Flight Training - January 2014 - 38

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.

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 SCENARIOS. Once the
internal organization is established, an
an own-to-learn club is operated (ownown-to-fly club could be operated along
ing the aircraft, leasing, et cetera), certain at least three different scenarios, each of
basic rules apply to its organization. These which has its own pros and cons:
include but are not limited to:
* The club buys the airplane and puts it on
The legalities. A lawyer should be
leaseback to an established flight school.
employed to set up the agreements to limit * The club owns and maintains the aireach member's legal liability. There are a
plane but contracts with a flight school for
number of ways to do that, but establishing instructors.
the club as a limited liability corporation
* The club could view itself as a mini-flight
(LLC) and placing the airplane in a sepaschool, hire its own instructor(s), and do
rate LLC is a common tactic.
everything required of a flight school.
CLUB ORGANIZATION. Regardless of how

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
38 /

FLIGHTTRAINING.AOPA.ORG

OPERATIONAL 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 MEMBER-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

http://FLIGHTTRAINING.AOPA.ORG

Flight Training - January 2014

Table of Contents for the Digital Edition of Flight Training - January 2014