Question of the Month: Should a Flying Club comply with the ADS-B mandate, and how can it be funded?

The question of whether to equip to meet the ADS-B mandate can be difficult even for a single-owner, but when adding the opinions of multiple co-owners into the mix - all of whom likely use club aircraft for different reasons and activities – the topic can quickly become complicated, if not contentious.

This is not an article on the underlying technology of ADS-B, nor on the undisputed advantages that the technology provides to most pilots.  A great deal has been written on these topics and more – see the AOPA ADS-B webpages for detailed information on the technology, mandate and product options. 

Instead, we’ll address the questions: Should a club comply, and - if so - how can it be funded?

Let’s look at the “should” part first. 

Every club is different, and members use the club aircraft for different reasons.  If a clear majority of members use club aircraft in “transponder airspace,” then it makes perfect sense to equip at least with ADS-B OUT.    We say “at least” because, starting January 1, 2020, this is what is mandated in order to continue operating in that airspace.  

In addition to putting you in compliance with the mandate, there are other advantages to ADS-B OUT, including continuing to receive VFR radar advisories (flight following), and the advantage of being cleared through Class Charlie and Bravo airspace when on a long cross-country flight.   Given the time, expense, and disruption involved in a typical OUT installation, which only allows other people to see you, we suggest that you get something for yourself by adding ADS-B IN capability.  Whether you do this with a handheld unit such as the Stratus or use the internal IN capability of many products is up for discussion, but take it from us, once you fly with IN and use in-cockpit traffic and weather you’ll wonder how you managed without it.

What if you don’t fly in “transponder airspace?”

What if the majority of club members don’t fly in “transponder airspace,” or if it is an even split?   One opinion is to look at the mandate as an opportunity to invest in the club and its aircraft, and not to simply considerate it as an annoyance or expense.  

We know that people leave flying clubs for a variety of reasons, but we shouldn’t allow nonconformance to a safety mandate be one of them.   The point of a club is to provide aircraft for its members – aircraft with equipment that meets not just current users’ needs, but also the needs of future members.   We have an obligation to attract new and younger members to our clubs, and pilots should rightfully expect to use club aircraft to the limits of their certificates, ratings, and the regulations.  On the other hand, what if someone threatens to leave because the club intends to comply with the mandate? Well, perhaps you have just seen their true colors regarding the safety of members and aircraft.

One other point to consider is hours flown by club aircraft.  Clubs’ operational budgets are generally based on fixed costs and variable costs.  Fixed costs – paid for by monthly dues – cover things such as the hangar or tie-down cost, insurance, annual inspection, and other expenses that occur even if the airplane doesn’t fly at all.  Variable costs, by contrast, are bundled into the per-hour cost of the airplane, and include fuel and oil consumption, reserves for life-limited parts, etc.  Most clubs also add $5-10 per hour to help with general maintenance, and to help build a buffer for unknowns such as Airworthiness Directives (ADs) and, well, mandates such as ADS-B.  If an aircraft doesn’t fly as much due to equipment limiting access to transponder airspace, then reserves may dwindle, and the club may have to impose a special assessment to pay for the next unforeseen eventuality.

How to pay for equipment

Given the advantages of ADS-B equipage, it represents the logical option for clubs.  The question remains, how should a club pay for it?

Take the case of an equity club, where the club owns the aircraft.  There are really only three options:

  • Pay for it out of club reserves. If this drains the bank balance too much, add a dollar or two to the per-hour rate to help replenish it.
  • Get a loan.  This will require some down payment from reserves, and a monthly repayment paid for by a temporary increase in monthly dues.  When the loan is paid-off, the dues can be reset. (Or not, to avoid having to take a loan the next time.)
  • Assess the members.  Hopefully, your bylaws contain a clause whereby the Board of Directors can assess all members equally to cover unexpected expenses. (If your bylaws do not contain such a clause, it is probably time to revise them.) In this way, all members pay an equal share of the equipment’s purchase and installation costs and it becomes a one-time cost rather than spread over time.

In essence, either you have the money due to sound planning, or you have to come up with financing options.  This is just the same as if you had some unexpected expenses with your house – but with the advantage of sharing the costs across all members, which is one of the big advantages of flying clubs in the first place!

What if you lease the aircraft?

Presumably the arrangement is described in a Lease Agreement, in which maintenance responsibilities are clearly addressed.  The Lease Agreement will describe, for example, who bears responsibility for the annual inspection, oil changes, general wear and tear, etc. The agreement should also be clear about major items such as the engine and propeller and ADs or other unexpected costs, such as ADS-B.  Simply put, the owner should be responsible for factors that affect the base value of the aircraft, whereas the club should be responsible for wear and tear and general maintenance.  A panel upgrade will invariably increase the base value of the aircraft, so it is reasonable for the owner to pay for it.  As the airplane is now worth more, the owner should expect an increase in the lease payments.   

A club should think carefully about this.  If the aircraft is on a long-term lease with a trusted owner, then it may be cheaper in the long-run for the club to pay for the upgrade and so not be subjected to higher lease fees forevermore.  Further, a club might negotiate with the owner such that the club foots the bill for the upgrade, in return for a lower lease payment – in effect, helping the owner to finance the work.

Of course, if the owner isn’t interested in installing ADS-B under any plan, that is their right.  The club must then decide whether to limit operations, or find a new partner.  I know what I would do.

Personal experience

I own an aircraft that I lease to a club, of which I’m also a member, so you might reasonably ask what I did.  I upgraded the panel with a new Garmin GTX345 OUT/IN transponder, and took the opportunity to add a used GTN430W GPS unit so that I could receive traffic and weather without requiring an iPad.  As the panel was open for this work, I also added a used King KX155 NAV/COM, a new PS Engineering audio panel, and replaced the old VOR head with two CDIs with glide slopes.  The club now has a very capable IFR platform, and I have invested in my aircraft.  The base value of the aircraft increased, and so too did the lease payments, which everyone agreed was a good deal for all.  I also got the $500 rebate, and we have been benefiting from ADS-B for well over 12 months now.

What are other clubs doing? We posted on the AOPA Flying Club Network Facebook page and were pleased with the response – which was heavily in favor of equipping early.  To get a bigger picture of equipage in clubs, this month’s Pulse Poll asks “Will you equip club aircraft to comply with the ADS-B mandate?”

ADS-B is a good thing.  Used appropriately, it will save lives and will add modern capabilities into GA cockpits, but time is running out and the FAA has made it clear there will be no extensions.  Very soon it won’t be indecision or even the eventual cost that determines whether a panel gets upgraded, but avionic shops’ capacity and waiting lists.  Equipment may become cheaper, but that is pretty useless if the plane is grounded because of waiting too long.  

Related Articles