Setting up a simple LSA training business

Hambone · Post by **Hambone** » Thu Jan 13, 2011 11:36 am

I’m an ex-USAF pilot investigating the viability of setting up a small semi-retirement business as a CFI-SP. I admittedly know very little about the industry, but nevertheless have a vague business plan. Feel free to shoot it full of holes!

Here’s my plan: Buy an SLSA (Aerotrek A240, perhaps) with the mobile-hangar trailer (no hangar fees). Train 4 students max per month, $2000 each from start to license. Rent aircraft to ex-students when it’s not being used for training (or for my personal use… this is semi-retirement, after all!)

Expenses: Fuel, oil, insurance, maintenance, marketing, miscellaneous. I may even do the maintenance course so I can do the 100-hour inspections.

Minimize expenses, costs, and keep it simple!

bshort · Post by **bshort** » Thu Jan 13, 2011 12:29 pm

It's a great idea, but there are many variables.

1) You buying the lsa outright or financing?
2) Location and potential business
3) Having a clean, well maintained craft that people want to fly.

The sp trainers I've seen are struggling at best to stay afloat. Winter is especially harsh on the bottom line.

If you make the offer of 2K from start to license you'll probably go broke! 2K is usually the cost of about 32 hours of dual time (wet)..

Hambone · Post by **Hambone** » Thu Jan 13, 2011 12:33 pm

Thanks for the comments!

I realize that my plan is rather simplistic. It's just a starting point.

I'm planning an outright purchase of the aircraft (saving hard now!), and will probably set up base initially in South Florida.

Aerco · Post by **Aerco** » Thu Jan 13, 2011 2:17 pm

I have been crunching the numbers on this a long time. $2,000 to get somebody their license is unrealistic, figure more like $3,500 to make a realistic profit. As you mention, as a semi-retired business proposition it might at least help to offset the cost of the aircraft. But to make a living you would have to be content with a modest living at best. Starting with owning an aircraft puts you way ahead, though.

I happen to make a basic living working evenings, and only about 4-5 hours per day, so my plan is to offer SP training during the time I am not working. But my business plan makes half its money from renting out the airplane when it is not being used for training with all the downsides that entails - more maintenance, more wear and tear on the airplane etc. You really have to want to do this as opposed to thinking you will make a fortune, but I guess that is your aim, too.

I'd say you need two aircraft to make it worthwhile, especially if you get more than one student at a time. People will not put up with an airplane being unavailable for maintenance or repairs for any length of time.

You'll at least get to fly and get paid a little and get the satisfaction of making new pilots while offsetting the cost of your airplane, all of which can't be bad.

Jim Stewart · Post by **Jim Stewart** » Thu Jan 13, 2011 2:46 pm

Where I live, December was VFR for about 4 days. January is shaping up to be a little better, but not much. You gotta have something to keep paying the bills in the winter.

dstclair · Post by **dstclair** » Thu Jan 13, 2011 3:55 pm

I would think that the mobile-hangar trailer part of the plan would be problematic with students doing their solo work and with renting the plane. You'd need to arrange to transport the plane to the airport then sit around waiting for the plane to return unless than plan is to park the trailer in a tie-down spot. If in a tie-down, you'd then be trusting the student/renter to not damage the plane when getting the plane out and putting it back into the trailer.

Hambone · Post by **Hambone** » Thu Jan 13, 2011 10:54 pm

Hmm... I'm beginning to see that keeping this simple maybe ain't so simple!

ArionAv8or · Post by **ArionAv8or** » Fri Jan 14, 2011 9:35 am

Hambone wrote:Hmm... I'm beginning to see that keeping this simple maybe ain't so simple!

Welcome to aviation

dstclair · Post by **dstclair** » Fri Jan 14, 2011 9:51 am

All is not lost. There is a lot of good information in this forum. One of the frequent posters, drseti, has a business that is similar to what you are planning, at least as far as a single airplane. He has been very open with his model. Do a search for his posts. Something to start with is in the Training topic with the Subject of "Cost of Operation". This should give you a good, er, grounding.

Given your goal seems to be less profit oriented than activity/enjoyment focused, I'd think you can find a way to make it work. Keep in mind that you would be able to write-off some of the costs (proportional to business usage) on your taxes so the net of things like a hangar may not be that bad.

Hambone · Post by **Hambone** » Sat Jan 15, 2011 4:36 am

Thanks again for the replies!

I have read drseti's posts with much interest. There is a lot of information there, and it's great that he is willing to share it with the forum. I like that attitude among the aviation community!

I'm trying to think 'outside of the box'. As I have a military flying training background, I'm familiar with the 'class' approach of training a group of pilots together in a relatively short time. Say, for example, I propose a 6-week course every two months, 4 students in each class. It shouldn't be impossible to complete a 20-hour LSA license in six weeks, flying on weekends and the occasional weekday, and academics taught in a classroom environment weekday evenings. That gives me a two-week break every two months for maintenance, my personal cross-countries, student rental of aircraft, etc, as well as most weekdays off for various semi-retirement pursuits!

Now for some preliminary (and probably completely unrealistic!) number-crunching. Six classes annually with four students at $2,500 each (maybe more realistic than $2,000) brings in $60,000. I'll assume annual costs can be kept to $20,000. Aircraft rental income would be icing on the cake!

Hambone · Post by **Hambone** » Wed Jan 19, 2011 7:58 am

Are these numbers in the ball park? Is $20K a reasonable annual cost estimate for an average 912-powered SLSA flying 600 hours (including fuel, maintenance, insurance)?

drseti · Post by **drseti** » Wed Jan 19, 2011 3:51 pm

dstclair wrote:One of the frequent posters, drseti, has a business that is similar to what you are planning, at least as far as a single airplane. He has been very open with his model.

Thanks for the vote of confidence, Dave. Hambone, I think you might want to take a look at my first Annual Report, online at http://AvSport.org/about/report1020.pdf. The financials there will show you that it's possible to break even with a retirement business, operating one plane -- but don't expect to actually make any real money. In my case, one full year in, I cleared $6300 (not including amortizing the airplane), but I worked 2,000 hours to accomplish that. Bottom line: I'm earning $3 an hour -- would do much better flipping burgers!

Not trying to discourage you, or anyone; this is a great business. I'm just glad I have my retirement income to live on (and you will be, too!)

If you really operate 600 hours a year (unlikely unless your wx is much better than mine), better figure $30k as a realistic figure for operating costs.

Good luck, Hambone. Let's get together off-list sometime, and share Air Force stories.

drseti · Post by **drseti** » Wed Jan 19, 2011 3:54 pm

Hambone wrote:That gives me a two-week break every two months for maintenance

Bear in mind that it's not always possible to schedule 100 hour inspections and oil changes conveniently around classes. I reserve one day per week just for maintenance.

Jack Tyler · Post by **Jack Tyler** » Fri Jan 21, 2011 9:29 am

Ham, if you were in an MBA program I'm betting that building your business plan would be worthy of a full semester's work. You're right, 'simple' ain't so simple. So comments on these forums (fora?) can only be tertiary to all that you need to consider and research. Because you've been in the govt. sector, I'm assuming this will be your first 'for profit' independent business venture. And because you've been flying govt. gear, this might be your first 'full immersion' experience in General Aviation. All of that to say: big learning curve, so there's lots of benefit in leaning on the expertise available from others. In that regard, part of what I'd recommend is:
-- using skype, spend a fair bit of time with the AOPA counselors (you're already a member, of course...) finding out how their wide range of expertise, info resources, etc. can aid you in your research and building your biz plan. AOPA should be a huge resource for you, if you work it.
-- when next in CONUS, enroll in a Small Business Course offered by the SCORE. Just working off their frontpage - http://www.score.org/index.html - you can see how helpful this org of retired (successful) small business operators can be to a newbie like you. Great organization.
-- you are right on target for taking time to consider a location like Florida (for its weather) and the storage issue (for your plane). Some don't realize that, for LSA's that use mogas @ 5gph, hangar rent is the single biggest annual expense. Your most likely acceptable option - affordable, available, functional - will be to share a hangar, as you'll want to be located in an area sufficiently populated to have sufficient potential students...and that will also mean lots of pilots and waiting lists for hangars. So your inclination to look for a foldable wing design does make sense...but it seriously limits your choices, too.
-- I'm assuming you have already completed the newly-announced CFII FAA-testing now available to military pilots...but if not, get on that ASAP before retiring.
-- Gut Hunch: Buying a brand new LSA is not a good move WRT any GA business plan today, especially if it is a S-LSA where prices are high due to multi-level distribution costs & profits. The plane will see lots of wear & tear. Think buying a new Chevy Impala SS and opening up a car rental business with hopes that car will retain its value a few years later. 2nd Gut Hunch: a LSA product may not be oh-so satisfying for you, either. I suggest you expand your research re: a/c acquisition in two directions: used & last generation LSA's that are being unloaded as some FBO's and SP schools discover they over-equipped themselves or are simply going out of business. AND look at the experimental marketplace, where you'll find less expensive choices with good flying qualities for a student (tho' pretty slow flying for its owner). The capital expense associated with buying a plane will be a key issue for you.
-- If staying with the S-LSA choice, I recommend after purchase you shift the registration to the E-LSA class (an entirely viable option), take the weekend repairman course, and set yourself up to do all your own maintenance (which I would think is essential to making your biz plan viable).

And these ideas are only scratching the surface... But one final note: a close friend of ours, after 20+ of USAF flying and some corporate flying, did what you did very successfully, here in St. Pete, FL. One method he used for creating a student pipeline was to register a PPL Ground School course with the local school district for their Evening Education ('adult ed') program. He advertised it via the local paper and posting fliers at the airports, charged very little, taught both the required content but also melded it with some show 'n tell segments and a weekend visit to the local airport (to let students 'try on' some planes), and of course he had a few sea stories to spice up the course. This worked out very well as it gave interested people of all ages a chance to explore their interest in getting a PPL without needing to take the big jump of committing to flight training & its costs. It also created a rep over time that was very favorable for him (think: word of mouth). Hoping you can wrap multiple students, every 6 weeks, into a full flight training + ground school curriculum is too much to expect, I fear. But giving folks an inexpensive (with materials) starting point - a 'turnkey' choice - available in the evening one night a week, is do-able for almost anyone.

BTW his ground school is how I came to meet Al, how my son & wife ended up getting their PPL with him, how I picked him for my Instrument ticket, and ultimately how he became a partner with us in our Grumman. Not a bad model to include in your biz plan...

Hambone · Post by **Hambone** » Fri Jan 21, 2011 11:21 am

Thank you so much for the wealth of information, Jack! I'll digest it slowly and research the points you bring up.

We're planning a research trip to Sun n Fun in March. I'm doing as much research as I can on the internet, but I think some time in Florida will be useful.

Thanks again for your time. It's much appreciated!