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Private Jet Insider

This is the second edition of Private Jet Insider. In today's deep dive, we'll look at the PC-12 shared ownership program offered by Cutter Aviation in Phoenix, AZ. We'll talk the good and bad, and what to look out for. If you love the PC-12 like I think you will love this issue.

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Solid Shared Ownership PC-12 out of Deer Valley, Arizona

If you've been following me for any period of time, you'll know that I love the PC-12. Its the suburban of the skies, and is an incredibly efficient airplane. You can't even put a deposit down right now on a new PC-12 NGX, thats how popular they are. The backlog is very strong on these. Textron wants to compete with the Denali. We'll see.

About the Manager: Cutter Aviation

Cutter Aviation (established in 1928!) is a strong name in private aviation, especially in the Southwest, with multiple FBO's (Fixed Base Operator), MRO (Maintenance and Repair Operation), charter, management, and aircraft sales.

They're a dealer for Pilatus and Piper, and have been a staple for many in the Southwest. Will Cutter is the President and CEO, and his son Will D. Cutter is the regional manager of Texas in Georgetown.

How the program works (and how much it costs)

So completely different to how Volato works (worked?) or NetJets or Flexjet, with a "floating fleet" of airplanes, you don't necessarily fly on the airplane you own.

In this program you only get access to the airplane that you own a share of.

Also different is you are buying 1/6th as opposed to 1/8th (Jet It) or 1/16th (Volato). This means you're only sharing with up-to 5 other owners.

You also don't have guaranteed access (first come, first serve) and you do have to pay repositioning fees back to the home base.

For the purpose of pricing, consider all of these prices to represent 1/6th of the airplane and it would scale relatively proportionately if you buy more than 1/6th.

Program Details: 50 Days Per Year

Each 1/6th share buys access to 50 days per year of flying, and for the most part you can fly as much as you want during those 50 days assuming you don't over extend the pilot.

This is great for 10 vacations (20 days of flying), 10 week-long business trips (20 days of flying) and 10 day-trips for meetings. The PC-12 is a workhorse, giving you Phoenix-Dallas in 2.5 hours, Phoenix-San Francisco in 2 hours, or Phoenix-Portland, OR in 3 hours.

Buy-in Price: $1,076,500

This is a brand new, 2024 Pilatus PC-12 NGX. Even if you multiplied that by 6 at $6.459m its a great deal on a brand new PC-12. Pricing guidance I've seen on a few 2020 PC-12's have been in the mid 6's and those aren't brand new airplanes with BMW interior.

Plus, you own the 1/6th of the asset. *Disclaimer* I'll also tell you things to look out for, so understanding how the contract works and if Cutter can buy back the 1/6th at a set price after a period of time would want to be known. If there's not a guaranteed buyback, I don't see this airplane taking all that much real depreciation, which means you can likely sell your interest in 5-7 years and not get hosed on it. PC-12's hold their value pretty well over time.

People ask if you can finance shared ownership. The answer honestly is, it depends. We would need to structure it in a way that the shared interest has the first right of refusal and that might mean your terms won't be as sweetheart as if you owned the whole airplane. But you have 1/6th the fixed costs, so it might be worth it.

Professional Management (Fixed Costs) - $4,786 per month

Professional management is a hot topic for most aircraft owners. Depending on the size of the airplane, some would argue you don't need a true "management company" especially for something like a PC-12. Hiring a pilot to manage your airplane on the side should suffice, right?

If you have any level of complexity or don't want to ever have to deal with a maintenance log, you should consider hiring a management company. I've seen ranges from $1,000 a month to $12,000 a month+ for management, and you can even get a-la-carte for management. One day, we'll do a deep dive into management but in this program, you get professional management.

The key to this management price is to understand what all it includes:

• Pilot salary and training for a single-pilot operated airplane
• Storage
• Professional Management
  • Regulatory and maintenance tracking
  • Aircraft charts and database
  • Wash and Detail
• Insurance

All-in-all, probably on the steeper side for management but when you consider that almost half is a pilot salary, and the other large chunk is insurance, its not that bad. These are all estimated costs, I would want to understand what the pro-rata was in the event something went over or what the t's and c's are.

Hourly Cost- $748 per hour

Alright, this is where its great. You're sharing 1/6th of an airplane and 1/6th of the monthly fixed cost and then flying at direct operating cost. HOWEVER. What I want to know is, when does the warranty run out? Are we not paying engine programs?

According to google, the warranty on a PC-12 engine is 5 years or 2,500 flight hours, whichever comes first. I would consider buying this fractional and paying the direct operating cost for $748 per hour for 5 years and then swapping up.

Now that takes us to the annual numbers, and yes I've run scenarios for you!

Flying 2.5 Hours From Home

I ran some numbers via a spreadsheet calculator to estimate the annual burn, and an estimated 30% reduction in share value after 5 years (which I think is really conservative). I've estimated the following all-in hourly cost for a 5 year hold, 30% depreciation in share value, 2.5 hour average occupied trip, and 1/6th share.

• $244,432 annual cash budget (40 days of 1-way travel, 10 days of 2-way travel)
• Pre-depreciation hourly cost of $1,630 per hour
• Post-depreciation hourly cost of $2,060 per hour

None of these numbers consider any sort of tax benefits that comes with depreciation of a fraction of an aircraft or the hourly cost. If you need a kick-ass accountant (who happens to also be in Phoenix), I am happy to make an introduction. And, if you want an introduction to Cutter and the guy who runs this, let me know. I think this is a killer deal, and one that I would strongly consider.

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Until next week,

Preston Holland

If you made it this far, you should share with a friend. Reply to this email and tell me you shared it with a friend, and I will give you a free 30 minute consulting call (normally a $50 call) on anything private aviation.

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