Aircraft partnership agreement: what to put in it, and how to split the costs

An aircraft partnership agreement is the contract between the co-owners of one aircraft: who owns which share, who may fly it and how it is booked, who pays which cost, and what happens when an owner wants out, stops paying or dies. This guide walks through what goes in it, using the checklist AOPA publishes for exactly this purpose, and works out the money part with the same cost model as our aircraft ownership cost calculator.

Short answer: AOPA's Co-Ownership Agreement Checklist lists 21 matters, from the identity of the parties and the aircraft to arbitration and the governing law. They fall into four groups: who owns what, flying the aircraft, money, and leaving and disputes. For the money, AOPA's own sample agreement splits the fixed costs as an equal monthly share and charges every owner an hourly fee for their own flying; done the same way — a monthly share for the fixed costs, an hourly rate for the flying — four owners of a Cessna 172S flying 200 hours a year pay €146 a month each plus €168 per flight hour at European prices. AOPA's advice is to agree the ground rules among yourselves and have an attorney draft the agreement, not to fill in a template.

What a co-ownership agreement covers: AOPA's 21 points in four groups

appsoftware can carry it out day to day

Who owns what

Who the owners are, how they hold the aircraft and how each share is paid for

• 1.Identity of the Parties and Aircraft
• 2.Title to the Aircraft
• 3.Financing

Flying the aircraft

Who may fly it, from where, under which insurance, and who does which job

• 4.Insurance
• 5.Basing
• 6.Authorized Pilotsapp
• 7.Aircraft Schedulingapp
• 12.Federal Aviation Regulations (FARs)
• 13.Co-owners Responsibilities

Money

Who pays which cost, on what basis, and what happens when someone pays late

• 8.Fixed Expensesapp
• 9.Operating Expensesapp
• 10.Overhaul Fundapp
• 11.Aircraft Improvements
• 14.Timely Paymentsapp

Leaving and disputes

How a share is sold or taken back, what happens on a death, and how a dispute ends

• 15.Life Insurance
• 16.Sale of Aircraft
• 17.Voluntary Sale of Co-Owner's Interest
• 18.Forced Sale of a Co-Owner's Interest
• 19.Death of a Co-Owner
• 20.Arbitration
• 21.State Law

Is there a template?

AOPA publishes a sample co-ownership agreement, drafted by a co-owner and used in his own partnership — and it says plainly what not to do with it: "We urge you not to copy this agreement and "fill in the blanks."" Its recommended route is to "draw up a list of "ground rules" for each co-owner to abide by" and then take that list "to an attorney who can draft a co-ownership agreement that will bind all the co-owners."

The checklist below is that list of ground rules. Read it as the questions your group has to answer before anyone drafts anything. AOPA writes for the United States, which is why the last point is about state law; outside the US the questions are the same, but the law that governs the agreement is your country's. Nothing in this guide is legal advice.

Who owns what

Three of AOPA's points settle the ownership itself:

• Identity of the Parties and Aircraft — the full name and address of each co-owner, the date of the agreement, and the aircraft's make, model, registration and serial number.
• Title to the Aircraft — how the owners hold it: AOPA names "joint tenancy, tenancy in common, or other arrangements".
• Financing — in many cases each owner finances their own share; if not, the agreement spells out how the purchase is financed.

The buy-in belongs here too: how many shares there are and what each owner pays in at the start. AOPA's sample starts each owner with a capital contribution that opens their capital account, and on a sale the proceeds are settled against those capital accounts.

Flying the aircraft

Six points decide how the aircraft is used day to day:

• Insurance — the type and amount of liability cover, hull cover, deductibles and "in-motion" or "not-in-motion" cover, and who pays a deductible after an accident. AOPA adds that all operations must stay within the policy, for instance by "allowing no commercial operations and limiting aircraft use to pilots with certain ratings or minimum hours."
• Basing — where the aircraft lives, and possibly how many days it may be away from home base without the others' permission.
• Authorized Pilots — AOPA: "You should decide who you want flying your aircraft. After you've decided, put your restrictions in the agreement."
• Aircraft Scheduling — depending on how much the aircraft flies, AOPA calls for a "flexible, but carefully spelled out set of guidelines". Examples of what to settle: how far ahead an owner may book, how long a booking may run, how weekends and holidays are shared and when an unused booking is released.
• Federal Aviation Regulations (FARs) — that every flight follows the rules, and who pays if the FAA fines the co-owners as the "operator" of the aircraft rather than the pilot who flew.
• Co-owners Responsibilities — who does which job; AOPA's examples are bookkeeping, scheduling and maintenance.

A booking rule is only worth what the booking system enforces. If two owners can book the same Saturday, the agreement's scheduling clause becomes a negotiation every week; see aircraft partnership software for how the tools differ.

Money: who pays what

Five points cover the money, and they are where a partnership either runs quietly or does not:

• Fixed Expenses — insurance, tie-down or hangar fees and annuals. AOPA's question: "Will these expenses be paid based on equal shares by all co-owners or adjusted based on hours flown?"
• Operating Expenses — "fuel, oil, and maintenance which generally increase with aircraft use", borne "equally or in proportion to hours flown".
• Overhaul Fund — whether to save for the engine overhaul, how much and how often, and whether an owner who sells gets part of it back.
• Aircraft Improvements — whether all owners must agree before new equipment goes in, and who pays.
• Timely Payments — AOPA: "Set deadlines for payment and penalties for delinquencies." If an owner falls far enough behind, the agreement can trigger a forced sale of their share.

AOPA's own sample shows one set of answers. Its fixed costs come out of a fund "replenished monthly and equally by all co-owners"; each owner pays an hourly fee "for each hour of _____ Meter time" that "does not include the cost of fuel", which each owner buys as they fly; the overhaul fund is a fixed monthly contribution, not refundable to an owner who sells; and an owner more than thirty days behind loses flight privileges, with a further sixty days as grounds for involuntary dissolution.

Equal shares or by hours flown?

The choice matters most when the owners fly very different hours. Take one Cessna 172S that four owners fly 200 hours a year between them — 20, 40, 60 and 80 hours each. The calculator puts its fixed costs at €7,010 a year at European prices and its hourly cost at €168 (fuel, oil, the 50- and 100-hour inspections, and an engine reserve of €15 an hour, because at 200 hours a year the engine reaches its hour limit before its calendar limit). The hourly cost of their own hours is the same for everyone either way; only the €7,010 is shared differently.

One owner's year: fixed costs shared equally, or by hours flown

• Equal shares — €1,753 of fixed costs each
• By hours flown — fixed costs in proportion to each owner’s hours

Owner flies	Equal shares and by hours flown, European prices	Equal shares / by hours flown, US prices
20 h	€5,113 €4,061	US: $4,678 / $3,323
40 h	€8,473 €8,122	US: $7,098 / $6,646
60 h	€11,833 €12,183	US: $9,518 / $9,969
80 h	€15,193 €16,244	US: $11,938 / $13,292

With equal shares each owner pays €1,753 a year of fixed costs, €146 a month: the owner who flies 20 hours pays €5,113 for the year and the one who flies 80 hours €15,193. Split by hours flown, the 20-hour owner pays €4,061 and the 80-hour owner €16,244. At US prices ($9,030 fixed and $121 an hour) the 20-hour owner pays $4,678 with equal shares and $3,323 by hours.

Equal shares follow the logic of ownership: each owner has the aircraft available whether they fly it or not, and the hangar costs the same. A split by hours suits a group where one owner flies far more than the others. Splitting the fixed costs by hours flown is in practice the same as adding them to the hourly rate — €35 an hour on top of €168, €203 in all — and that is its weak spot: the rate is set for the hours you plan. If the aircraft flies 150 hours instead of 200, €35 an hour collects €5,250 towards €7,010 of fixed costs, and the group is €1,760 short at the end of the year — before the engine reserve, which falls short in the same way. A monthly share does not depend on the weather.

AOPA's sample takes the same shape: a fixed monthly share for the fixed costs, and an hourly fee per meter hour — although its hourly fee leaves out fuel, and it saves for the overhaul monthly where this model charges it per hour. Whether fuel is in the hourly rate is the wet or dry rate question; the hours-versus-calendar logic of the engine reserve is explained in how much it costs to own a plane.

Leaving, selling and disputes

The last seven points are the ones nobody wants to discuss when the partnership starts, and the ones that decide whether it ends well:

• Life Insurance — policies naming the other owners as beneficiaries, so they can buy out a deceased owner's share.
• Sale of Aircraft — how the money is divided when all owners decide to sell.
• Voluntary Sale of Co-Owner's Interest — AOPA says this "may be one of the most important considerations in drafting your agreement": how a share is valued, how the others are told, whether they get the first chance to buy it, and whether an owner may sell to an outsider.
• Forced Sale of a Co-Owner's Interest — which defaults trigger a forced sale, how the expelled owner's share is valued and how amounts owed are settled.
• Death of a Co-Owner — AOPA notes that "in most cases, the deceased co-owner's family is the new co-owner of the aircraft", and suggests applying the voluntary-sale rules.
• Arbitration — whether disputes go to arbitration "in lieu of litigation, which can be more costly and time-consuming".
• State Law — which law governs the agreement.

What software can run, and what stays on paper

Six of the 21 points are decisions that partnership software can carry out every day once the agreement has made them. In Pilot-Next, only pilots an administrator has added can book; confirmed bookings cannot overlap, and the group can cap how long a booking may run, how many open bookings an owner may hold and how many days ahead an owner may book (owners with administrator rights are not held to these limits). The fixed share becomes a recurring fee — monthly, quarterly or yearly, with an own amount per owner where shares differ — and the hourly costs a rate per Hobbs or Tacho hour, with the engine reserve as a second hourly rate on its own invoice line. Fees and settled flights are invoiced to the owner's account balance (a flight settled as a service flight is not), and the group can refuse new bookings below a minimum balance. The app collects the money and enforces these rules; it does not keep a separate overhaul fund, refund a selling owner's contributions or charge late-payment penalties — those stay in the agreement.

The other fifteen — title, insurance, improvements, selling a share, a death, arbitration — are agreement matters and stay that way. The aircraft partnership software guide puts each clause next to what the software does with it, and compares how the partnership tools on the market split the costs.

Before you sign, put your own aircraft and hours into the calculator: it shows the fixed share and the hourly rate for any number of owners, so the money clauses of your agreement start from numbers instead of guesses.