Why haven't rental rates come back down?

On 05/13/09 10:54, Dallas wrote:
On Tue, 12 May 2009 20:07:24 GMT, Bob wrote:

My FBO/Flight School charges $95.00 (wet) for a 172, a $3 increase from
last year.

Those are sweet prices. I hope you appreciate the good deal you've got
going there.



Not to make you feel worse, but in my club, we rent IFR-certified 172s
for around $80 wet. Plus we have great insurance for a club membership
fee of $19/month.


--
Mark Hansen, PP-ASEL, Instrument Airplane, USUA Ultralight Pilot
Cal Aggie Flying Farmers
Sacramento, CA

Dallas wrote:
Why didn't rental rates come back down with the price of fuel?

Renters saw major increases in rates during the fuel price run up. After
the oil bubble burst my FBO dropped their rates a tiny fraction as the
price of fuel dropped back down to where it used to be. When I asked what
was going on the chief pilot explained that they call around to other FBOs
and their price is competitive.

I called around and found that he was correct, everybody's price is still
up. I also ran a quick study from their online booking system and found
that their rentals were down 60% in December and 54% in January.

My comment to the chief pilot was that airplanes sitting on the ground
aren't doing anybody any good. He ignored me.

So what is going on? Is there some invisible expense increase at FBOs
that's keeping their prices up or do they not understand the laws of price
and demand?

At least you are still able to fly. At the FBO/Flight School I have
rented from for more than six years, the entire fleet of aircraft have
been grounded since January. The excuse was that they can no longer pay
for the insurance on those aircraft. So now the only 2 remaining flight
instructors are biding their time manning the front desk. I fully expect
the place to close up completely within 12 months. 30 or 40 renters are
now either not flying at all or being forced to drive 40 miles to the
next closest FBO with rentals.

Zack Sten

On May 9, 7:32*pm, Zack Sten wrote:
Dallas wrote:
Why didn't rental rates come back down with the price of fuel?

Renters saw major increases in rates during the fuel price run up. *After
the oil bubble burst my FBO dropped their rates a tiny fraction as the
price of fuel dropped back down to where it used to be. *When I asked what
was going on the chief pilot explained that they call around to other FBOs
and their price is competitive.

I called around and found that he was correct, everybody's price is still
up. *I also ran a quick study from their online booking system and found
that their rentals were down 60% in December and 54% in January.

My comment to the chief pilot was that airplanes sitting on the ground
aren't doing anybody any good. *He ignored me.

So what is going on? *Is there some invisible expense increase at FBOs
that's keeping their prices up or do they not understand the laws of price
and demand?

At least you are still able to fly. At the FBO/Flight School I have
rented from for more than six years, the entire fleet of aircraft have
been grounded since January. The excuse was that they can no longer pay
for the insurance on those aircraft. So now the only 2 remaining flight
instructors are biding their time manning the front desk. I fully expect
the place to close up completely within 12 months. 30 or 40 renters are
now either not flying at all or being forced to drive 40 miles to the
next closest FBO with rentals.

Zack Sten

that sucks, my sympathies.

Maybe you can buy one of their planes cheap when they go under.

"Zack Sten" wrote ...
At least you are still able to fly. At the FBO/Flight School
I have rented from for more than six years, the entire fleet
of aircraft have been grounded since January. The excuse
was that they can no longer pay for the insurance on those
aircraft.

Here's a "cold water shot of reality" from about eight years ago:

Yearly insurance on a 1979 PA28-181, 1M/100K:
Private owners (2 named pilots) $850.
Club (2 planes/ 28 members) $2800 per plane.
Local FBO (training & rental) $8600

On May 7, 4:24*pm, Dallas wrote:

So what is going on? *Is there some invisible expense increase at FBOs
that's keeping their prices up or do they not understand the laws of price
and demand?

--
Dallas

I think that many FBOs were just losing money during the fuel
increases and are now recouping.

-Robert

On Mon, 11 May 2009 15:13:50 -0700 (PDT), Robert M. Gary wrote:

I think that many FBOs were just losing money during the fuel
increases and are now recouping.

I'm sure you are right, but that's a goofy way to run a business... It
uses the assumption that the same number of rentals will occur at any
price.

Given that they call around to check each other's prices, once everyone's
price has floated upwards, they feel comfortable leaving them there. They
love the new profit margins and no one considers dropping their price.

When the rental volume drops, they blame it on the recession and use that
as further reason to hang on to the increased margins.

They don't understand they've exacerbated the effects of their recession by
choking off demand with higher prices.


--
Dallas

On May 12, 10:53*am, Dallas wrote:
On Mon, 11 May 2009 15:13:50 -0700 (PDT), Robert M. Gary wrote:
I think that many FBOs were just losing money during the fuel
increases and are now recouping.

I'm sure you are right, but that's a goofy way to run a business... * It
uses the assumption that the same number of rentals will occur at any
price.

If they were smart in business the first thing they would do is sell
the FBO.

-Robert

Robert M. Gary wrote:
On May 7, 4:24 pm, Dallas wrote:

So what is going on? Is there some invisible expense increase at FBOs
that's keeping their prices up or do they not understand the laws of price
and demand?

--
Dallas

I think that many FBOs were just losing money during the fuel
increases and are now recouping.

-Robert
The FBO at has been under new ownership for less than two years and is
currently in default with their mortgage company and the airport's
owners. Their rental planes have all been grounded since January. A year
ago there were five CFI's available; Today only one, and that poor guy
has to work behind the receptionist desk. Anyone interested in
purchasing a potentially viable facility located at a towered airfield
in Pennsylvania?

Zack Sten