Primarily for general aviation discussion, but other aviation topics are also welcome.
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By mossie
#1872642
We had similar, one member wanted to fly behind a better set of instruments... Rest were ok with what we had.

So, at their own cost and effort, upgraded what they wanted to have (the rest of the group agreed on the fit as being suitable).

We reflected this in that if a share or the aircraft were sold they would recover a proportion of the money that had been invested (cost of components only not effort spent to install). A value was agreed, and is amortised over a 5 year period. Ie if no shares or the aircraft are sold within 5 years of that date - they have gifted in whole the new equipment to the aircraft and so the group.

Shake hands and we moved on.
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By Dman
#1872648
Maxthelion wrote:
Dman wrote:How do syndicates sort out purchasing an item for the group plane if one of the members can`t or won`t contribute to the cost.
I get the fact that there has to be a majority for the purchase to go ahead ( which there is)
But if there is not enough in the kitty, can someone be forced to stump up for something they don`t want ?


In the spirit of a little more context, can you tell us what the item is that you want to buy and what the driving reason is for buying it?

I am a little reluctant to go into too much detail, as I`m not sure who is on this forum.
We are not talking huge sums.
It`s more a case of 3 of us would like dearer option rather than the cheaper option, which would work perfectly ok, but look a bit **** in our quite smart little plane.
Certainly not looking to kick members out over it
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By Dman
#1872649
marioair wrote:We have this exact problem around doing an avionics upgrade. We have 50% VFRers and 50% IRs so can get tricky agreeing where to spend.

Now
If its 50% either way then no change should be made
Got to be a majority
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By Dman
#1872651
If I say that our issue is with a 3 axis Microlight group, then that puts it in a bit more context as to the figures involved.
In other words, it`s a couple of hundred each, not 5k each
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By Sooty25
#1872652
Dman wrote:
Maxthelion wrote:
Dman wrote:How do syndicates sort out purchasing an item for the group plane if one of the members can`t or won`t contribute to the cost.
I get the fact that there has to be a majority for the purchase to go ahead ( which there is)
But if there is not enough in the kitty, can someone be forced to stump up for something they don`t want ?


In the spirit of a little more context, can you tell us what the item is that you want to buy and what the driving reason is for buying it?

I am a little reluctant to go into too much detail, as I`m not sure who is on this forum.
We are not talking huge sums.
It`s more a case of 3 of us would like dearer option rather than the cheaper option, which would work perfectly ok, but look a bit **** in our quite smart little plane.
Certainly not looking to kick members out over it


If it isn't huge sums, let those that want to go the cheaper route pay their percentage of that, and the others cover the balance of the posh upgrade.

If the difference is small, it isn't worth splitting hairs over.
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By rdfb
#1872673
Maxthelion wrote:The money paid into the group via a monthly sub is to cover maintenance (and permit renewal, insurance, parking). Maintenance becomes necessary partly as a result of hours accumulated on the aeroplane. In effect, that monthly charge is part of what you pay for the wear and tear you have put on the aeroplane. Just because the moeny has not yet been spend on maintenence at the point you're leaving the group, doesn't invalidate the wear and tear you put on the aeroplane and entitle you to a chunk of cash back out of the kitty.

If groups were run that way then people would just leave and take their cash with them whenever a big item needed payiing for. I'm sure you'd feel hard done by if you bought a share in something only to be told that you needed to cough up another £5k because the engine needed a rebuild and the previous owner of your share and user of that engine had elected to leave the group and take his share of the kitty with him.


I agree with your general principle and concern here. But I'd account for it by varying the valuation of the aircraft. For example, an aircraft with a just refurbished engine is worth much more than the same aircraft some years on that is approaching TBO. This affects the value of everyone's shares. The same goes for all maintenance items, including smaller ones. Even if it's just an oil change that is due, you can consider the value of the aircraft to have been diminished by the amount the oil change is expected to cost.

So if selling a share where such maintenance is "due", I'd still expect an equal proportion of the cash, but a lower valuation of the rest of the share due to the lower valuation of the aircraft. With my oil change example, that would mean that I'd still expect my share of the cash that was "set aside" for the oil change, but it would be offset by a equal reduction in the value of the share resulting from a valuation of the aircraft having been reduced by that amount.

This may seem obtuse, but I think it's the only fair way of separating cash that's built up over time that's just cash (eg. for future upgrades), and cash that's built up over time that's needed to cover wear and tear that has happened. To separate the two, you have to value the aircraft, and once you've done that, wear and tear is factored in and the cash in the bank should just get split equally.
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By Rob P
#1872682
rdfb wrote:
Maxthelion wrote:To separate the two, you have to value the aircraft, and once you've done that, wear and tear is factored in ...


With a two-person group, neither of whom has a moment's reticence in spending money on the aircraft, we nevertheless value the aircraft at a price with zero-timed engine, relying on the market to inform this figure, and then deduct £1,000 for every 100 hours flown from the notional value.

We use this for insurance purposes and also as a guide for the day when one of us no longer wishes / is able to fly.

But then we grow the 'engine fund' by £1,400 every 100 hours. And the whole equation is made more complex by the buoyancy of RV prices.

If we decide to quit at the same time the aircraft will be advertised at the price appropriate for the remaining engine life and we will divvy-up the engine fund. If one of us wants to remain flying the share will be advertised at the valuation for a zero-timed engine, but the money in the fund will remain with the aircraft.

Rob P
By OhNoCB
#1872698
Kitty pays for stuff in our group. Cash calls avoided unless airworthiness requirement. If there's enough money in the kitty then a majority will make the decision. If there's not enough money in the kitty then either everyone agrees to stump up share or (more likely) it doesn't happen. I don't believe it's entirely fair to make someone stump up for something they don't want and isn't needed otherwise. Obviously if something is NEEDED for airworthiness then further discussions must be made.
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By Rob L
#1872706
I'm going to reiterate many (but perhaps not all) of the previous posts. I've operated a few aircraft groups in my time, all without grief (it's like a time-share in a boat, or a holiday home in Spain):

1. It's the group that makes the group, not the aircraft.

2. Make a written, signed agreement.

3. Money paid into a fund (commonly called an "engine fund" or "maintenance fund") belongs to the aircraft, not the group. So a shareholder has no recourse to that money upon sale of share.

4. It's that simple. Don't join a group that does it differently.
By stevewarbs
#1872707
Rob P wrote:
rdfb wrote:
Maxthelion wrote:To separate the two, you have to value the aircraft, and once you've done that, wear and tear is factored in ...


With a two-person group, neither of whom has a moment's reticence in spending money on the aircraft, we nevertheless value the aircraft at a price with zero-timed engine, relying on the market to inform this figure, and then deduct £1,000 for every 100 hours flown from the notional value.

We use this for insurance purposes and also as a guide for the day when one of us no longer wishes / is able to fly.

But then we grow the 'engine fund' by £1,400 every 100 hours. And the whole equation is made more complex by the buoyancy of RV prices.

If we decide to quit at the same time the aircraft will be advertised at the price appropriate for the remaining engine life and we will divvy-up the engine fund. If one of us wants to remain flying the share will be advertised at the valuation for a zero-timed engine, but the money in the fund will remain with the aircraft.

Rob P


As someone who is looking to start a syndicate I think this is a great way of doing it.
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By VRB_20kt
FLYER Club Member  FLYER Club Member
#1872711
Rob L wrote:Money paid into a fund (commonly called an "engine fund" or "maintenance fund") belongs to the aircraft, not the group. So a shareholder has no recourse to that money upon sale of share.


I agree that a shareholder shouldn't take away "his share" of the pot when he leaves, but it's certainly a discussion point when it comes to the value of a share. I gather that some syndicates can set the sale price of a share but surely in most instances the buyer and seller must agree a price? And a bigger pot must make the share more attractive and increase its worth?
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By Rob L
#1872724
VRB_20kt wrote:
Rob L wrote:Money paid into a fund (commonly called an "engine fund" or "maintenance fund") belongs to the aircraft, not the group. So a shareholder has no recourse to that money upon sale of share.


I agree that a shareholder shouldn't take away "his share" of the pot when he leaves, but it's certainly a discussion point when it comes to the value of a share. I gather that some syndicates can set the sale price of a share but surely in most instances the buyer and seller must agree a price? And a bigger pot must make the share more attractive and increase its worth?


In the agreements of all the groups of which I have been part, the potential sale of a share goes to the remaining group members first of all; not an outsider.

The group has always bought back the share from the departing member, and then found a new group member without the departing member being involved.

Much better that way.
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By Paul_Sengupta
FLYER Club Member  FLYER Club Member
#1872737
VRB_20kt wrote:And a bigger pot must make the share more attractive and increase its worth?


The pot should grow with usage, so the share should be worth the same whether the engine's just been overhauled or just about to be overhauled or anywhere in between. Assuming the maintenance fund is built correctly from the usage fees that is.

A £30k pot will certainly make an aeroplane with 2000 hours on the engine be worth more than if the pot wasn't there. But with nothing in the pot just after a large annual with engine overhaul (and/or paint, fabric, interior etc, etc), the share should be worth the same as the £30k pot (say) with annual and overhaul due situation.
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By Maxthelion
#1872753
Paul has it exactly right.

In addition, shares are worth what people are willing to pay for them. It's seldom the case that a 1/10 share in a £100k aeroplane that has a £10k kitty is worth £11k. It could be worth more or less depending on many other factors that make the share more or less desirable. For instance, as fuel prices have increased and Vans RVs have become more desireable, a Yak 52 share has probably depreciated whilst an RV share has appreciated considerably.

Regarding members selling shares, because that asset belongs to the member, we allow (indeed we don't think the group has the right to dictate the value of each others' assets) the member to set their own price and they can sell their share on the open market to whoever they like. However, the group has to approve their proposed replacement.
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By Chris Royle
#1872759
" However, the group has to approve their proposed replacement."
Straightforward to specify piloting experience etc, but hat personality criteria do people use......? And how would you measure acceptability? I don't have the answer(s). Just interested to know how people go about selection. As has probably been said, it only takes one group member to upset the apple cart......