Setting up a simple LSA training business

[drseti]

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, Jack -- in fact, we had a lurker on these fora (yes' you're right about that too!) who is indeed an MBA student, who contacted me off-list to get further background info for his thesis.

all that you need to consider and research.

Research is indeed the operative term here. I spent seven months in full-time research before I launched my flight school. That just scratched the surface.

for LSA's that use mogas @ 5gph,

Soon to be a thing of the past. My state mandated ethanol in all mogas last year; others will follow. As discussed elsewhere on these boards, most airframes are not authorized for ethanol, even though the Rotax engine is. And even with those that allow it, putting a solvent in your tanks is just not a very good move. So, you will probably end up having to go with 100LL.

hangar rent is the single biggest annual expense.

Not in my case. I pay around $200/month for a t-hangar. My insurance, OTOH, runs $5k/yr, and is my dominant cost.

-- 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.

I concur. I researched the used S-LSA market, and found a good many acceptable low-time candidates for typically 35% below new aircraft prices. The sweet spot seems to be a 3 year old airplane with 500 or so Hobbs hours. (Do not buy a plane based upon tach time; with the Dynon EMS, for example, you can program the tach to read anything you want it to, just by changing your estimate of "normal" cruise RPM in the setup screens.)

AND look at the experimental marketplace,

Not for a flight school! FARs prohibit doing instruction for hire in an experimental.

-- If staying with the S-LSA choice, I recommend after purchase you shift the registration to the E-LSA class (an entirely viable option),

Not only can an E-LSA not be used for rental, or instruction for hire; it also costs more to insure. But worst of all, once the airworthiness certificate is changed from S-LSA to E-LSA, it probably cannot be changed back. Reason: the original manufacturer will not want to take back the liability! This destroys the resale value of the aircraft.

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).

For an S-LSA, you can still get licensed to do all your maintenance and inspections. But, you need to take the 3-week course (currently available from Rainbow Aviation in Corning CA). And, if you're getting a Rotax-powered plane, also take the Rotax maintenance-level training, available from Lockwood, CA Power Systems, or Leading Edge Airfoils (and possibly others) as a weekend course.

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.

That's a good move, though as a retired educator, I can tell you that it's lots of work. Another approach is to be a guest lecturer in somebody else's course, where you can (subtly) plug your own flight school.

Hoping you can wrap multiple students, every 6 weeks, into a full flight training + ground school curriculum is too much to expect,

I agree. In my case, I've broken it up into two successive three-week courses, "pre-solo" and "post-solo", with a couple of weeks break in between for the student to review for and pass the FAA knowledge test (written exam). Not all students completing the first three weeks go on for the second -- my attrition rate is near 50%.

I hope this thread is being archived -- could be useful to anyone contemplating getting into this business. Meanwhile, Hambone, we can talk via Skype (my username there is the same as it is here) while you're still in UAE. Then, when you get back Stateside, feel free to take a trip up this way and I'll show you my operation.

Safe skies,
Paul

[drseti]

We're planning a research trip to Sun n Fun in March.

Good plan, Ham. That's where I started my LSA research a couple of years ago.

[Jack Tyler]

Paul, thanks for the clarification on (not) using E-LSA's for instruction or hire. I no doubt got confused by some folks doing it...unofficially, that is.

BTW the retired USAF Colonel that did periodic adult ed courses for PPL ground school found this very easy to manage. Like everything else, the first one took time & effort to prep: duplicating materials & worksheets, finding/arranging the video segments and so forth. There was also some logistics work upfront with the high school evening coordinator, so she understood the A/V materials he needed, which classroom was more suitable, and so forth. The second time was very easy, as it was all 'plug & play'. And after a while, former (ground school) students became flight students, then licensed pilots, and were a source of inspiration - and a source of planes to visit when doing the airport tour with new students. There are lots more wrinkles to this model, including an amazing amount of word-of-mouth good will, so it struck me as win-win all around for a very manageable work load.

Ham, just to raise another issue for your attention: you are probably from a generation that in large measure had an in-built fascination with aviation. That was sure true of Paul's and my generation. Today things seem to be very different. E.g. just ask yourself where a young (or more mature) adult hears the accolades and sees the role models for entering aviation. It sure isn't from being in the queue for another TSA frisk line hours before one's flight or reading about the two-tier pay scales in the airlines. GA airports are now locked up tight as a drum; nosing around an airplane hangar is very tough for anyone to do these days. My point is that in my area (W coast of FL), there is no bountiful, eager line of students clamoring to be taught, nor are there many who are flush with cash (note Airman's posts). Marketing and sales needs to be a big part of your biz plan.

What this suggests to me is that you need to think about this from a 'niche market' perspective. I can imagine (tho' I'm just guessing) that one of the things Paul promotes in his marketing is that he can deliver sound teaching methodology, because he brings experience as a professional educator to his program. Consider how you can play off your military flight experience & what local contacts you can develop that help develop your student pipeline (MacDill's monthly Beer Calls in one of the hangars is one of many examples for this area. Another is that we're the home of the largest USCG flight center in the country, so probably in the world. In your shoes, I'd look for these kind of 'friendly skies' when picking an area). Canvas the flight schools where you are thinking of locating and notice to whom they are marketing their training programs, and then ask yourself how you can either focus in areas they are missing and/or how you out-compete them. E.g. some schools in my area employ low-time, relatively young pilots who are there to build hours, and the hourly rates strike me as fairly high given the likely quality of instruction and depth of flight experience these folks are drawing on. Add in the school's profit cut on top of the instructor's actual pay, and it looks to me like there's some opportunity there for you.

I see the mogas issue differently than Paul and encourage you to work this through to your own satisfaction when gathering info. Ethanol-based fuels, now being forced into the U.S. distribution system for political reasons moreso than ecological ones (there are many views on just this part of the issue!) has indeed been a huge source of concern for many LSA a/c owners - just as Paul suggests. However, things move on over time, manufacturers realize there is great appeal of lower-cost mogas to a potential buyer, and so some a/c today are being built (and being marketed) to run on mogas. And there's plenty of evidence from mechanics that Rotax engines do more poorly on 100LL than mogas. My point isn't to claim one is good and the other isn't, but rather to suggest that you build the use of mogas into your research, your a/c search and the financial side of your biz plan, do some in-depth reading on this while overseas (much info is available on the web but choose the sources thoughtfully) and form your own thoughts on this. Every flight hour will cost you 5 gals of fuel...so it's a significant cost factor to be considered.

Good discussion.

[deltafox]

Wonderful discussion, thanks. I just bought an S-LSA and am planning a similar path here in my neck of the woods. Your insight is priceless, thanks.

[Aerco]

. 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).

An experimental for paid instruction? Wouldn't that be nice. I have yet to hear one successful story from anyone managing to get a LODA for his experimental to use for paid flight training. AT first the FSDOs had no clue about how to issue these. Now the FAA has attached so many clauses and restrictions to their guidelines, that it's still pretty much impossible to get one issued.

Has anyone here tried this?

[scottj]

Hambone:

There are a lot of good, and some really bad, comments here. As you can see, you really need to do your due diligence before opening your school.

Have you considered getting a job as a CFI and learning the ropes at an existing school?

Have you looked into other manufacturers airplanes? I would not buy a 'no name' airplane to start a school. Customers like well known brands.

Have you researched the safety record of the various airplanes?

A lot of LSA are not built Ford Tough. In a school environment aircraft take a beating. Parts, labor, and price will be a big factor.

Check into the various aircraft manufacturers dealer programs. You should add the ability to sell your training aircraft to your students. People like to fly their own, new, equipment.

Good luck!

Scott

[drseti]

Have you considered getting a job as a CFI and learning the ropes at an existing school?

Scott makes a good suggestion, Hambone. If you are interested in an apprenticeship, drop me a line off-list

[Hambone]

Thanks for all of the comments!

This is getting a lot more complicated than I first thought. It IS meant to be a laid-back semi-retirement fun-in-the-sun pursuit, after all!

Have you considered getting a job as a CFI and learning the ropes at an existing school?

That's a possibility. I do have 1500+ hours of instructor time, albeit not in an LSA. But working for someone else is certainly a consideration!

Have you looked into other manufacturers airplanes? I would not buy a 'no name' airplane to start a school. Customers like well known brands. Have you researched the safety record of the various airplanes? A lot of LSA are not built Ford Tough. In a school environment aircraft take a beating. Parts, labor, and price will be a big factor.

That's what I hope to learn at Sun n Fun. What are the tough, well-known, safe, economical SLSAs I should be looking at?

[Aerco]

I had a good look at your school's financials, Paul and it makes interesting reading. An honest portrayal of the realities involved.

I am planning to operate as a freelance instructor in the near future, but having an absolute minimal amount of money to invest in this, my plan addresses the major costs like this:

Aircraft :

I am looking at starting my venture into this with very small steps; I cannot afford a new LSA ($100,000+) so I looked at old school aircraft and eventually settled on an Aeronca Champ (or two). Yes, you automatically lose those customers who are only impressed with shiny new plastic airplanes. But a sizeable proportion of people getting into this do know a little about airplanes, even just from building models as a kid. They know a classic airplane when they see one and even most neophytes feel that tailwheel aircraft just have that certain je-ne sais-qoui. So having accepted that, I went looking for a Champ and ended up finding a an Aeronca L3 in a barn. It was cheap, but in great shape. Of course, it needs a total rebuild and i have the facilities for this. Beggars can't be choosers and it turns out this L3 is a diamond in the rough. Perfect for the kind of flight school I eventually hope to establish - basic stick & rudder flying in interesting classic airplanes. This particular one was a wartime trainer and how many new students will get to say, years from now, that they learned in a genuine WW2 trainer?

Hangar cost:

Modern fabrics stand up well to the outdoors these days and even here in southern California, the only operator of fabric , tailwheel airplanes near me (Sunrise Aviation at John Wayne airport) keep all theirs outside, all year long. So no hangar for me until I can afford one. The local 'regular' flight school keeps all their airplanes outside.

Office facilities:

I have a workshop where I keep my airplane project with an office, only a few minutes form the airport - no need for a separate office at the airport. We can do groundschool here. Also, as a one man operation, who would man my airport office if I had one??

I would venture to suggest that 95% of your students will find you from a website and referrals, rather than from simply walking onto an airport and looking for a an office and a sign that says "Flight School".

Insurance:

A killer for tailwheel airplanes. I will either have to swallow this or operate with a minimum of insurance. Having a workshop and being well-versed in the construction and repair of these kind of airplanes, I may even operate without hull insurance.

Crazy, I hear everyone say. But apart from a major write-off and wrapping the whole thing into a ball, these airplanes are cheap and simple to fix. Even a bad groundloop, bending the landing and wingtip perhaps is easily fixed, if you know how to work on these things. And generally speaking, these airplanes are a lot tougher than the current breed of modern LSAs. A LOT.

At current insurance rates I would be better off saving the money and buying an extra run-down Champ every three years or so and re-build it as I go along.


Maintenance and running cost:

These airplanes run on simple and reliable engines. In airplane terms they are dirt cheap to rebuild.Mechanics are familiar with these engines, unlike Rotaxes, which need specially trained people to work on them.
No electrical systems to give you hassles, simple handheld radios suffice.
Tough construction and mechanics know how to work on these.

We have a club here at Flabob with two LSAs: a Cub and a Tecnam.
Nothing ever goes wrong with the Cub; it's always available. The Tecnam has constant maintenance issues; even getting a new tire or innertube is a ridiculous hassle. Once we noticed a few rivets missing from the wing - it was down for weeks while we waited for a 'repair scheme' from the factory. Which amounted to : "Put in some new rivets." It really is a nuisance.

One other point I would make, other than cost:

Location:

I cannot see how you can be successful in this if you are located in the boonies. You need to be near a major population center. Also you need decent weather. I am in Southern CA and while there are some even better locations, it's as close to perfect flying weather as you get anywhere. Near the edge of uncontrolled airspace, but close enough to give students a taste of flying in busy airspace too.

I could see how a residential school might work with this in a far-flung location; the relatively short time required to get your license, might make it an attractive proposition to simply stay at the school for , say, three weeks and get it all done at once. You could tie the accommodation business to the flight school and make a few extra pennies. This could work nicely if you are located somewhere picturesque.



I also don't need this venture as my main income, but I hope it will grow into that eventually. My point here is to illustrate that things can be started with very humble resources.

[Hambone]

Aerco-

That looks like a fantastic plan!

Pure, simple, stick 'n rudder grassroots flying (without a microprocessor or nosewheel in sight) sounds appealing!

[scottj]

Someone mentioned keeping it simple and not buying insurance. You may be able to fix the airplane with your own two hands. But one "simple" off runway landing can cost over $ 400,000 in medical and liability bills.

Can you self-fund that liability?

Trust me... I know. I am not just a CFI who has been there and done that, I am an insurance agent too.

Go big or stay home. Like the GOBOSH people say.

[Aerco]

I should have been more specific: I was considering operating without hull insurance. Everyone needs liability insurance, but that is not the expensive part. It's almost a given in the US if you have any hope of staying in business and even then it's doubtful any school survives a lawsuit.

I only meant that if I have to pay $5,000 a year for a taildragger in hull insurance, it's cheaper in the long run to just get another airplane every few years and keep them in storage for spares. You can get Champ projects for less than $8,000 sometimes, flying ones occasionally for $15,000.Nice ones are much more, but i am talking about "donor" airplanes when something does break.

[Hambone]

Have you looked into other manufacturers airplanes? I would not buy a 'no name' airplane to start a school. Customers like well known brands. Have you researched the safety record of the various airplanes? A lot of LSA are not built Ford Tough. In a school environment aircraft take a beating. Parts, labor, and price will be a big factor.

That's what I hope to learn at Sun n Fun. What are the tough, well-known, safe, economical SLSAs I should be looking at?

[scottj]

I hesitate to endorse any of them. Do your own research... look up the top sellers on www.bydanjohnson.com Then check the NTSB reports. Then actually get demo rides and fly five or ten different ones. Do some web searching and email flight schools and ask what they are using. It's your business...have fun creating it.

[zdc]

That's what I hope to learn at Sun n Fun. What are the tough, well-known, safe, economical SLSAs I should be looking at?

The landing gear on a GOBOSH looks like it may be up to the primary training task.