Flying Club Features

Oh - a few other things.

8: aircraft easily available. This means a good ratio of planes to pilots.
9: equity participation - sort of like buying into a share. I think a
fee structure of three separate "channels" - cost of ownership (loans,
opportunity cost), other fixed costs, and hourly costs, make it easier
to justify the rates.

Jose
--
Get high on gasoline: fly an airplane.
for Email, make the obvious change in the address.

In a previous article, Jose said:
9: equity participation - sort of like buying into a share. I think a
fee structure of three separate "channels" - cost of ownership (loans,
opportunity cost), other fixed costs, and hourly costs, make it easier
to justify the rates.

Our club doesn't do equity participation, and that's the reason why I'm in
this club. There is another club on the field, and when I was ready to
join Rochester Flying Club was $500 to join with no equity, and Aerodrome
Flying Club was $5,000 to join with equity. I didn't have $5,000, so I
joined RFC. Now the Aerodrome join is $18,000, so it might have been a
decent investment if I'd had the money, but I didn't.

--
Paul Tomblin http://xcski.com/blogs/pt/
It's the _target_ that supposed to go "F00F", not the processor.
-- Mike Andrews, on Pentiums in missiles

Our club doesn't do equity participation, and that's the reason why I'm in
this club.

It could be optional, in exchange for lower dues. In essence, the extra
dues would cover what it would cost monthly to borrow the equity share.
No matter how it's sliced, the money has to be paid somehow; what I
like about splitting it that way is that the equity share gets returned
on exit. The member actually "owns" a piece of it, should they want to.
It also makes the economics of deciding on another plane simpler.

Jose
--
Get high on gasoline: fly an airplane.
for Email, make the obvious change in the address.

Jose wrote:

Our club doesn't do equity participation, and that's the reason why I'm
in this club.

It could be optional, in exchange for lower dues. In essence, the extra
dues would cover what it would cost monthly to borrow the equity share.
No matter how it's sliced, the money has to be paid somehow; what I
like about splitting it that way is that the equity share gets returned
on exit. The member actually "owns" a piece of it, should they want to.
It also makes the economics of deciding on another plane simpler.

It seems to me that this equity mechanism - which my club uses too, BTW -
has a disadvantage. What happens when the club wants to "invest" somehow
(better avionics, new plane, whatever)? How does that get funded?

In my club, with a few specific exceptions, it would be an equity increase.
But how far can that go before the equity becomes a significant barrier to
entry (ie. it costs too much for new members to join)?

Invest a little here, invest a little there, and eventually increasing
equity becomes essentially impossible. So does the club cease investing at
that point? Sure, everything is well maintained, but no more aircraft
upgrades (ie. replacing a 1979 182 with a new glass 182)?

A club around here is replacing an older 172 or 182 (I forget which) with a
new glass version. But they're doing it w/o increasing the equity. Those
members that can are loaning the club some money, and the plane gets paid
off out of operating income (ie. some combination tach and montly rates).

So in that case the current members are paying - through their rates - for
an asset that the club will own and from which future members will benefit.
That appears contrary to the idea of equity, and also seems a little unfair
to current members in favor of new members.

However, it also seems to leave more room for investment w/o pricing a club
out of the market.

This is something I've been thinking about for a while, but I've not really
reached any conclusion. Perhaps I'm missing some factor which would
eliminate the "no more investment" issue.

I'd appreciate the thoughts of others on this matter.

- Andrew

"Andrew Gideon" wrote

A club around here is replacing an older 172 or 182 (I forget which) with
a
new glass version. But they're doing it w/o increasing the equity.
However, it also seems to leave more room for investment w/o pricing a club
out of the market.

This is something I've been thinking about for a while, but I've not
really
reached any conclusion. Perhaps I'm missing some factor which would
eliminate the "no more investment" issue.

I'd appreciate the thoughts of others on this matter.

- Andrew

Perhaps I am missing something, because the answer seems so "out in the
open."

New members?
--
Jim in NC

Morgans wrote:

Perhaps I am missing something, because the answer seems so "out in the
open."

New members?

Sorry, I wasn't being clear. I guess my confusion on this matter leaked.

Adding members is great if airplanes are being added. But if an airplane is
being [merely] replaced, then adding members risks causing availability
problems.

- Andrew