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Whenever pilots get together for a little hangar flying, the conversation is likely to turn to ownership. Each pilot has his or her dream. One may talk of the ideal King Air, fully IFR equipped with a couch, bar, and separate restroom in the cabin. Another might talk about flying sophisticated, high-performance singles. But eventually the conversation drifts back to earth and to more affordable aircraft. Most pilots have to admit they probably can't even afford one of those, at least not alone. But, with a partner or two....
Most flying clubs get their start this way. Two or three pilots join forces, obtain an aircraft, and presto—instant flying club. But the idea of starting a club may raise more questions than it answers. Who will form the club? How many members should it have? How many members will it need? Should it be a co-ownership, a corporation, or should it take some other form? What type of aircraft should be flown? Should the aircraft be purchased, rented or leased? Should there be regular meetings? What about dues and fees? The answers to these and other questions will shape the club.
The backbone of every successful flying club is a roster of involved members. An enthusiastic group of pilots increases a club's chances of success and makes the whole experience more enjoyable. But how does a club get good members?
There is no single best method for selecting members, but it's always a good idea to run both a credit and character check on each prospect. Some potential members may be upset by this, but it's better and easier to weed out poor prospects before they become problem members. It could save money and hard feelings. As the story goes, one flying club failed to thoroughly check out one of its prospects who, during his first month as a member, ran up a $1,300 bill and disappeared without a trace. The bill did not disappear, and the rest of the members had to make up the difference.
Membership can take any form a club chooses. It can be open to all pilots or limited to certain professions such as doctors, teachers or plumbers. It can be limited to pilots flying for business or those flying for pleasure. It's up to the club to decide whom it wants as members.
Another important consideration is how many members to allow in the club. This helps to determine the number of members per airplane and is a key factor in recruiting and retaining members. A club needs enough members per airplane to cover all expenses but not so many that it's difficult to schedule a flight.
Some good rules of thumb as a starting point might be: include members who do most of their flying during the week so that the airplane gets used as much as possible. If the majority of club members fly extended trips, limit the number of members per aircraft to four or five; if the majority fly for training or pleasure, then 10 pilots per airplane should be okay.
Having more than 10 members per airplane could easily lead to a situation similar to all the members of a large family trying to squeeze into a single bathroom at the same time in the morning!
There are several ways to organize a flying club, but one is no better than another unless it is tailored to meet a club's specific needs. Members should outline the club's general objectives and decide how they want it to operate. The next step is to seek the help of an experienced attorney.
To give potential club organizers an idea about where to begin, some generalizations about different ways to organize a club are listed below. They shouldn't be used "as is." Instead, the suggestions should be used as guidelines for structuring a club that will meet its members' specific needs.
The co-ownership arrangement is a contractual agreement that lets each member own a fractional interest in the airplane and in any property purchased in common with the other members. A co-ownership arrangement is technically not a partnership. A partnership is an association of two or more people who operate a business for profit. Since most flying clubs are not-for-profit in nature, they are usually co-ownership arrangements, not partnerships.
Having confidence in two or three other pilots is one thing, but when that number grows to five, or six, or more, a flying club takes on an entirely new complexion. Incorporation is often the most desirable way to organize a flying club with more than four members. Because a corporation is a legal entity separate from the individuals who make up the corporation, individual members may not be personally liable for contracts made in the name of the corporation or for injury or property damage committed by other members of the corporation. In addition, a corporate structure makes it a bit easier for the individual to transfer his or her interest in the club.
When a flying club is organized as a corporation rather than a co-ownership, its members do not own a direct interest in the aircraft. Instead, they own an interest in the corporation and the corporation owns the aircraft. One advantage is that members who wish to leave the club can sell their interest by offering it back to the corporation. This provision could eliminate the need to get approval from every other club member and save valuable time. Sales outside the corporation, however, should require the approval of the Board of Directors. It's wise for corporate bylaws to include a requirement that members who want to sell their interest must offer it to the corporation first. This requirement should also apply in the event of a member's death. A well-drafted shareholder's agreement should cover most of these potential situations, preventing a lot of future problems. Such an agreement should only be drafted under the supervision of a licensed attorney.
Every state permits incorporation and some have laws specifically for "not-for-profit" (also called "corporations not for profit," "non-stock corporations" or "membership corporations"). Since most flying clubs are not-for-profit in nature they will likely be formed under the nonprofit statutes. In states without these specific statutes, clubs can incorporate under the general corporation law and still function as not-for-profit corporations.
Sample articles of incorporation and sample bylaws are included below.
If you decide to incorporate your flying club, the elected corporate officers can assume some of the club administration. But, no matter what organizational structure your flying club adopts, a good manager and staff are needed to keep it running smoothly and ensure it is financially sound. Ideally, a club's administration should be handled by a paid, full-time staff skilled in club operations, accounting, and public relations. The administrator should also have thorough knowledge of maintenance and Federal Aviation Regulations. That's ideal. Realistically, most clubs cannot afford a paid staff and the administration of the club is the responsibility of the membership. Below is a typical list of the various officers and their duties. These positions should be filled with members experienced in the particular skills required for that job. (Note: If a club is incorporated, many of these offices will coincide with officers legally required for the corporation.)
Following is a list of typical corporation officials and their duties. More information is included in the sample articles of incorporation.
President/Manager: A good manager is the heart of a successful flying club. It is important that the manager be respected by the members and trusted to run the club smoothly and efficiently. The manager should be able to resolve minor disputes without having to consult the Board of Directors or the entire membership. The principal duty of the manager is to oversee and coordinate the work of the other club officers, making sure they are performing their jobs accurately and on time. In clubs that are corporations, the manager is usually elected president of the corporation. In small clubs, he or she is often responsible for many duties that might otherwise be assigned to other members.
Treasurer: A club's treasurer has the basic responsibility of keeping the Board of Directors and members fully aware of the club's financial condition. No money should pass into or out of a club's bank account without the knowledge of the treasurer. The treasurer has the responsibility for billing members, signing all checks (with a co-signer), sending financial statements to all members, and paying all the bills. The treasurer should be authorized to meet monthly obligations such as hangar fees, aircraft payments, and insurance premiums without having to get club approval when each comes due. It is very important that the treasurer have prior financial experience, and because of the large amounts of money involved, club members should think about having their treasurer bonded.
Scheduling Officer: Of all the club officers, the scheduling officer will probably need the biggest bottle of aspirin. The duties of the scheduling officer include posting the aircraft schedule where members have easy access to it, scheduling flights and rescheduling them as members change their minds or swap times and dates, notifying members of any schedule changes due to unexpected events such as unscheduled maintenance, notifying the club manager when members abuse the schedule, and getting maximum utilization out of the aircraft by keeping the schedule full. This is particularly important because the more the aircraft is used, the brighter the financial outlook. In a smaller club, the officer may also be expected to schedule meetings and notify members about them. Clubs may prefer to use online scheduling.
Maintenance Officer: The maintenance officer is responsible for the airworthiness of the club's aircraft. The maintenance officer should know aircraft inside and out and be able to assure the quality of repair work. Ideally, he or she would be a certified mechanic. More realistically, though, this job will be handled by a member who is not a certificated mechanic. In this case it is best to choose a member who is very familiar with aircraft maintenance procedures. The job of the maintenance officer includes getting the aircraft to the repair shop for both regular and unscheduled maintenance and inspections. This should be done with a minimum amount of down time. The maintenance officer is also responsible for keeping the engine and airframe logbooks. It is good policy for any club to keep squawk sheets in the aircraft and to require all members to immediately report any aircraft discrepancies to the maintenance officer.
Secretary: The secretary is responsible for most of the club's communications and paperwork. This includes maintaining accurate records of all club correspondence, keeping minutes of meetings, notifying members of meetings or special events, alerting members when the aircraft is out of service, maintaining the club's bulletin board, and, if necessary, helping the other officers with their record keeping. Being secretary is not a grueling job, but it requires organizational ability and a talent for keeping track of several unrelated items at the same time.
Safety Officer: The safety officer plays a key role in maintaining the club's health both physically and financially. The safety officer should keep members advised of proper flight procedures, encourage flying proficiency, notify members of changes in the FARs that may affect them, and help the club establish criteria for aircraft check-outs, recurrent training and time in aircraft type. Financially, a safety program incorporated in the club's bylaws will not only encourage competent, accident-free flying, but can also be useful in enhancing the club's eligibility for obtaining the lowest possible insurance premiums.
Other Flying Club Duties: There are other special duties that are part of a flying club. Many of them depend on the size and nature of a particular club and can include the maintenance of hangar or tiedown facilities and club headquarters, organizing social programs, managing ground school and flight proficiency programs, new member recruitment, and more. Each job should be clearly spelled out and rotated among members on a regular basis so no one keeps getting stuck with the same job. Of course, members of small clubs will have to take on more than one job.
Updated October, 2011
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