If there is one universal thought that permeates the student pilot population, it is to learn to fly as efficiently and inexpensively as possible. “Inexpensive” and “learning to fly” are not terms normally found in the same sentence. Fortunately, there are ways to reduce the cost while making the training schedule more flexible.
One of those methods is to create a flying club that is organized specifically for the purpose of teaching its members to fly. Flying clubs can range from four or five individuals owning a Cessna 150 to more than 100 members who own an entire fleet of airplanes. One of the main advantages of the instructiononly club over a traditional flying club is simplified scheduling (in addition to being less expensive). Flying clubs are often besieged with scheduling problems because the members want to use the airplanes for cross-country flights, so aircraft are unavailable. This isn’t the case with an own-to-learn club, because a majority of the flying would be one-hour instructional hops.
Club organization. Regardless of how an own-to-learn club is operated (owning the aircraft, leasing, et cetera), certain basic rules apply to its organization. These include but are not limited to:
The legalities. A lawyer should be employed to set up the agreements to limit each member’s legal liability. There are a number of ways to do that, but establishing the club as a limited liability corporation (LLC) and placing the airplane in a separate LLC is a common tactic.
By-laws. Each member’s rights and responsibilities should be clearly spelled out and agreed to in a signed document so there are no recriminations later.
Buy-out clause. All clubs have a buy-out clause so members know exactly what will be required to get out of the club, which may include the other members approving those to whom a membership will be sold. Buy-out clauses are important, particularly if, in a learn-to-fly club, the membership decides that a member must sell his share as soon as he earns a certificate or is no longer working on ratings.
Terms of use. To protect the members, the use of the aircraft depends upon the members adhering to a clearly defined code of conduct, for example if a member purposely does something that is deemed unsafe or violates club rules, the other members can ask him/her to leave.
Basic buy-in cost. The memberships would be valued as necessary to acquire the aircraft in question. This includes licensing fees and initial support costs. Support cost/dues. Fixed costs in the maintenance and support of the aircraft or any other club activities—accounting services and the like—would be spelled out and shared by the members as a monthly charge. Variable costs would be part of the hourly charge.
Operational sce narios. Once the internal organization is established, an own-to-fly club could be operated along at least three different scenarios, each of which has its own pros and cons:
The club buys the airplane and puts it on leaseback to an established flight school. • The club owns and maintains the airplane but contracts with a flight school for instructors. • The club could view itself as a mini-flight school, hire its own instructor(s), and do everything required of a flight school.
operatio nal approach. When evaluating the way the aircraft is to be operated, it’s important to recognize that to many new pilots the mental burdens (as opposed to financial burdens) of aircraft ownership may be too much. They want to learn to fly; insurance, maintenance, and scheduling concerns may be too distracting. Setting up something such as a club—with all its expenses and possibilities for personality conflicts— isn’t for everyone.
Many established flight schools look for aircraft owned by those who want to learn to fly so they can operate them on leaseback. This allows the operator to have an airplane on the line that entails no acquisition cost, which the operator maintains (usually) and gets to fly his own students in, as well as the owners. The owners pay a reduced cost per flight hour and, depending on their legal arrangement in organizing the ownership of the airplane, they may get a healthy tax deduction because of depreciation and operating losses.
The leaseback arrangement is convenient and demands the least of the owners, but in exchange they’ll have to put up with some scheduling conflicts with outside students, although they can usually stipulate in the lease agreement that they get scheduling priority.
In exchange for a much lower per-hour cost (there is no profit mark-up), a learnto- fly-club can absorb all of the fixed and variable costs associated with operating an airplane. This includes the acquisition cost, the insurance (including hangar insurance, if applicable), the annual and variable maintenance, and operating costs. Then they contract with a flight school for instructors or hire a freelance instructor. The pros of hiring their own instructor(s) rather than contracting with a flight school for them is that they’ll be working with the same instructor start to finish, rather than working from an instructor “pool” in which they seldom get the same one two times in a row.
One of the real disadvantages of owning and operating the aircraft is that you are very dependent on the number of hours flown to reduce the per-hour cost to a reasonable number. If members lose interest, or there’s a serious bout of bad weather, the fixed costs (hangar rent, insurance, et cetera) continue, and the cost per hour goes up. For that reason, the hourly rate should be based on a conservative estimate of how much flying will be done, versus an optimistic one. Always better to build a surplus in the treasury than to have to ask members for contributions to overcome revenue shortfalls.
Setting up a mem ber-owned flight school. The most extreme method of creating an own-to-learn club is to establish the entire training school environment minus the fixed assets—in other words, no regular office or staff other than a full-time instructor, who would also act as maintenance coordinator, scheduler, nursemaid, and secretary. He’d get a regular salary, although paying him as an independent contractor may be simpler from a tax and accounting standpoint (consult your lawyer and certified public accountant).
Making it all work. While the concept of buying an airplane and setting up a training situation around it may sound great, it can be loaded with pitfalls if the way it is operated isn’t well thought out ahead of time. More than one flying club has gone bankrupt just because there wasn't enough time spent working out all the details in the way the club would be run.
Although flying is a hobby to most people, the club has to be viewed and operated as a business. That means each hour the aircraft is flown has to generate revenue and records must be kept—even though a profit margin isn’t part of that revenue. Members must pay their bills when they are due.
Accounting is one area in which it is well worth hiring a local independent bookkeeper to come in once a month. The bookkeeper can do the billing and accounting at the same time.
Scheduling can make or break members’ satisfaction with the operation. Online scheduling will make everything easier if enough thought is given to how flying actually works (a one-hour flight will generally tie up an airplane for an hour and a half, minimum) and every effort is made by both student/members and the instructor to adhere to the published flight schedule. This is more difficult than it sounds, and it must be stressed with everyone concerned. The instructor also has to be careful about how he sets up his schedule, because the briefing, preflighting, debriefing, and aircraft servicing can easily run to 1.8 hours per flight.
Cross-country training schedule effects. Different students will be at different stages of their training at different times, so cross-countries will sometimes eat up blocks of time. They must be planned with a reasonable cushion inserted at both ends of the time allotted. This is where cell phones can save a lot of inconvenience.
Even things as simple as oil changes become major scheduling obstacles if sufficient planning doesn’t accurately project when they are likely to come due. This requires someone to monitor the planned flight time far enough ahead that maintenance is done when it is due. If not, maintenance always becomes a crisis, which causes scheduling conflicts and tends to drag maintenance past set deadlines. This also requires a relationship with a reliable mechanic or maintenance shop that recognizes the necessity of maintaining the schedules to keep from inconveniencing student/members.
Do your homework. With spreadsheet software commonly available, it’s easy to insert fixed operational costs such as insurance, hangar rent, et cetera, and instantly know how much it will cost simply to own the airplane, much less fly it. Then fuel, oil, and other hourly costs are plugged in so the variable cost per hour is known. Then the variable and fixed costs are combined and divided by a number of different assumed hour scenarios to be flown a year. When that is done, the cost per hour that must be charged to support our flying addiction lets us know the break-even point, in terms of hours that must be flown per year to make the entire concept feasible.
Don’t be surprised if it won’t work, simply because it’s difficult to fly the number of hours required. Adding just one member could suddenly reverse the equation.
And what airplane should be chosen? The choice of airplane will have drastic effects on the hourly operational costs and the maintenance numbers, but there is at least one simple conclusion that can be reached through basic considerations.
If the aim is to get training costs as low as possible, then what is needed is a two-place airplane that burns the least amount of gas, has very few complex systems, is so reliable it seldom needs maintenance, and costs very little to buy. In other words, we need a Cessna 150/152. But not just any 150/152. We’ll be willing to pay a slight premium, $25,000 to $30,000 for the right one. This means it has a low-time engine, fairly current (not antique) radios, good tires, et cetera. We’ll buy at the top of the market, because we’ll be able to sell it for what we paid for it when we’re all finished learning to fly. Plus, a high-quality airplane will save greatly in maintenance. There are lots of two-place airplanes, including Light Sport aircraft, that could fit the bill, but we ignored them on purpose. We did so because the sheer numbers of 150/152s available means the “right” airplane is bound to be out there for the right price.
The most important ingredients in making the own-to-learn concept work are advanced planning and flexibility. Sit down with the spreadsheet and be very conservative. Lower the expected numbers that will be flown, and increase the expected costs. This way any surprises will be kept to a minimum.
The own-to-learn concept is a sound one, so analyze your situation carefully before you put out the word that you’re looking for like-minded people who want to learn to fly. They’re out there and will be eager to join. Have fun!
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