If you've spent any time researching aircraft ownership, you've almost certainly come across the idea of a leaseback. The pitch sounds appealing: buy an airplane, lease it to a flight school, and let the rental revenue offset your ownership costs. In theory, someone else is paying for your airplane while you still get to fly it.
But if you dig into online forums, you'll find a very different picture. The responses range from cautious optimism to outright hostility. Comments like "don't do it," "you'll never make money," and "flight schools will sell you a dream" are everywhere.
So who's right? It depends entirely on the numbers. And the problem is that most people considering a leaseback have never actually run the numbers properly. This article gives you the real financial framework — not a sales pitch, not a scare piece.
A leaseback is a business arrangement where you, the aircraft owner, lease your airplane to a flight school, flying club, or FBO. The operator puts your aircraft on their rental line, and in exchange, you receive a share of the rental revenue.
In a dry lease, the renter pays for their own fuel. In a wet lease, you pay for fuel out of revenue. Most GA piston leasebacks are dry leases.
"If you're doing it thinking you'll make money, you won't. It's just to offset costs." — Typical forum response
This advice isn't wrong, but it's not useful either. It doesn't tell you how much a leaseback will offset your costs. It doesn't tell you what utilization rate you need to break even, or how the operator's cut and wet vs. dry structure changes the math. Flight school operators, on the other hand, tend to be overly optimistic — showing you best-case projections with high utilization and no downtime.
What you need is a framework that lets you model your specific situation with realistic variables.
These hit regardless of whether the airplane flies. For a modern Cessna 172 with financing, total fixed costs (including debt service) can run $35,000–$45,000/year. For a Cirrus SR22, you're looking at $55,000–$85,000+.
On a $185/hr C172 with a 20% operator fee, your net revenue is $148/hr. On a $450/hr SR22 with the same cut, it's $360/hr. This difference is enormous and has to be modeled specifically to your aircraft and deal.
In a dry lease, your hourly variable costs are primarily engine, prop, and airframe reserves. These depend heavily on where the engine is in its life cycle. A freshly overhauled engine on a C172 might reserve at $17.50/hr. An engine with 500 hours to TBO could reserve at $45+/hr. This single variable can swing a leaseback from viable to deeply negative.
This is the single most important variable — and the one most likely to differ from operator projections. The difference between 300 projected hours and 210 actual hours can mean a $15,000+ swing in annual cash flow. Always stress-test at lower utilization before signing.
When you fly your own aircraft, you pay full variable costs out of pocket — no revenue generated. These hours come after the leaseback P&L. If you fly 75–100 hours personally, that's a meaningful additional cost the leaseback revenue needs to help offset.
A leaseback creates a legitimate business use case, opening the door to bonus depreciation, Section 179 expensing, and deductible operating expenses. For owners in higher tax brackets, Year 1 tax savings can be substantial. But IRS material participation rules are complex — always consult an aviation CPA.
| Parameter | Value |
|---|---|
| Purchase Price | $350,000 |
| Financing | 20% down, 20 yrs @ 7.5% |
| Annual Debt Service | $26,880 |
| Insurance (w/ commercial surcharge) | $6,875/yr |
| Hangar | $6,000/yr |
| Annual Inspection | $3,500/yr |
| Gross Rental Rate | $185/hr (Dry) |
| Operator Cut | 20% |
| Target Leaseback Hours | 300 hrs/yr |
Best case (300 hours): Net revenue after operator cut = $44,400. After leaseback variable costs ($7,425), contribution margin is $36,975. Against $44,455 in fixed costs, net operating income = −$7,480. After 50 personal hours, final net = −$11,468/year.
That might sound bad — but without the leaseback, the same owner pays $48,400/year. The leaseback reduced effective cost per hour from $968 to roughly $229. It's a cost-reduction tool, not an income source.
Reality check at 70% utilization (210 hrs): Final net cash flow jumps to −$22,560/year. The swing from 300 to 210 hours costs $11,000. This is why stress-testing utilization is non-negotiable.
The Owner Intelligence Suite was built specifically for this analysis. Load your aircraft preset, enter your actual deal parameters — purchase price, engine hours, rental rate, operator cut, wet or dry — and stress-test against realistic utilization scenarios in real time.
Is a leaseback worth it? For many owners, yes — as a cost-reduction strategy, not an income strategy. The owners who succeed go in with accurate financial expectations, choose the right aircraft and operator, and model the numbers before they sign. The ones who get burned trust someone else's projection without doing their own analysis.
Don't be the second type. Run the numbers. Stress-test the assumptions. Make your decision based on data.
Blue Skies,
Ethan Narber · CFI, Narber Aviation