yet another flight school business question

[RitterKreuz]

yup... its that time again?!  ::)

Which would be best?

Purchase a used aircraft as a trainer which as the benefit of lower initial cost, lower monthly cost etc.

or

Purchase a brand new aircraft similar to a Flight Design CT which would reduce fuel and oil related costs by over 80% - but it would cost more per month.

I have incorporated both options into my excel spreadsheet.

The monthly cost of the new aircraft is almost $200 greater than the used aircraft... however, the fuel use per year of the new aircraft is  about 80% lower.

[Brett_Henderson]

Purchase a used aircraft as a trainer which as the benefit of lower initial cost, lower monthly cost etc.

You're mixing it up a little here. A used airplane has lower initial cost, but higher monthly cost (repairs / maintanence). In the looooong run, they about equal out. With a new airplane, you've got more interest (either being paid on a loan, or not being earned if you buy it outright).. on the older plane, you've got expensive 100-hour/annual-inspections.. and more down time.

Fuel is a non-cost.. as in you don't buy fuel that isn't already paid for by the renter/student.

Newer, faster, more efficient airplanes do NOT help students, financially. They help licensed club members, as it cost's less per mile when going places. Students only care about cost per hour. You get the same hour of training while plugging along 110KIAS, as you do at 130KIAS. ,,

[RitterKreuz]

Fuel is a non-cost.. as in you don't buy fuel that isn't already paid for by the renter/student.

The Way i see it based on my figures; everything else being equal, the new plane burns about half as much fuel per 500 hours than the old plane (500 hours is what im basing all of my numbers on).

with the aircraft being rented "wet" this does have an impact on the bottom line. even though cost of fuel is being included in the hourly rental fee - it must be paid for none the less.

With an older aircraft burning 8-9 gph, and the newer plane burning about 4... the impact on annual fuel cost is a difference between $22,000+ per 500 hours in fuel and around $11,000 per 500 hours.

The newer aircraft obviously cuts into profits less because you have to pay for the fuel somewhere... this comes directly out of the hourly revenue for the aircraft.

If you're going to be a one-plane school, and older airplane makes more sense. When you have a roster of members in a club.. newer planes make sense.

regardless of old or new; I had considered having a silent partner in owning the aircraft. I would manage it and use it for flight training... and he would come and fly it whenever he wants... (which he generally flies just enough to stay current). We would split the aircraft payment 60/40 or something similar, and we would

[Brett_Henderson]

The newer aircraft obviously cuts into profits less because you have to pay for the fuel somewhere... this comes directly out of the hourly revenue for the aircraft.

Fuel costs have absolutely no effect on profit..

[RitterKreuz]

i see what your saying.

I have heard that there is a high demand for a flight school at the airport in question. (well - "high demand" for this rural area anyhow)

they are telling me that there is no instructor, nor is there a rental plane and they routinely turn away 3 to 5 people per month who walk into the FBO asking about flight training.

When i instructed there a few years ago it was not uncommon for us to manage 30 - 40 hours per month on our Piper Warrior.

I'm expecting a similar experience, but planning on about half as much business to be conservative.

Once in a while you have to step back and look at the big picture... because it is easy to want so many good things for your business... but then you open the check book and things are different.

If i can secure an airplane (ANY airplane at this point) i have planned on a very miniscule small business loan of about $5,500.

it doesnt sound like much, but it is enough to acquire the office supplies, student desks & chairs, make the class room powerpoint ready and purchase resale items like student pilot kits and books, get phone service etc. without the payment on the loan costing me an arm and a leg.

in short, its enough to open the doors.

all seems within grasp, i just need to get a more sturdy plan together for an airplane, as the office and class room are sitting empty... ready for an occupant.

[beaky]

You might want to test the waters by getting a simple, inexpensive (acquisition, maintenance, insurance, and operation) LSA-eligible plane and offering instruction for tailwheel transitions or the Sport Pilot rating (or PPASEL, if the student chooses)... there's controversy surrounding the SP rating, but I believe that the quality of the Sport pilot depends on how much is put into his or her instruction, just as with the PPASEL (any PP holder knows that there's a lot more to it than meeting the FAA reqs, in terms of being an aviator vs. an airplane driver).

With, say, a Champ or Luscombe, you could make up an hourly-cost speadsheet with values about 1/2 of what Brett outlined (which represents a good medium-grade 172 or Cherokee). Less overhead, less risk.

If that works out, you could then acquire something a little fancier.
then there's leasebacks- I never met a leaseback airplane owner who was making money off it... I guess the school is the only one making out in that scenario.  ;D

[Brett_Henderson]

There's some logic to looking into the light-sport stuff (especially as this economy continues its nose-dive), but as far as using it as test-bed.... That's kinda like seeing if a McDonalds can turn a profit as a barometer for deciding on opening a full-service restuarant. They're apples and oranges.. two completely different, potential pilot/customers.

The airplanes themselves, are a wonderful, economical alternative for "fun flying"... and if I'm not mistaken; the models Rotty mentioned can qualify as both Light Sport AND traditional trainers. However.. if I were considering opening a "school", I'd steer completely away from the Light Sport curriculum. The difference in cost between the two (training-wise) isn't all that much, when you consider the cost of being a pilot in total. You (and your insurance company) will be much happier with people willing let a doctor say they're pilot-worthy (you wanna turn that plane of yours over to someone who hasn't even peed in a cup for the FAA?).. and you'll definately get more out a potential pilot looking to be an actual pilot. He/she will be more active.. rent more often.. be more likely to pursue and instrument rating, and so on.

From this, and your other posts.. it sounds like you'd like to eventually make a go of this. If that's the case, don't cut too many corners. I'm mot saying that you need go commit to fleet of brand-new airplanes... But at the very least, especially if it's just one airplane; start out with a solid, IFR capable airplane with enough useful load to lure existing pilots into renting it, too. If you can't establish enough interest to support that airplane, you'd be starting down a fruitless path, anyway.

[RitterKreuz]

Well Brett to be honest with you... im not really interested in doing the light sport training... like you i dont see the benefits - at least not the monetary benefits anyhow.

however, if i can keep a better control of cost by finding a light sport aircraft which can be used for private pilot training (if im not mistaken you can use any S-LSA for private pilot training... but cant use an E-LSA for private training)

most of my focus would be on producing private pilots.

I have secured a small business loan which will cover all of my initial costs.

I have itemized for tables, chairs, a computer, pens paper, whiteboard, 2 months of office rent and aircraft payment, filing cabinet, general office supplies, a cash lock box, any items intended for resale to students like books and kits etc and about 2 dozen other similar items.

I am also going to be getting a Federal Tax ID number, an Employer Number and a Sales Tax Number.

Im not jumping right into credit card machines, but it is on the list of "to-do" items.

depending on what my "silent partner" and i decide on an aircraft, and the splitting of costs/profits...

well... i could be enrolling students as early as February or March 2009.

[Brett_Henderson]

Excellent !!  :)

Keep us posted !

[MeekRN]

way back in 1998 when i was getting my license, a group of 10 guys i worked with asked me if i wanted to join in with them and buy a used 152 for about 22000 dollars back then, it didnt have a transponder, and  was not ILS rated. we all used the plane  instead of renting one, and it cut our costs from $85 an hour including pilot to $25 an hour for pilot only. in the short 9 months we had the plane we put about 525 hours on it total for all 11 of us, we needed to do 1 annual a couple thousand gallons of fule and a dozen quarts of oil, and thats it, we ended up selling the plane for 21500 less than a year later, and saved about $2500 each.

My point is can you use this angle some way?

[Brett_Henderson]

My point is can you use this angle some way?

No.. he cannot. It's apples and oranges. What you did was communal, private ownership.. He's in the fly for hire business. He is charging people to use the airplane. Insurance companies can require 100 hour inspections. And even if they do not..

[RitterKreuz]

Thanks for the suggestions.

Here is an update.

The school more or less officially opened on the last week of November. So far, there has been a lot of interest. I have booked or conducted at least a dozen introductory flying lessons. however i have only had a couple of firm commitments.

A lot of people seem to want to come out and book an intro flight for a novelty "hey everyone look what i did" sort of thing... not because they are genuinely interested in long term training.

however, the aircraft has so far sustained enough business to pay for itself 2 months in a row. - largely because i have only just now received my payment coupons for insurance payments.

so - for two months i have not had the burden of paying insurance even though i have an active policy for rental and training purposes.

this means, i am breaking even. which for a small town flight school like mine, with word of mouth only advertising thus far - is doing pretty good acutally.

Spring is right around the corner.

it is my intent to have a strong, local advertising campaign in March.

My plan is to offer an introductory flying lesson link on my home page which will be active for one day only between 8am and 8pm where people can book an intro flight.

The first 50 bookings will be entered for a chance to win 10 hours of free flight training.

of course i will accept more than 50 bookings... but the first 50 will be entered for the chance to win.

hopefully this will get anyone who is sitting on the fence to jump off and start training.

on another note. Due to poor management practices my closest competitor closed up shop a few weeks ago.

while i do genuinely sympathize with him this may only serve to strengthen my business position in the area.

I am optimistic for a productive and profitable spring season