An aircraft leaseback is an arrangement where you buy and keep title to an airplane, a flight school or rental operation puts it on its line, and you are paid for the hours it flies. It is the most common way private owners defray the fixed cost of an airplane, and it is also the arrangement people most often enter with the wrong expectations, because a leaseback is a small business, not a passive investment.
This page explains how the model works in general terms, what each side normally pays for, what the regulations require once an aircraft is used for instruction for hire, and what to establish before you sign anything. Our specific leaseback terms are individually negotiated and are not published here — book a free consultation or call (818) 330-1318 and we will talk through your aircraft and your numbers. For what renting looks like from the other side of the counter, see aircraft rental at Van Nuys.
The Basic Shape Of A Leaseback
You own the airplane. A school leases it from you and operates it for training and rental. The school schedules it, dispatches it, markets it, collects from renters and students, and pays you an agreed amount for each revenue hour flown. You retain title, you continue to fly it yourself subject to whatever priority the agreement gives you, and you remain the registered owner on the FAA registry.
Two structures dominate, and the difference between them is who buys the fuel and who carries the maintenance risk.
In a wet leaseback, the school's hourly rate to customers includes fuel, and the owner receives a rate per flight hour with fuel already accounted for. This is the common structure for training fleets, because it keeps the customer-facing price simple. In a dry leaseback, fuel is handled separately and the owner's payment reflects that.
Payment is almost always per revenue hour — hours the airplane is rented or instructed in — measured on a Hobbs or tach basis defined in the agreement. Which clock is used matters more than people expect, because tach time on a trainer running at partial power in the pattern accumulates more slowly than Hobbs time. Establish which one the agreement uses before you model anything.
Who Pays For What
Every agreement divides these differently, and the division is the deal. The table below is the typical split, not ours and not a promise; use it as the checklist for the conversation.
| Item | Usually The Owner | Usually The Operator |
|---|---|---|
| Purchase price and financing | Yes | No |
| Hull and liability insurance | Usually the owner, with the operator named | Sometimes shared |
| Hangar or tiedown | Often the owner | Sometimes provided |
| Fuel and oil | No, in a wet arrangement | Yes, in a wet arrangement |
| Scheduled inspections, including 100-hour | Usually the owner | Sometimes billed through at cost |
| Unscheduled maintenance and squawks | Usually the owner | Coordinates the work |
| Engine and propeller overhaul reserve | Owner | No |
| Avionics databases and subscriptions | Negotiable | Negotiable |
| Scheduling, dispatch and marketing | No | Yes |
| Cleaning and routine servicing | No | Usually |
| Property and use taxes | Owner | No |
The Regulation That Changes The Economics: 100-Hour Inspections
This is the single most important fact on the page, and it is the one prospective owners most often discover after signing.
Under 14 CFR 91.409(a), any aircraft must have had an annual inspection within the preceding 12 calendar months. Under 14 CFR 91.409(b), no person may operate an aircraft carrying any person other than a crewmember for hire, or give flight instruction for hire in an aircraft they provide, unless within the preceding 100 hours of service that aircraft has received an annual or 100-hour inspection. The 100-hour limit may be exceeded by not more than 10 hours only while en route to a place where the inspection can be done, and any excess used that way must be included in computing the next 100 hours.
In plain terms: the moment your airplane is used for instruction for hire, it goes from one inspection a year to an inspection every 100 hours. An airplane flying 400 hours a year on a training line therefore sees roughly four inspections rather than one. That is a real recurring cost and it belongs in your model from the first line.
14 CFR 91.403(a) is the other half of it: the owner or operator of an aircraft is primarily responsible for maintaining that aircraft in an airworthy condition, including compliance with Part 39 airworthiness directives. A leaseback agreement can allocate who arranges and pays for work, but it does not move that regulatory responsibility off the owner in the way some people assume. Read your agreement with that in mind.
What Training Use Does To An Airframe
Training hours are not touring hours. A trainer on a busy line at Van Nuys accumulates landings at a rate a private owner never would, and landings are what wear out tires, brakes, nose gear components and the airframe structure around them. Pattern work means repeated power cycles, which is harder on an engine than long cruise legs. The airplane will also be flown by people who are, by definition, learning.
Against that: an aircraft that flies regularly suffers far less from corrosion, seal drying and the general decay that kills airplanes sitting in a hangar eleven months a year. High utilization is genuinely good for an airframe. It is the type of utilization that carries the cost.
Budget an engine and propeller reserve per flight hour from day one, put it in a separate account, and treat it as a real cost rather than profit. Owners who skip this step have a very unpleasant conversation with themselves at overhaul.
Insurance And Operational Control
Two things to get right before anything flies.
The policy has to permit the use. A standard pleasure-and-business owner policy does not cover commercial rental and instruction. You need a policy written for that use, usually with the operating school named, and with open-pilot warranties or an approved pilot list that matches who will actually fly it. Ask your broker specifically about student pilots and about instructional use for hire.
The agreement has to be clear about operational control. Who decides whether a flight goes? Who decides when the airplane is grounded for a squawk? Who has final say on maintenance vendors? Who can refuse a renter? Ambiguity here is what turns a reasonable business relationship into a dispute.
Also settle the mundane things in writing: your own access to the airplane and how far ahead you may block it, minimum guaranteed hours if any, notice periods on both sides, what happens if the airplane is damaged, who holds the keys and the logbooks, and how you get paid and how often.
Tax: Get Real Advice, Not Internet Advice
Leaseback is frequently sold on its tax treatment, and this is the area where we are least qualified to help and most inclined to tell you so. Depreciation, expense deductions, passive activity rules, material participation, California sales and use tax on the purchase and on lease payments, and personal property tax all apply, and the answers depend on your own circumstances and how the arrangement is structured.
Use a CPA who has done aircraft leasebacks before, and an aviation attorney for the agreement. The cost of both together is small next to the cost of getting the structure wrong, and no flight school should be giving you tax advice.
Is A Leaseback A Good Idea?
It is a good idea for a specific person: someone who wants to own a particular airplane, will fly it themselves regularly, can carry the fixed costs without the revenue, and wants the revenue to reduce the bill rather than eliminate it. For that person the arithmetic often works, and there is real value in someone else handling scheduling, cleaning and dispatch.
It is a bad idea for someone buying an airplane purely as an income-producing asset, or for someone who will be upset when a student lands it firmly. Set your expectation at cost offset, not profit, and you will be a happy owner.
The types that earn their keep on a training line are the ones a school actually needs: IFR-equipped four-seat singles, well-equipped trainers with glass panels, complex singles that satisfy the 10-hour requirement in 14 CFR 61.129(a)(3)(ii), and light twins for multi-engine training. A beautifully restored airplane with a small fleet population and scarce parts is usually a poor fit, however much you love it.
Talking To Us About A Leaseback
We operate a fleet of 20 airplanes at Van Nuys, from Cessna 162 Skycatchers through Piper Warriors, Diamond DA20s, a Piper Arrow, a Piper Seminole and a Cirrus SR22 Turbo, plus a Redbird MCX full-motion simulator. What that means for you is that we know what our line needs and what it does not.
Our leaseback terms — hourly rate to the owner, minimum hours, insurance requirements, maintenance allocation and notice periods — are agreed case by case and we do not publish them, because a number that ignores your airframe, its equipment and its condition would be meaningless. Bring the aircraft details, the logbooks summary and what you are trying to achieve, and we will give you a straight answer including "this airplane is not right for our line" if that is the answer.
Related Reading
- Aircraft rental at Van Nuys — how renting works and what checkouts involve.
- The airplanes you'll fly — the fleet a leaseback aircraft would join.
- Cirrus owner services — insurance checkouts, recurrent training and ferry flying for owners.
- Aircraft checkout requirements for renters — who would be flying your airplane.
- Flight school rates at Van Nuys — every published price on one page.
- Flying out of Van Nuys Airport — the field, the runways and the airspace.
Aircraft Leaseback FAQ
What Is An Aircraft Leaseback?
An arrangement where an owner keeps title to an airplane and leases it to a flight school or rental operation, which schedules, dispatches and markets it and pays the owner for revenue hours flown. The owner normally retains insurance, maintenance and overhaul responsibility.
Does A Leaseback Pay For The Airplane?
Rarely. The realistic expectation is that leaseback revenue offsets a meaningful share of the fixed costs of ownership, not that it produces net profit. Owners who set out expecting an income-producing asset are usually disappointed.
Does My Airplane Need 100-Hour Inspections On A Leaseback?
Yes, once it is used to give flight instruction for hire or to carry persons for hire. 14 CFR 91.409(b) requires an annual or 100-hour inspection within the preceding 100 hours of service for those operations, and the limit may only be exceeded by up to 10 hours while flying to the inspection.
Who Is Responsible For Airworthiness?
14 CFR 91.403(a) makes the owner or operator primarily responsible for maintaining the aircraft in an airworthy condition, including compliance with Part 39 airworthiness directives. A leaseback agreement allocates who arranges and pays for work, but read it carefully rather than assuming responsibility transfers.
What Insurance Do I Need For A Leaseback?
A policy written for commercial rental and flight instruction use, not a standard pleasure-and-business owner policy, usually naming the operating school and with pilot warranties that match who will actually fly the aircraft. Speak to an aviation broker before you sign a lease.
Can I Still Fly My Own Airplane?
Yes. Owner access is a negotiated term: how far ahead you may block the aircraft, how many days a month, and what priority you have over paying customers. Get it in writing rather than relying on goodwill.
What Are Your Leaseback Terms?
They are agreed case by case depending on the aircraft, its equipment and its condition, and we do not publish a standard rate. Call (818) 330-1318 or book a free consultation with the aircraft details and we will give you a direct answer.
What Kind Of Aircraft Do You Want On The Line?
Aircraft our students and renters actually need: IFR-equipped four-seat singles, well-equipped trainers, complex singles that satisfy the 10 hours required by 14 CFR 61.129(a)(3)(ii), and light twins. Rare types with scarce parts are usually a poor fit for a training line.
Talk To Us Before You Buy
The best time to have this conversation is before you commit to an airframe, because what a training line needs is not always what a broker is selling. Book a free consultation or call (818) 330-1318 and bring the aircraft details, the logbook summary and your numbers. We are at 7900 Balboa Blvd, Van Nuys, CA 91406, on Van Nuys Airport, open 9:00 AM to 9:00 PM, seven days. If you are not an owner yet and want to start at the beginning, a discovery flight is $229 for 60 minutes.