Own your own jumpship?

[frontloop33 1]

Hi!

I'm just wondering if anyone can tell me, when it is better to own your own jumpship instead of rent/lease one.

Is there a rough number of loads/year, jumpers at your DZ or anything else that can give an indication? Lets say, if there are 1000 Loads per year at a DZ it's (mostly) better to rent a plane but if there are 5000 loads/year it's better to buy one?

I know, it depends on the size of the aircraft, the available number of jumpers (there's no need for a caravan, when there are only 10 jumpers at the DZ).
How about a Cessna 206 or something like that?

[diablopilot 2]

My consultant's fee is $40,000 per year. Plus Jumps.

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You're not as good as you think you are. Seriously.

[davelepka 4]

It's just business. You have to calculate the cost of ownership of a plane in your country. This includes insurance, and hanger rent. Then look at the cost per hour to operate the plane you're interested in, and this includes fuel, oil, required inspections, and money to go toward an engine overhaul. Finally, look at the price of jumps, and how many jumpers you can haul per hour.

Let's say the cost of ownership is $1000/month. Let's also say it costs $200/hour to operate, and you can carry 10 jumpers per hour at $25/jump, for an income of $250/hour. With a gross profit if $50/hr, you would need to fly 20 hours per month (about 40 loads) to cover your expenses and 'break even'.

If you have to take out a loan to buy the plane, add your loan payments to the cost of ownership, and the additional loads per month you'll need to cover them.

If you can pay cash for the plane, you could look at the interest you're not earning on the money you spent on the plane as a 'cost', so you could add that to the cost of ownership.

All of the above numbers are just for example, and I chose them to make the math easy, but I don't think any of them are too far off.

[DBCOOPER 1]

With a 182 it would be 8 jumpers per hour@ $25 or $200 per hour which is break even. There really is no money to be made with a non turbine aircraft. You would have to charge $35 a slot to make any kind of a profit. It's sort of like a tandem rig. It's a tool used to make money from something else.

Replying to: Re: Stall On Jump Run Emergency Procedure? by billvon

If the plane is unrecoverable then exiting is a very very good idea.

[davelepka 4]

I get that. The guy did say 206, so I went with 10 jumper per hour, but even that deal is still close to a wash. You get more jumpers per hour in the 206, but it costs more to feed and run a 206.

It's the tandems and students that will make the difference. If you can pocket $75 or $85 per tandem, and fly 4 of them per hour, now you're making $300/hr, not $50/hour.

It's not the easiest way to make money, but you can make some money, and it's probably a good time in the process. It almost sounds to me like this guy is part of a club, and in that case, making money isn't really the goal. The goal is to have the plane available and pay for itslef, and any 'profits' can just be applied toward lowering jump prices. Even if the plane just breaks even all year, the club benefits by having the plane available and being able to jump.

[airtwardo 6]

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I get that. The guy did say 206, so I went with 10 jumper per hour, but even that deal is still close to a wash. You get more jumpers per hour in the 206, but it costs more to feed and run a 206.

It's the tandems and students that will make the difference. If you can pocket $75 or $85 per tandem, and fly 4 of them per hour, now you're making $300/hr, not $50/hour.

It's not the easiest way to make money, but you can make some money, and it's probably a good time in the process. It almost sounds to me like this guy is part of a club, and in that case, making money isn't really the goal. The goal is to have the plane available and pay for itself, and any 'profits' can just be applied toward lowering jump prices. Even if the plane just breaks even all year, the club benefits by having the plane available and being able to jump.

...and sometimes it makes more financial sense to lease.

IF it's a club with a not so steady stream of tandems coming in, or a varying number of jumpers per day/week, not 'having' to make a certain nut regarding loan payments etc. and only paying for the tach hours gets rid of a big headache.

Annuals, insurance, fuel, general maintenance like tires & brakes...and what happens if ya lunch the motor. Without some major reserves in the kitty you are getting a loan to just get it flying again...to make the 'other' loan payment.

It's a business decision that really needs to be thought out and run the numbers a few times.

Owning at AC ties up a lot of capital that can be effectively used in other areas of the business to grow the thing to a point buying is a necessity not a luxury, and puts you in a much stronger position to do so.

~ If you choke a Smurf, what color does it turn? ~

[fencebuster 7]

I'll let you know in December. I am operating anew DZ in VA with a C-182; tandems, AFF, IAD and fun jumpers.

Charlie Gittins, 540-327-2208
AFF-I, Sigma TI, IAD-I
MEI, CFI-I, Senior Rigger
Former DZO, Blue Ridge Skydiving Adventures

[Ron 7]

You are going to have to do math on this one using your own numbers. You are going to have to factor in the purchase price, cost to insure, cost to hangar, cost to run, and the cost to maintain the aircraft. then you will have to compare that to how much it costs to lease... Even if you can find a lease.

In some cases, owning might be better.... Others it is going to be much less expensive to lease.

I own my own small plane and I crunched the numbers and unless I fly more than 64 hours a year, it is less expensive to rent a plane. You will have to do the same math for your situation. For me it is about 5.3 hours a month I have to fly and I normally do that in a single weekend if the weather is good.... So it made sense in my situation.

But I can share a few horror stories.... One, my plane has a starter issue and I have been tracing that down. My plane is experimental and not commercial, so I can do a lot of the work myself..... If I had to pay a mechanic it would be much more expensive.

A buddy bought a 182 for 40k and the engine had an issue and had to be replaced..... That was another 40k. Another buddy had a 182 and the engine had to be rebuilt and that was 30k. Another buddy had a plane and spent several thousand during an annual and they found an issue that will cost several thousand more to fix.

Knowing all of this, I'd do the numbers to see how many loads I would have to fly to break even if I owned the plane.... And then I would lease at first to see if I can make those numbers. That way I am paying tach time and if I need to fly 8 loads a weekend to own and I only get 6..... I am not going into debt because I am only paying tach time on the plane.

And honestly, you will never know all the factors that go into the decision till you are in the mix.

This is all just my opinion......

"No free man shall ever be debarred the use of arms." -- Thomas Jefferson, Thomas Jefferson Papers, 334

[davelepka 4]

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lease at first to see if I can make those numbers

Great advice. I do some business consulting, and one of the biggest mistake is when people spec equipment to start their business, they're always looking for bigger or higher capacity equipment than they need. They claim that they don't want to have to upgrade or buy new equipment down the line, but then they're faced with paying off the big machines.

If you start off with smaller equipment (aka, less upfront investment), you have a chance to see how things will pan out. If it turns out that you're running the smaller machines to their absolute limits for 80 hours per week, guess what, you might need to upgrade. Guess what else? You've been making money off the smaller machine for 80 hour per week, and you have the money to upgrade.

[DBCOOPER 1]

With a lease or a loan you'll probably have to insure it for skydiving ops. Last time I checked Falcon was the only game in town and it was 6 grand a year. Thats a lot of loads just for that nut.

Replying to: Re: Stall On Jump Run Emergency Procedure? by billvon

If the plane is unrecoverable then exiting is a very very good idea.

[aeroflyer 0]

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With a 182 it would be 8 jumpers per hour@ $25 or $200 per hour which is break even. There really is no money to be made with a non turbine aircraft. You would have to charge $35 a slot to make any kind of a profit.

Hey, that's what they charge at the dropzones here in Canada!!

[Spills 0]

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I'll let you know in December. I am operating anew DZ in VA with a C-182; tandems, AFF, IAD and fun jumpers.

Where at in VA? I noticed the 540 area code.

[SkydiverDZO 0]

New Market, VA. We'll be running a C-182 until May when we'll have a King Air.

Charlie Gittins
MEI-I, CFI-I
Sigma TI; AFF-I
FAA Senior Rigger

[mchamp 1]

Congrats Charlie and good luck with your new DZ! Hope to come jump there sometime!

Now get off dz and enjoy your spectacular week ahead of you with your special lady and congrats on freeing the man!!

For info regarding lift ticket prices all around the world check out
http://www.jumpticketprices.com/dropzones.asp

[Spills 0]

I'll have to drop by this summer. I bet the view of skyline drive is nice.

[Andrewwhyte 1]

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Hey, that's what they charge at the dropzones here in Canada!!

That is a key point. The OP is from Germany and most of the numbers are from Americans. (BTW $35.00/ jump is a "good old days scenario around here. We will start the season at $40.00 and it may go higher depending on the price of fuel).
I think it is important to look at your annual load rather than hourly to make the call. 200 hours/yr is and absolute minimum. If you will not do that then get a smaller plane.
When examining the 'opportunity cost' of purchasing do not only look at the interest you will pay/forgo. You need to look at what else you could do with your money to increase revenue. There is no point in buying a plane if you are short tandem gear or your storefront looks like shit unless your leasing situation is truly intolerable. Remember you will need to be able to pay for unanticipated maintenance on the spot if you go down during the season. This can be especially hard in the spring when revenues are not the greatest and you already spent last year's surplus.