It may seem preposterous at first, but trust me, this concept makes sense. Let’s talk about non-profit flight schools.
In an industry as tightly regulated as aviation, where margins can be tight and costs can be high, it would be easy to disregard the idea out of hand. To reject it immediately. And who could blame you?
The idea of intentionally founding a business in an openly capitalist market, then deliberately removing the profit motive from that same business could easily strike an intelligent person as anathema.
Still, there are situations where this really might be the best way to go.
There is an old joke in aviation circles. It goes like this: How do you make $1 million in aviation? Start with $2 million.
You’ve heard that one, I’m sure. Most of us have. Too many times, frankly.
Because for all the financial challenges inherent to the industry, aviation can be profitable. There are a considerable number of very good flight schools that have persevered through good times and bad. They’ve been stable. They’ve weathered hurricanes and floods and economic hard times and regulatory challenges most businesspeople would shudder and quake at just the thought. Yet they survive and even thrive in the long term.
There are several critical components that lead to the success of those businesses.
One, and it’s an important one, is a regular influx of new students. Nothing can replace the economic benefit of having an unending string of new customers walking through your door.
Some of the smaller, less structured flight schools also enjoy the great good fortune of return customers. Pilots who come back to conduct flight reviews, add-on new certificates and ratings.
Commerce is good. Conducting it well, and profitably, generally requires a customer base of a certain size. That reality favors flight schools located in more densely populated areas, as surely as it challenges those in less populated areas.
This is where we come to the concept of the non-profit flight school. If the new-student pool is small, if the returning customer base is severely limited, if the capital available to start up involves a number smaller than one might spend on a new luxury car, the traditional profit-seeking flight school is probably not going to work out well.
There are exceptions, of course. But in general, if the customers aren’t there, the financing isn’t there, and neither of those factors is likely to change in the foreseeable future, profitability may be more than an uphill battle. It may be entirely out of the question.
On the other hand — and let’s face it, if you look hard enough there is almost always another option beyond the traditionally accepted practices — a non-profit flight school may be just the thing that provides the services and equipment that a small student pool needs, while limiting the costs and at least some of the more threatening challenges facing a flight school.
Now, to be clear, a non-profit business does not have to run on volunteers alone. Employees can be paid, and they can be paid competitive wages. In fact, many of the basic aspects of business are the same when comparing a for-profit model with a non-profit model. Each has its advantages.
And that’s the point. While most people think of a non-profit flight school as being just short of insane, under the right circumstances it might actually be the best, most practical option.
Let us assume there is an airport in a rural setting, far from any major population centers. The airport is almost surely little used and not profitable for the community that owns and operates the facility.
But it is an important part of the transportation system available to that small out of the way burg. Or it could be.
It could also be a vital resource for education and personal betterment for those who live in the region. If only there was a flight school where the population could learn to fly and perhaps rent aircraft to remain current and refine their skills.
Given that scenario, it is a safe bet nobody is going to make the considerable investment to start, staff, and outfit a for-profit flight school that will serve no more than a handful of customers each year. They could, of course. But it would surely fail, since the profit they seek would be so elusive as to never actually come about.
On the other hand, a non-profit flight school might pop up with a single airplane suitable for primary and instrument training. The school might be operated by a single CFI or A&P who runs the business. They might hire additional helping hands as contractors who enjoy the flexibility of only being required on site periodically. That extra income might be a welcome opportunity for some folks who prefer an unstructured schedule that allows them to work in aviation on a part-time basis.
Because the business is registered with the state as a non-profit entity engaged in flight training, which is by nature an educational pursuit, the management might opt to apply for tax-exempt status. With the benefit of a 501(c)(3) exemption from the IRS, the flight school gains an enormous advantage that helps offset its limited income.
While the non-profit model does present small rural communities with the option of having a real flight school, there is nothing that says the business can’t grow with good management over time. Non-flight school examples include Khan Academy and Yale University, both of which are 501(c)(3) tax exempt organizations that have done pretty darned well.
Unconventional as it might seem, the idea of a non-profit flight school in your town just might be worth your consideration.
Just a quick point: Yale Aviation, although long associated with Yale University, is NOT a part of Yale but a separate entity. As a flying club since the early days of flying, it was reorganized in the 1960’s as a 501(c)3 with an emphasis on aviation education, a mission which continues today!
I learned to fly at a flying club’s grass field airport.Non profit. No tower. No radio. No snobbery. No costs above the basic. Most of the training aircraft did not have electric starters. Navigation was by map and compass – one became astonishingly good at it! We were expected to always know where we were. No uniforms. But very professional. More than thirty aircraft. Great community spirit! There were above ground gas supplies, and a local aircraft mechanic. There were well publicized white markers half-way along the runways. If you didn’t land before those markers, you went around for another try. One form of amusement was watching students and instructors from “big” airports trying to land at our field. They often started their go-arounds 50 to 80 feet above the white markers. One learned to “rubberneck” –a cycle requiring us to check instruments first then look around outside for other aircraft. Constantly (automatically) check for possible landing sites in case of emergency. My first aircraft did not have brakes; one learned to think far ahead of the aircraft. We learned how to properly tie down an aircraft outside- and how to keep mice and insects out of aircraft. If you did not use good tiedowns and ropes you heard about it from the CFI -and your fellow pilots. We learned to look carefully before entering any active runway. A later sport was to take a friendly pilot for a trip. This was especially good if there were thousands of lakes; the PIC would suddenly hand the other pilot an unopened map and ask, “Where are we?” The 2nd pilot was expected to provide the correct answer within seven minutes.
Today, in the event of an electronics failure and no radio, what is likely to happen?
Big business, big money, lobbyists and politicians have all but ruined a wonderful thing.
The Ferengi are not finished with us, not yet.
I am just curious. Where was the school and airfield you learned from?
I belong to a nonprofit flying club, Wings of Carolina Flying Club in Sanford, NC. We are a 501(c)7 social organization with 13 planes and a full-time maintenance director. Flight training is a significant part of what we do: We have a dozen or so flight instructors who work as independent contractors.
But the idea of a “profit motive” is irrelevant: Our motive is to provide affordable flying opportunities to new and experienced pilots, and the nonprofit structure enables us to do this.
What are the savings in being a non profit organization. Assuming the are no profits you dont save corporate income tax. If there are loses unlike a llc no one benefits by being able to deduct those loses. The entity still has to pay sales B&O taxes fuel taxes. Ia is it any easier for a nonprofit to get 141 accreditation. Forming a non profit vs a llc or for profit corporation is not significantly harder but if the non profit is to get IRS recognition as a non profit the costs and record keeping are significantly harder and unless line is planning to get tax deductible donations which is unlikely what is the point
Canadians get “free” medical care, too.
We don’t call it that. We call it universal healthcare. It works just like public roads, firefighting, policing, parks, and all the other “socialised” services that you have in the U.S. too.
Back to the main question, one of the main benefits of a non-profit will be different governance, especially if it uses a membership model. My flying club (one of Eastern Ontario’s biggest flight schools as well) operates under a board of directors elected by the membership. Its finances are transparent, so we know that it’s not on the verge of bankruptcy, and all the members have input throughout the year and at the annual meeting.
The thing is, nobody gets rich in general aviation—you’d be an idiot to invest your retirement savings in a GA operation—so we might as well admit that we’re running these schools as community things rather than profit-making “businesses”. The only real choices are non-profit or “no profit”. :-/
You ask some excellent questions, Jim. Let’s see if I can address them in order.
Q: Using other models of education as an example, there surely isn’t any reason the leadership and educators could not be fairly compensated. Is the tax exempt status the key to making that possible?
A: Tax exempt status affects the cost of doing business for any entity that qualifies and enjoys that status. That being the case, the savings from tax exemption are beneficial in keeping overall costs down, which is a factor that will come into play when making any expenditures, payroll or otherwise. The tax exempt status isn’t the key factor, but it undeniably is a factor.
Q: Would a larger org be more or less exposed to liability concerns?
A: I suspect the exposure is equal in any case, Jim. The scale of a large operation’s activities might suggest incidents occur with greater frequency, but that’s not necessarily going to be the case. A good culture of safety established from Day 1 would be a wise commitment, regardless of the size of the school.
Q: Heck, using colleges as an example, there doesn’t even need to be a market for all of the graduates, nor the requirement that all topics of study be relevant to the degree being pursued.
A: No, you are correct, to a point. There are no degrees being issued in most flight schools. In fact, it could be argued that no flight schools issue degrees. Colleges that own a flight school might offer degrees, but the flight school itself does not. There can be diplomas given by the school which may lead to certifications from the FAA, however. That has value. There also doesn’t have to be a commercial market for pilots to validate the establishment of a flight school. There are many reasons to learn to fly that have nothing to do with making the pilot seat one’s profession. Personal enrichment, the ability to travel with nearly unrestricted freedom at a speed unmatched by any other form of transportation. There are many reasons to learn to fly, Jim. Getting a job is just one of those reasons, but it is by no means the only one, or even the primary one.
Q: Do you picture each rural flight school as it’s own entity or do you see it as a larger org with multiple locations?
A: I do not control the establishment of flight schools locally, regionally, or nationally, Jim. The column discusses some of the benefits of this business model, but it does not suggest that I or anyone else needs to give approval. You can start an independent non-profit flight school if you wish. It can be a stand-alone entity, or in partnership with others. You could also establish satellite bases of operation if that works for you. If you’ll pardon the pun, the sky is the limit. You (or whomever wishes to start and operate such a school) can get underway at will. I have no role in that process other than as an advisor, if you have questions.
Q: Would a larger org be more or less exposed to liability concerns?
A: I suspect the exposure would be similar regardless of size. A large school may have more incidents do to the difference in the scale of their operation, but a good culture of safety established from Day 1 to counteract that concern would be a good idea regardless of the size of the school.
Q: What are the hurdles?
A: Anything you can imagine. As with any business, profit or non-profit, the number and complexity of challenges can be unlimited and never-ending.
Q: What existing non profits have similar capital and expense intensive requirements, on a percentage basis, as airplanes?
A: I have no idea, Jim. That’s a detail you will have to research on your own. I’m not a business analyst and no business has any responsibility to seek me out to share their annual report with me. The concept is sound, regardless. The specifics are up to the individual who seeks to pursue it.
Q: Would this require expensive and onerous accreditation and produce only pt 141 schools? It would seem that in the current landscape this is the only path lined with some Gov’t loans and grants….
A: This business model requires a CFI and an aircraft. That’s all. Title 14 CFR Part 61 and 141 do not suggest how to run a business, nor do they connect in any way to your state’s filing requirements or the IRS’s. It also has no inherent involvement with government loan programs. Nor is it required to do so.
Q: With the change in the standard deduction, has small donation giving dropped off. Or, perhaps, there is some untapped significant source of wealthy donor$ who would live to support aviataion.
A: Giving to any charitable or educational program is entirely up to the individual. Why they give and how much they give, in terms of time or money, is ruled 100% by their own altruistic impulses. Income and social status have little to do with the concept of supporting causes any of us might find to be worthy.
Q: If we look around the country, are there any tech schools offering flight programs? If so, are those more or less accessible; more or less expensive; more or less successful at turning out pilots?
A: Of course there are tech school programs, Jim. There are high school programs. There are college programs. There are a multitude of options available, but not nearly as many as are needed to serve a public that is spread over nearly 3.8 million square miles of real estate. The cost varies dramatically, too. As you can imagine, a for-profit flight school in NYC (where I began my flying adventures) is likely to be far more expensive than a non-profit flight school in Eldorado, TX.
Q: What’s the example in Lakeland? Is that a model to study?
A: The Lakeland Aero Club is based on the field at Lakeland Linder International Airport. It’s one of the leading high school non-profit flying clubs in the nation. It would be hard to find a better program to emulate and replicate.
Q: AOPA has gotten into insurance, financing, flight planning tools, credit cards, etc…sure, all via partnerships, but all are forays into areas otherwise served by private enterprise…
A: I’m not sure how to respond to that last bit, Jim, since it’s a statement, not a question. However, I will say that while I am employed by AOPA and take great pride in my association with that remarkable organization, I am not speaking for AOPA in this space. I wrote this column long before I was employed by AOPA and with the grace of Ben Sclair I hope to continue to write it long after I’ve retired from the ranks of the actively employed. The thoughts and experiences expressed here are mine and mine alone. Please do not paint AOPA or any of the other organizations I’m involved with in an unfavorable light because of an idea or an experience I share here. This is me.
Much larger response than I expected, thank you.
I was, more or less, asking all of the questions rhetorically as a way to continue to flesh out what you proposed. Some questions were even a little tongue in cheek*.
Perhaps this back and forth will spur others to action.
*specifically the points about the pursuit of flight instruction not for the purposes of becoming a pro pilot. Plenty of education dollars are spent on classes and requirements that have very little to do with the field of pursuit the graduate might enter.
The mention of AOPA was not directed at you specifically – just that they are an non-profit organization already in existence with a board, staff, and endowment….
Thanks again for writing an interesting article.
What’s bizarre about it? Many/most Canadian pilots learn to fly at non-profit flying clubs. Our “flying clubs” are different from in the U.S.: they’re often large operations with full-time dispatch, maintenance hangar, and a fleet of aircraft. Canada set up many of these flying clubs in the 1920s and 1930s to ensure there would be a good supply of pilots of needed, and that paid off by providing a large pool of instructors for the British Commonwealth Air Training Programme during the Second World War.
I learned to fly at the Ottawa Flying Club (founded 1928), and now keep my plane at the Rockcliffe Flying Club (founded 1964, at the site of the former RCAF Rockcliffe base).
David, I agree with you, we are going to be short of pilots in the near future and any school profit or non-profit is important to all of us.
I joined the Light Sport Aircraft movement in 2005 when it started, I felt strongly that this was the direction for learning to fly at an economical way. The cost of a GA airplane is almost out of sight for us regular pilots, SLSA is the way to go in any flight school.
I am importing a SLSA airplane setup for flight schools at a good price, you can go to our website at montaerusa.com. Hope you take a look at it. In the near future I would like a Dealer in Canada.
Edward Ricks
623-695-9040
ed@montaerusa.com
Jamie,
I would argue that multiple flight schools in Indiana are all already operating as non-profit orgs, through their local airport sponsor (owner).
For example, Crawfordsville (CFJ) not only operates a flying school, but a full service A&P shop, with a IA on hand!
Others include, Logansport (GGP) and Huntingburg (HNB).
These small rural airports, long ago lost their “for-profit” FBO/Flight School and had to pick up the pieces, figure it out and move ahead, if they want to continue to keep their hangars filled with aircraft, sell fuel and sustain the airport.
I predict, this same thing will continue to happen across the US, due to many of the things you site in the article!
Smooth Landings,
Travis McQueen
Interesting idea.
Using other models of education as an example, there surely isn’t any reason the leadership and educators could not be fairly compensated. Is the tax exempt status the key to making that possible?
Heck, using colleges as an example, there doesn’t even need to be a market for all of the graduates, nor the requirement that all topics of study be relevant to the degree being pursued.
Do you picture each rural flight school as it’s own entity or do you see it as a larger org with multiple locations?
Would a larger org be more or less exposed to liability concerns?
What are the hurdles?
What existing non profits have similar capital and expense intensive requirements, on a percentage basis, as airplanes?
Would this require expensive and onerous accreditation and produce only pt 141 schools? It would seem that in the current landscape this is the only path lined with some Gov’t loans and grants….
With the change in the standard deduction, has small donation giving dropped off. Or, perhaps, there is some untapped significant source of wealthy donor$ who would live to support aviataion.
If we look around the country, are there any tech schools offering flight programs? If so, are those more or less accessible; more or less expensive; more or less successful at turning out pilots?
What’s the example in Lakeland? Is that a model to study?
AOPA has gotten into insurance, financing, flight planning tools, credit cards, etc…sure, all via partnerships, but all are forays into areas otherwise served by private enterprise…
Aren’t the Flight Programs of institutions such as UND and Purdue non-profits?
This is an excellent idea!