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Acquiring aircraft for a flight schoolAcquiring aircraft for a flight school

Dana and I moved from Rockville, Maryland, to Jacksonville, Florida, in 2013 with a utility trailer full of our belongings, some savings in the bank, and the dream of opening a flight school. Hunkered down in an extended-stay hotel near Jacksonville Executive at Craig Airport (CRG) with our then-6-month-old daughter and our dog, we spent the first few weeks searching for a small, affordable office and an airplane that would be a primary trainer.

Whether your flight school is just starting out or already established, it is critical to define the mission and target customer for your aircraft. Do you need a brand-new airplane with a glass panel, or will an older airframe with basic radios do the job? We defined our ideal training platform as a 1970s- or 1980s-vintage Cessna 152 or 172 with a low-time engine and decent paint and interior, located within a few hours’ drive of Jacksonville to facilitate a pre-purchase inspection. With a budget of $40,000, we found a 1979 Cessna 152 at a grass strip 65 miles southwest. The broker was pleasant to work with and the airplane was in great shape, so we closed the deal on N152SJ and immediately put it to work.

Because our business was brand-new and had not yet established credit with the bank, we had to take out a personal loan to finance the purchase of 2SJ. We considered leasing a newer Cessna 172, but the leasing company’s monthly minimum payment was more than we could afford at the time. Still, leasing can be a good option for building your flight school fleet as long as the terms of the lease make sense for both you and the aircraft owner. In general, the advantage of a lease is that you minimize your up-front costs such as a down payment for a bank loan and any state sales and use taxes that you’d owe on the purchase of a new or used aircraft. The primary disadvantage is that you will make less money per hour than if you owned the aircraft, and you might have to negotiate with the owner on scheduling as well as any upgrades or major maintenance.

About six months into our operation, we established a lease agreement with the owner of N1180M, a 1969 Cessna 172 that is hangared here at Craig. It has a nice, clean interior and is IFR certified with a Garmin 530 GPS. The best part is that the owner does not require a minimum monthly lease payment. So far, this arrangement has worked out nicely for us and for the owner.

Whether you’re buying or leasing an aircraft for your school, it’s important to make an operating costs spreadsheet that includes fixed monthly costs such as your loan or minimum lease payment, insurance premium, and hangar or tiedown fees, as well as hourly costs such as fuel, oil, and routine maintenance (annual and 100-hour inspections). This will help you determine the hourly rate that you will charge customers for use of the aircraft. Also, make a list of any upgrades you think you’ll need over the next few years—paint, interior, radios, ADS-B equipment—and start saving for these. You’ll also want to put between $10 and $15 per hour into a major engine overhaul fund, depending on how close your engine is to TBO. (AOPA offers an interactive online operating costs calculator. Note that the default values for things like fuel, oil, and maintenance may not reflect market prices in your area.)

The decision to add an aircraft to your flight school’s fleet is an exciting but serious one. As the old saying goes, bigger is not always better. It’s important to make sure you have a healthy growth plan and are not taking on more overhead than your business can justify. Dana and I agreed from the start that we would never, under any circumstances, hire additional instructors just to bill more hours. We prefer to remain a “mom and pop” operation with just the two of us running the show, with the understanding that we will grow our business organically, from within.

With the school turning a profit and our schedule reasonably full, we recently decided to purchase two additional aircraft: a 1969 Cessna 150 for primary training and rental and a 2007 CubCrafters Sport Cub for tailwheel training. While these two aircraft have very different missions, together they complete our school’s portfolio by providing existing and new customers with affordable and fun aircraft to fly. We are not a CubCrafters dealer, but our relationship with the CubCrafters dealer network allows us to use this sharp-looking, modern aircraft to tap into additional business that we might not otherwise have access to had we purchased a vintage Piper Cub for tailwheel training. The Cessna 150 was a “diamond in the rough” that we knew would be a money-maker from day one, as a trainer and a rental aircraft for pilots who want to fly for fun or build time relatively inexpensively. The Cessna 150 and 152 are both slated for interior and exterior upgrades over the next six to 12 months. This will keep our students and renters satisfied for years to come and increase the value of our assets.

Meredith Holladay and her husband, Dana Holladay, are flight instructors and owners of Holladay Aviation in Jacksonville, Florida.

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