To buy an LSA and start a sport pilot school

[deltafox]

Having read numerous posts about deficiencies in sport pilot training, and the lack of LSA schools nearby, I was wondering what it would take to get a new Light Sport School started. What are costs and requirements that should be considered?

[KSCessnaDriver]

I'd be very interested to see where this goes. Currently, I'm not in a position to finance starting my own school, but I'd love to be able to do so. I'm sort of disappointed to see there are no large companies that will set up long term lease's of LSA's, so that a flight school may operate without owning their own aircraft.

[FLA-CFI]

There is a lot of research to do before you can open the doors.

Things like whether you are buying the plane, leasing, financing, etc? Are you based out of a towered airport or non-towered field? How will you be funding operations? Plan on losing money the first year if not longer. Research on the surrounding demographics will be required. What is the local flight training competition (not just Sport Pilot)?
To put together a solid quality business plan takes a lot of work. If you plan on trying to get bank or investor financing you’ll need one that stands up to thorough review.

There are a lot of flight schools but to be successful at it takes a lot of time and hard work with little pay.

Adam
Co-Owner First Landings Aviation

[N918KT]

deltafox if you're gonna start a SP flight school, where do you want the SP school to be based at? Any chance that you're gonna have it in Northern/Central NJ in NYC metro area?

[Aerco]

I have been looking into this for over a year. The main hurdle is the insane cost of new LSA's and the lack of secondhand ones available. And even for those the cost only goes down from "insane" to "crazy". I ran many, many scenarios through my spreadsheets and to make such an enterprise work, you need a very high utilization and more than one airplane; you can't afford to have too much downtime or students waiting around for an airplane to be fixed. Yes, you can use older standard cat. aircraft such as Eroupes and Aeroncas, but then you are into a specialty niche and not the main market. People now expect to see Remos, CTs and suchlike.

Unless you can afford to buy a couple of these types outright, financing is a huge hurdle. Even asking for a loan for a little Aeoronca recently I was told, "yes you can have $25,000 if you can show us an account with $26,000 in collateral". I am not kidding - these are hard times to get money out of the banks; they are probably busy spending the bailout money before they actually have to use it for the intended purpose.

Location is another big factor - you need to be near a major population center to get enough students and you need decent flying weather.

Also - is there a DE nearby who will do SP checkrides? Or will you have to send your students on a 200 mile cross country to get to one?

It will not be easy, but you know what? I am still going to try and do this. If I wanted to make a ton of money I'd go into real estate, but what is you really want in life, is the question?

[glyn]

if you guys like, you can contact me about using LSA's to start flying schools or clubs. there are pro's and cons to each. that is one of the things we do. www.sportflyers.org. I just finished up helping a school get started using a remos.
Aerco is right. buying used is mainly the way to go. this particular remos i took very quickly. $95,000. 2008 remos GX, Aviator II package and i went and had a BRS installed in Rogers Ar. 60 hrs total time.

[drseti]

This will be a longish post. Read on if you've been contemplating starting your own LSA flight school.

As many of you know, I launched AvSport of Lock Haven in late January of this year. I spent six months last year (May through early December) researching, writing and massaging the business plan, meeting multiple times with my CPA, talking to the local FSDO, getting business permits and tax licenses, registering trademarks and service marks, designing a website, preparing curricular materials, negotiating a lease with the airport manager, making presentations to City Council, and test-flying various LSAs, before I ordered my (used) plane.

Preparing the plane for delivery (installing some additional equipment and getting a fresh annual) was supposed to take four weeks. It actually took seven. When I took delivery, I had only about two hours in type. So, I got five hours of dual from a CFI with several hundred hours in type, flew the plane home (3.4 hours), and with ten hours total experience in make and model, gave my first lesson in it the next day! I now have about 75 total LSA hours -- just enough to start being dangerous...

My total start-up costs were right around $100k, including aircraft purchase. I considered bringing other capital into the venture, but didn't want to relinquish total control (yes, to be successful in business, you really need to be a bit of a control freak) or compromise my standards. I was fortunate in being able to do this without partners or bank loans (by trading in another plane that was already paid for). Still, I expect it to take me 1 to 2 years to hit break-even, excluding the purchase price of the aircraft (which will have to be amortized over several years).

The dealer from whom I bought my SportStar had several other planes for me to consider. There was a somewhat newer, much nicer, and better equipped one that I flew and really liked, but it would have cost me an extra $20k. I had the cash, but that would have left me strapped, without the cushion needed to cover expected operating costs and contingencies. The seller very generously offered to carry paper, at a most favorable interest rate -- and I seriously considered it, for a few milliseconds. Finally, I replied that, nice as the other plane was, it would be foolish to start a new business in debt.

I'm working on a series of articles for NAFI Mentor detailing what I went through in starting this business. I was well prepared for the entrepreneurial aspects, having started a Silicon Valley high tech company back in the 1970s, having run an international nonprofit and a larger engineering firm more recently, having gone through a full MBA curriculum while in grad school, taught college for 35 years, flight instructed for almost 30, and been flying since 1961. Still, I was surprised by a few of the realities of starting a flight school. Biggest hit was insurance costs.

Somebody on this thread mentioned that you really need more than one plane, and I agree. I am in the process of training a couple of adjunct flight instructors, personally training eight primary and two advanced students, and find myself working seven days a week. once the other instructors come up to speed, things will get a bit better -- and then, if I have enough graduates interested in renting, I'll consider purchasing a better equipped but nearly identical bird for that purpose, doing most of my instruction in the present plane. There will be economies of scale, training advantages, and maintenance convenience in having two of the same kind.

The majority of new small businesses fail within the first two years, primarily by being under-capitalized. Aside from having a good cash cushion, the best indicator of success is the level of detail in the business plan. It should be both thorough and formal -- even if you are not going for venture capital, others will read it, and a good document can gain you important allies. I'll be happy to share my Policy Manual with anyone else planning to start an LSA school -- I've tried to anticipate all eventualities, but of course I'm sure I've left a lot out!

Starting a flight school is a non-trivial matter. Be sure you're doing it for the right reasons. Don't expect this will get somebody else to pay for your flying pleasure. For every hour I fly, there's an hour of administration. If you don't really enjoy both teaching and managing a business, this is probably not the right path for you. But if you get your kicks out of creating something out of nothing, have a supportive family that doesn't mind you working seven days a week, and have a reasonable retirement income or other source of day-to-day living expenses, then the intangible rewards are substantial.

Yes, I could still go broke. So, the final advice I can give is: have an exit strategy. Pick a walk-away point, and don't be afraid to stick to it. Decide in advance how much you're willing to lose, and get out when you hit your limit. Business decisions should never be based upon sunk costs. Look forward, not back.

To paraphrase Kenny Rogers: you gotta know when to hold 'em / know when to fold 'em / know when to walk away / know when to fly...

Most important: have fun!

[deltafox]

Professor, what wonderful insight and advice. Thanks for taking the time to share your experiences and best of luck in what I am sure will be a very successful endeavor.

[Bill]

Very nice write-up, Paul. Even though I am not interested in starting a flight school I enjoyed the read*. What you describe would be a valuable model for would-be-entrepreneurs to follow, no matter the business** they are contemplating.

* Im just having too much fun with my 'Coupe to not check in here daily.

**My business evolved from (what I thought was going to be) a hobby - building a couple of websites nearly a dozen years ago. Therefore I never had a "written" plan but did employ a couple of your tenets - having control and not being in debt (to anyone).

[pjcampbell]

Stupid question but can you get an aircraft loan just like you would on a car? Where comprehensive/collision insurance is a requirement of the loan?

I can't imagine most individuals buy planes outright?

[Aerco]

Stupid question but can you get an aircraft loan just like you would on a car? Where comprehensive/collision insurance is a requirement of the loan?

I can't imagine most individuals buy planes outright?

My request for a loan for $25,000 for a Champ was answered with "Sure, if you can show us $26,370 in collateral. In an account in our bank, please." I am not kidding. banks are not happy lending anything to anyone who actually needs a loan. (What was that bailout money for again...?_

Aircraft loan companies won't touch anything old either and old means 1974 or so, never mind a 1946 Champ.

I frankly have no idea how people finance these 100-150k LSAs; either they are a big flight school with a few million dollars worth of airplanes already or older guys who spent a lifetime accumulating the cash.

[ArionAv8or]

I frankly have no idea how people finance these 100-150k LSAs; either they are a big flight school with a few million dollars worth of airplanes already or older guys who spent a lifetime accumulating the cash.

Business owners who have the cash to pay for toys generally don't have the time to enjoy them. Priorities are a bi#@h sometimes!

[garbageman]

I bought a new Tecnam Eaglet last Nov, which I lease back to a flight school. I financed it through AOPA/Bank of America. Not quite as easy as buying a car, the FAA is involved! Hull insurance is a must.

[drseti]

either they are a big flight school with a few million dollars worth of airplanes already or older guys who spent a lifetime accumulating the cash.

I wish I were the former. Unfortunately, I am in the latter category; worked hard for 45 years, saved carefully, invested prudently, and had accumulated enough to buy the plane outright (using, as a trade-in, the plane I had bought myself 30 years earlier out of hard work and careful saving...) Don't know how youngsters can do this. Of course, I don't know how youngsters can manage to buy a house these days, either.

[Aerco]

Don't know how youngsters can do this. Of course, I don't know how youngsters can manage to buy a house these days, either.

Interesting facts: Since 1938 the mean per capita income has increased by a factor of 25. The price of houses around here increased by a factor of 100! The price of a Piper Cub, in the same time, has also multiplied by a factor of about 100, from a little over $1,000 to over anything from $100,000 to $150,000. It's a losing race for the average working person.