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As light aircraft are relatively expensive to buy, yet enjoy much lower utilisation than cars, it makes sense to spread the cost of purchase and ownership around a like-minded group of people. FLYER asked solicitor and qualified commercial pilot Ian Gee of Jobling & Knape, an expert on the subject, to give a rapid run through the basic requirements and considerations:

‘The basic rule for group ownership is that no member of the group can be a limited company and each member must hold not less than a five percent share. One important decision for the group is whether to operate as a limited company itself, in which case the number of shares and the procedure for voting decisions must be established.

Whether the group operates as a limited company or not, there is still a long checklist of questions to be completed. First, the fundamentals; at which airport the aircraft is to be based? What will be the minimum requirements for prior flying experience of members and currency? What level of insurance is required (e.g. amount of cover, excess and geographical area to be covered)?

When you have purchased the aircraft you may have to buy additional equipment and you will certainly have to pay for maintenance – so you will have to decide on the amount of authority for capital expenditure, authorisation for repair.

To make sure everybody has their fair share of flying time, you will need to establish a booking system that allows separation between bookings and sets maximum periods – and if a member has not turned up by a certain time/notified delay, the presumption is that the booking is cancelled. The rates for flying charges will have to take into account much more than the simple, direct costs – especially if it is intended to build up reserves for spares and, ultimately, an engine change. You will also have to decide on delegation of responsibilities for bookings, financial dealings, cheque signing, arranging engineering, etc.

In time, group members will, for a variety of reasons, move on. So how will you sell shares – do the other members have first right to buy, and is there to be a minimum price? You hope it won't happen to your group, but you should allow for default by a member, suspending flying if payments are overdue and setting up a mechanism whereby a share can be compulsorily sold.

Equally, you need a procedure for resolving disputes and ending the agreement/sale of the aircraft.'

Some owner groups work on a remarkably informal basis, but others have run into damaging and terminal disputes that might have been avoided through better planning and the drawing up of a formal agreement.

Contact Jobling & Knape with your Group Ownership question:

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