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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. ,,  But when traveling, you don't mind paying more per hour when you get there faster.

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.

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Fuel costs have absolutely no effect on profit..  You don't pay for the fuel until it's used .. and when it's used, it's recoverd 100% as part of the hourly rental. The only time it would effect profit, is if prices go up and you don't adjust the hourly rate accordingly. It wouldn't matter if the plane burned 122 gallons an hour and fuel was $35.00 gallon. It's a consumable, not a fixed cost.

I suppose technically, fuel costs can affect profit, but anly as a side-effect... as in, hourly rates get so high that people fly less. But the check you'd write to the FBO for fuel, is for fuel used.. and that means the renter already  paid you for it. You're just a middle man.

As far as paying more per hour for a new plane as a student ?  That's a personal choice.

You hit the key word here.. Break-even point. That's the point where your fixed costs are paid for (building rent; utilities; aircraft insurance; hangars, etc.).

Here's a typical breakdown on an hourly rate:

Fuel $6/gal@9gph........          $54
Engine reserve............            $8
100-hour/annual reserve....    $10
Oil, tires, misc...................    $10
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                                           $82

Hourly rate.............             $110

This leaves  $28/hour to pay the fixed costs.

Commercial hull replacement insurance is about 5% of the value per year.. so a $50,000 airplane is about $200/month. Liability runs about $125/month. Total insurance cost = $325 per month..  That makes your 12 hours per month break-even point look do-able.. for  each plane, on it's own (not accounting for the other fixed costs).

The club I fly out of most, has a 200+ roster of dues paying members ($30/month)..  That gives them $6000/month to cover things like hangar rent, building rent.. phone, utilities, etc...  with a nice buffer for slow times, when the planes aren't generating revenue.

Instructor fees are a stand-alone item. The difference between what's charged for their time, and what the student pays will cover the administrative cost (in our case.. a full-time office manager to manage a 200 member club).


The big point I'm making here, is that it works out to be six of one, half-dozen of another. A new plane will tie up more capital, but will cost less at inspection/repair time. New planes and old planes aren't that far apart, as far as what it cost per hour to operate them. It sounds like you'll be a one-plane outfit, without a large base of dues paying members. Licensed members have no sense of humor about airplanes being down for maintanence, so newer planes are in order. For you.. a nice, older C172 in the $50,000 range sounds about right.

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.  

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.  

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?

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