Fixed and variable, and why the line matters
Fixed costs arrive whether the aircraft moves or not: hangar or tie-down, insurance, the annual inspection, registration, database subscriptions, and any loan payment. Variable costs accrue per hour flown: fuel, oil, engine and prop reserve, consumables.
The distinction is the backbone of partnership billing. Variable costs follow the hours — the pilot who flies more pays more, and nobody argues. Fixed costs are the contested ones, because they exist regardless of use and someone has to carry them.
The three models
Equal shares. Total fixed cost divided by number of partners. On $650 a month between three, that is $216.67 each.
Simple, and correct when ownership is equal and access is equal. Its logic is that everyone is buying the same thing: the right to have an aeroplane available.
Share-weighted. Fixed costs split in proportion to ownership percentage. In a 40/30/30 group on $650, that is $260 / $195 / $195.
Correct whenever ownership is unequal, which is more common than people expect — one partner puts in more capital, or an original owner sells fractions to two others. The partner holding 40% owns 40% of the asset and takes 40% of any appreciation; they should carry 40% of the cost of keeping it.
Usage-weighted. Fixed costs allocated by hours flown.
Almost always a mistake. It sounds fair and it destroys partnerships. Fixed costs are the cost of availability, and a partner who flew twice last year still had the aircraft available fifty-two weekends. Charge fixed costs by usage and the low-hour partner's per-hour cost becomes absurd, they fly even less to avoid it, and the spiral ends with them leaving. Meanwhile the high-hour partner's costs balloon and they start asking why they are subsidising the hangar.
Choose by ownership, not by activity
The reliable rule: fixed costs follow ownership, variable costs follow use.
Equal ownership, equal fixed shares. Unequal ownership, share-weighted fixed shares. Then let the hourly rate do the work of charging people for what they actually fly. This is transparent, defensible, and it never produces the conversation that begins "I've been thinking about whether this is still worth it for me."
Getting the number right
Most groups underestimate fixed costs because they only count what gets paid monthly. Build the real figure annually, then divide:
- Hangar or tie-down — the big one, $150 to $600+ a month depending on where you are
- Insurance — hull and liability, $1,200 to $4,000+ a year for a piston single, more with low-time pilots on the policy
- Annual inspection — budget the average of the last three, not the cheapest
- State registration and property tax, where applicable
- Database and subscription costs — ForeFlight, navigation data, ADS-B services
- Loan payment, if the aircraft is financed
- Accounting, or the software that replaces it
Add them, divide by twelve, and that is the monthly dues figure before any allowance for the unexpected. Many groups add 10% as a buffer, which is sensible — it stops every unscheduled squawk becoming a fresh conversation about money.
What about the annual inspection?
Two defensible treatments. Accrue for it monthly as part of fixed dues, so the money is there in February — this is the better approach and the one that avoids a large bill landing on whoever happens to be current. Or bill it when it happens, split by ownership share, which is simpler but leaves the group exposed to a partner joining just before or leaving just after.
If you accrue, the accrual should be visible in the same way the engine reserve is, or it is indistinguishable from the operating balance and will get spent.
Non-flying partners
Partnerships often end up with someone who has stopped flying — a medical issue, a house move, a new baby — but has not sold their share. They still own the asset. They still owe fixed costs.
This is uncomfortable and it is correct, and it needs to be in the agreement before it happens rather than negotiated while someone is dealing with a medical certificate problem. What can reasonably be offered: a defined leave-of-absence period at reduced dues, or a first-refusal process to sell their share to the other partners. What should not be offered is an open-ended waiver, because the costs do not pause and the remaining partners end up carrying them indefinitely.
Review it annually
Insurance renews, hangar rents rise, the annual gets more expensive as the aircraft ages. A dues figure set three years ago is almost certainly too low, and the gap is being funded from somewhere — usually the reserve. Recalculate every year on a fixed date, and tell partners the new figure a month before it takes effect.