel and unusual punishment for a bright and shiny object of fun and admiration. At any rate, the extra cost of the hangar is an "owner-preference" that my renters also seem to appreciate.
- Maintenance in 2021 included two different 100-hour inspections, four 50-hour oil changes, and two unplanned expenses; the first in the form of a scraped and scuffed wheel pant from a cross wind landing "oops", and the second was a preemptive nosewheel strut repair on the smallest of hairline cracks our mechanic found during one of the inspections. In both cases, I chose to resolve the issues proactively as opposed to taking the cheaper route of waiting and watching (which in my experience, often just leads to more expensive work at a later date).
- The rest of the costs are pretty self-explanatory and range from gasoline to cleaning supplies and even the little website where we manage things for www.fly4fun.us.
So, what's a business to do?
At first glance, you might just say, "raise your rental rate and all will be good." I worry though that raising the rate may make it harder for some wanna-be flyers to afford the sport, and it may leave those who do fly, flying less hours so as to hold down their cost.
However, if you're an accountant, you've likely already cut to the chase and recognized that the two largest categories of expenses (insurance and hangar fees - plus the property tax costs) are "fixed" costs. As such, they stay the same, in total, regardless of how many hours the plane does or does not fly. That means if you double the number of hours flown, those costs will drop in half on a per hour basis.
To me, it seems pretty clear, the answer to getting the Vixxen to being a positive moneymaker versus it's current loss-maker status, is simple... get more rental hours of flight, plus a tiny rate bump to $120 per hour given the increasing fuel costs already seen in 2022 and voila, a small profit!
Yes, the answer means "simply" introducing more and more people to the thrill of flying in a small airplane through some of the prettiest scenery Southern California has to offer. How hard can that be?
Who do you know who wants to fly for fun with us?
PS you'll note that the actual cost of purchasing an airplane is not addressed at all in the above numbers ... that's an exploration for another time.
Always dreamt of personal flying? Really fun flying?
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