Are commercial flight schools uninsurable?

General aviation has seen an interesting and uncommon change recently. A new certificate is now available. The new Sport Pilot certification has been much awaited, touted, and striven for by many dedicated individuals and organizations whose goal was to help broaden the appeal of GA.

Sport Pilot offers a new group of people the ability to participate in, help support, and ultimately grow an industry that traditionally was limited in its potential customer base. Along with this new potential, it also will require training and licensing of a large group of pilots who formerly fell into categories, such as ultralight aircraft, powered parachutes or a variety of others, that the Sport Pilot ruling now has authority over. General aviation has the potential to grow in a new way and provide a needed service to a market that was not in existence a few short years ago. We have already seen companies developing and providing new products for this rating, such as training materials, videos, new examiner certifications, and even aircraft.

This growth will add new participants and, as a result, add revenues to those who provide the services that help to support this portion of the industry. There is a critical limiting factor that stops the ability of flight schools to provide this training. Currently, insurance to provide Sport Pilot training required by these pilots in conventional aircraft is unattainable.

As an owner of a flight school with an established history, a current customer base, and a moderate-sized fleet of aircraft, it was my intent to purchase an appropriately configured aircraft to offer Sport Pilot training to interested customers. This is intended to complement the flight training we already offer so that we can truly offer all types of training for our customers. After taking some time to choose an aircraft with consideration of multiple characteristics, I decided an Aeronca Champ would be an appropriate aircraft in which to provide this training.

This aircraft is useful in that it is not only a great training aircraft for Sport Pilot, but it can serve the function of offering tailwheel training for endorsements for currently certified pilots. Further, to use the aircraft in a commercial capacity, which flight training and aircraft rental certainly are, it must be a certified aircraft. This requirement limits the aircraft choices to production class aircraft, unlike the ability of individuals who can purchase their own aircraft that can fall into the experimental category.

As I worked to choose an aircraft for my flight school, I found that most of the aircraft that could apply for use under Sport Pilot regulations are naturally older aircraft. These include a variety of Taylorcraft, Luscombe, Aeronca, Piper, and a few other aircraft. Each of these aircraft ranged from the approximate vintages of 1930 through 1960. Most were of fabric wing construction, and all that apply were two seat aircraft as required by the Sport Pilot rule.

Our customers were interested and excited at the new offering and I was excited to be able to offer it to them. Tailwheel training is becoming far too scarce and it is a pleasure to be able to offer this type of training and hopefully continue the art of tailwheel flight into a new generation of pilots. But all is not perfect in this venue. There is definitely some work that will need to be done if this appropriate offering is to be able to be fully offered to our customers.

While the FAA has offered the certification publicly for training and is currently training Sport Pilot examiners, with the first few batches already completed, the insurance industry is offering up a major stumbling block to anyone who wants to provide this type of training.

As I attempt to offer this type of training, there can be no doubt that I, as will most flight schools, desire to have appropriate liability and hull insurance on the aircraft, instructors, and clients who will be using the Champ. This is necessary to protect the customers who will fly the aircraft, the aircraft itself as an asset, and the business for any potential liability that could arise. Unfortunately, this is where the road block begins.

Insurance underwriters that we consulted brought forward a variety of reasons that they “simply could not insure this type of operation.” I would like to say that this just applied to the Sport Pilot certification training, but in the first stages of negotiation it also applied to the aircraft itself for any type of training. One main reason included the aircraft age, as the Champ was built in 1946.

After many weeks of discussion, we came to the compromise that the aircraft could only be used for dual instruction in the first six months. Instructors would have to have at least 50 hours in-type and 100 hours of tailwheel experience (a significant decrease from an initial unrealistic request of 500 hours in-type and 1,000 hours of tailwheel experience!). This truly limits the ability of this aircraft to be fully utilized in the first six months of operation. It at least offers us the ability to transition the Champ into operation and eventually offer it for full use to our customers who are certified pilots.

Not only does this limit the utility of the aircraft, but also severely limits the ability of any flight school to find an adequately qualified instructor-pilot with this significant amount of time in not only tailwheel aircraft, but in type as well. Those that do have this amount of experience are typically unwilling to work as a flight instructor any more or for flight instructor wages.

While the limited potential to offer tailwheel training is available, Sport Pilot training is presently out of the question. My agent, who has worked diligently and feverishly as I pursued this possibility, indicated that this negotiation process hinged upon the point that I would not even bring up the question of offering Sport Pilot certification in the aircraft.

Presently, any underwriter who has been asked about coverage for Sport Pilot certification training has simply said that they are not covering this type of training yet. The cost of doing so has never even been an issue in this discussion. I am willing to pay an appropriate premium to be able to offer this training, but even the motivation of a high premium hasn’t been enough to secure underwriting for Sport Pilot training operations. I have even tried to get underwriters to offer only liability, and not cover hull damage to the aircraft as an option, a risk I am willing to take. This has also been unsuccessful. Their reasoning is largely based on a fear of the “non-medically approved pilot.” Many underwriters have indicated that they will need to see someone else cover it first before their companies will do so, but if everyone needs to see someone else cover it first, then no one will end up covering this type of training until the industry provides sufficient motivation to the underwriting companies to do so.

The hurdle is simple, but poignant. Until flight schools are able to secure appropriate insurance coverage to provide this type of training or are willing to risk going uninsured, Sport Pilot training will require that an individual purchase their own aircraft. This significantly increases the investment required by potential Sport Pilot candidates and so decreases the pool of individuals who will be attracted and have the ability to participate in this new avenue of general aviation.

It is now up to us as general aviation service providers to help educate insurance underwriters about this new certification. We must show them that we can provide services and training for this market in a manner that is of equal or less risk compared to other sections of the aviation industry. To do so, we must first convince them to take a chance and sample the potential that is in front of them for new premiums that are safe and secure investments from an insurance viewpoint. Until this is realized, my flight school and others will have to settle with just offering tailwheel training and wait until the point in the future when insurance underwriting will allow Sport Pilot training operations on a commercial level to be realized. We hope that the industry will find a way for us to provide the needed training with insurance for this market so we do not have to exclude a large group of potential pilots. Without the ability to insure our operations, the Sport Pilot certification that has been so diligently worked for will not be able to fully realize its potential effect on the growth of the aviation industry.

Jason Blair
Owner, Dodgen Aircraft
Allegan, Mich.

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