It’s a bit of an “in joke” at the Flying Clubs Initiative, but many phone calls from existing clubs start with “…we are the oldest club in the state/nation/world…”. The point here is not to ridicule, but to realize that there are many, many clubs in the country that are “old” and some of them are old not just in years, but in behavior, operations and culture. By the way, the oldest club still in existence that we know of started in 1909…but feel free to challenge us!
We also take calls from club officers who tell us their club is more than 30-years old and that the founders are beginning to “age-out”, so they are looking for ways to reinvigorate their flying club. It is fascinating and amazing to hear that such clubs are operating the same aircraft and have many of the same members—many of them in the same officer positions! Whilst stability and continuity are both generally good things, it can lead to complacency and hence lost opportunities. Nothing stands still for long in this world, and that is especially true in organizations made up of many people. Not only does membership ebb and flow, but also individuals change over time (for example, get grumpy as they have “seen it all before”). So, in this month’s Question of the Month, we look at ways a club may assess its viability and we then present some ideas to get it back on track. Buckle up, as some of the ideas may have you scratching your head!
Flying Club viability can be tested (and improved) by looking at four main areas of health:
This is probably the easiest way to determine if your club will stand the test of time—or not. If you can’t pay the bills, then your club is not viable, and it will fail once the funds run out.
There are many reasons why this might happen, so let’s look a few and, at the same time, identify some operational traps to avoid and some golden rules to follow:
When doing this calculation, don’t forget to adjust the cost of fuel to reflect gallons per tach hour, rather than the usual gallons per elapsed (Hobbs) hour.
Now is the time for a reality check. If no one is flying a particular club aircraft, question it. Do members not like it? Do they find it too expensive? Do their passengers hate how it smells? (“Little Trees” can help with this—Steve’s club plane smells like a pine forest). Whatever the reason, it is time for some serious strategic planning and to reset the mission and objectives of the club. More on this later.
This is where we must get a bit intangible. A flying club is an exclusive, member run, member limited social organization. Again, if you want some amusement, attend our Workshop series and watch Steve and Drew rail about clubs that operate (illegally) as flight schools, and rogue flight schools that masquerade as clubs. We send invitations to the Workshops to “Contacts” listed for each club on the AOPA Flying Clubs Finder, so please ensure your club’s information is current.
So, back to intangible. By virtue of being an exclusive club, the notion of membership has “value”. Members have access to all the benefits offered by the club, which of course includes flying airplanes, social events, training opportunities, and so on. It is reasonable, then, for new members to pay a membership (or joining fee) in addition to the dues that pay the bills, and usage fees that pay for per-hour costs. By the way, this membership fee should be treated quite separately to any “equity share” that a new member will pay when joining an equity club, and the membership fee applies equally to equity and non-equity clubs, alike.
The membership fee is the price of admission to the club, in just the same way as joining a country club. It is a one-time, upfront commitment to be a member and should never, ever be refundable. This is an area where clubs can really suffer a hit in financial viability. If your bylaws state that membership fees will be refunded, then as you have no idea when a member or members may leave, you’ll need to keep a considerable amount of money as a liability on the accounts, which essentially removes it from working capital. What if a large proportion of the membership get torqued-off by something and leave in a huff? That might well deplete the club accounts to a non-viable level. Country clubs, golf clubs, quilting clubs, cricket clubs…none of these promise to refund membership fees, so why on earth should a flying club? This seems to be something that has been handed down in flying club folklore over the years, but it makes no sense and we strongly advise against it. The membership fee is the price of entry and is a commitment to a long-term relationship with the club, and no one should be offered “a refund” to leave the club! So, having a no-refund policy and setting membership fees at a sufficiently high level to instill a sense of exclusivity and skin-in-the-game will go a long way to avoiding financial catastrophe. As an aside, this will also help weed-out people who think they can join a flying club to “learn to fly”, beat-up the club planes for more than 40-hours, and then leave. For more information on flight training within clubs please visit here and here. In our opinion, flying clubs should be very cautious about having student-pilot members for many reasons—financial, ethical and legal. Bottom line on this topic is that if you rely on, or solicit for, new members based on promises of learning to fly, you will not only be operating illegally, but will also be continually on the edge of the finance precipice. More on this topic during our Workshop series.
Quickly back to the topic of equity shares. If the club is an equity club, new members will pay an equity share that is basically calculated from the market value of the club’s equipment divided by the number of members. More on how to establish the dollar amount in another article, but in the context of this piece, clubs should never, ever, state that it (the club) will buy-back an equity share if a member decides to leave. This is usually a significant amount of money and the club would have to carry that liability on its accounts. Thinking about it, as a club has no idea when members may decide to leave, it strictly must hold the full market value of the aircraft on its books as a liability—which would be financially throttling to operations, to say the least.
So, do not “buy-back” equity shares. A member buys in to the equipment and has a share. It is their asset. If they leave the club then they should be responsible for selling that asset. Many clubs handle this correctly by stating in their bylaws that the leaving member has sole responsibility for selling their share, albeit that the board of directors must approve the sale, since the purchaser will also become a new member and must go through the usual selection and onboarding process—another good reason for having such a process.
Now, good Treasurers are worth their weight in avionics equipment, so turnover is usually very low. Either the rest of the club “encourages” them to stay in the job, or no one stands against them in elections. We are quite convinced that the rotation of board positions is healthy for club operations, but the one position that requires considerable thought is that of the Treasurer. Over the years, the Treasurer gets to understand budgeting, financial management, and the all-important filing of reports and tax returns. There is truly a danger when long-time Treasurers retire from the position, as a lot of institutional knowledge may retire with them. We advise that you get ahead of this and have your current Treasurer capture everything that they do to and to keep impeccable records. We hear quite regularly from clubs that changed Treasurer (for a variety of reasons) but then had idea about the club’s federal and state obligations. At best this may get you into “discussions” with the IRS and state comptroller, but at worse, you could lose a coveted tax-exempt status and/or discover that you owe considerable back taxes and filing fees. Although it is the Treasurer’s job to do a lot of this, the rest of the board—and really, the whole membership—should understand the financial obligations of the club, if nothing else for reasons of “checks and balances”.
Bottom line on financial viability is that a flying club should never be considered as an investment plan. The idea of a club is for its members to enjoy each other’s company and at the same time, have affordable, ownership-like access to aircraft. If a prospective member appears to be over interested on “getting money back” if they leave, then thank them and move on.
Another area to consider is the viability of club equipment, by which we mean the aircraft. In the AOPA Guide at Starting a Flying Club, in Club Connector articles and during flying club webinars and workshops, we talk a lot about the initial selection of club aircraft and the need to dig deeply into the club’s mission and vision during the selection and acquisition process. It makes sense that the same care should be taken with the selection, acquisition and integration of additional aircraft, but in general, less thought is given to continually assessing the existing fleet for alignment with changing life cycles and the rhythms of successful flying clubs. To remain viable and to always have a future vector, a club must understand its reason for being, and the requirements, desires, and aspirations of its members. Given that things change in many dimensions (economic times, members, regulations, pandemics, and many more), a forward-looking club should regularly question whether the existing fleet is meeting members’ expectations. We suggest you make this part of a biennial strategic planning exercise and solicit detailed input and feedback from club members. In our Workshops, we talk about a club that for more than 30-years operated several Citabria aircraft—that’s what they did and what they were known for. Then, membership started to wane, so the board initiated a detailed strategic planning project. On soliciting for information, they found that the exiting members didn’t really want to fly specialist tandem tailwheel aircraft anymore, so (long very story short), they sold them and bought a couple of Grumman Tigers. Club membership soared and the club quickly returned to being successful and extremely viable.
Being a successful club in the past is not a sufficient reason for continued success. Given the natural changes mentioned above and coupled with the cyclical swings in people’s interests, finances, and hobbies, it should be expected that clubs are always considering their future state. We are often asked by existing clubs about how they can increase membership, or at least, retain membership, perhaps to get back to some bygone glory. In many cases, the reality is that the glory has (or should) change and is highly situational.
Here are few ideas to consider if you find that your club cannot continue to operate “as is”:
If truly only 50 members are flying, then the club likely doesn’t need five aircraft, so there is an opportunity to balance the realities of membership with the size of the fleet. This could even provide an unexpected boost for the club. Sell a couple of the underused aircraft and invest in the remainder of the fleet—new avionics and a coat of paint will work wonders for the attractiveness of the airplanes and hence the club.
On the topic of insurance…I’ll try not to re-rant, so listen to Flying Clubs Radio Episodes 3 and 14 for the full fury. Nevertheless, why are many older pilots getting so heated about their insurance premiums increasing due to their age? Now, I’m not drinking any insurance-sponsored Kool-Aid here, and I definitely understand why people are upset about insurance companies not even quoting any sort of rate, but we’ve learnt from experience that if a club (or individual) is not being quoted, it is usually for reason other than just the age of its members. When challenged, many clubs admit to multiple claims, which raises their risk profile in the eyes of insurance companies. If you want to help control insurance hikes, then don’t have claims, which means increasing the proficiency for all members. How? Instigate a club pilot proficiency program based on the FAA WINGS program.
Back to the older pilot situation. As we age, we expect to pay more for life insurance, health care, motor insurance and so on, so why should aviation insurance be any different? If a flying club consists of a few older pilots that has resulted in significantly increased insurance premiums, perhaps the older pilots should be charged an insurance surcharge to keep the lower-risk pilots at a level of dues commensurate with not having any older members. This might sound harsh, but remember we’re talking about long term viability here.
One final thought. Help the insurance company understand that you are a safe club. Insist that members take a phase of WINGS every year and upload members’ transcripts with the insurance renewal paperwork. If you don’t know how to start this, contact Steve or Drew who are FAASTeam Safety Representatives, for more information.
The last two areas of viability to consider in this article are members and procedures. Let’s take them one-by-one, but bear in mind that each could easily take up a whole edition of Question of the Month!
Economic conditions, the density of pilots (numbers, not brainpower), the equipment being operated, value for money and many more factors dictate the opportunities and attractiveness of a flying club to its base of existing and prospective members. When coupled with the life cycle idea discussed earlier, a club would be wise to consider its members as an integral part of all strategic planning exercises. When doing this, here are a few pointers to consider:
Take a look at your roster and flight hours. It is usual for clubs to trifurcate along the lines of those who fly a lot, those who fly infrequently and those who do not fly at all. Considering that clubs should operate with a membership cap (based on a sensible member-to-plane ratio) then it could be argued that if all members pay their dues, then why should this matter? In fact, such an arrangement means that the members not flying are subsidizing those that do fly. Well, another argument is that members who don’t fly are lowering the usage of the aircraft, perhaps to unhealthy levels, and are also “taking-up” membership places that could be filled by more active pilots—active in terms of both flying hours and, importantly, engagement in the club. We see a strong correlation between members who do not fly very much and their withdrawal (often complete) from the activities, governance and running of a club.
So, harsh as it may sound, you should look deeply at your members beyond the fact that they pay dues. Are they contributing members of the club? Do they participate in the club’s events, social and otherwise? Do they engage in other ways, such as willingly taking on board or officer positions? As we know, a flying club is first and foremost a social club of like-minded people, so weeding out “the renter” can be beneficial on many levels. How do you do this…? Well, the best way is to revise your bylaws such that everyone understands that they are a member of a club and that there are expectations. Steve’s club includes this list in their bylaws (borrowed from a club that the Flying Clubs Team helped form a couple of years ago):
Section 21: Members of the club are expected to:
We know of at least one club that includes the notion of “required service hours” in their bylaws. Members are expected to work a certain number of volunteer hours per quarter on behalf of the club in order avoid a fine, but more importantly, in order to stay as a member in good standing. This idea of adding service hours to the notion of being in good standing—beyond the more typical requirement of just being paid-up—is really very creative and reinforces the idea that a flying club is just that, a club.
Steve recently had a conversation with a board member of a well-established club (more than 40 years old), that is suffering the effects of an economic downturn in their city. The club has dwindled to 40 members from its heyday of 80, but still operated four aircraft, and, of the 40 members, only 20 flew the club planes. After a good discussion, the board member decided to propose that the club sell two of its four aircraft, invest in the remaining two and convert non-flying members into social members so they could still enjoy the social camaraderie of the club. A rough calculation showed that the monthly dues would be about the same for the 20 flying members, as there would be less equipment to maintain. You may think this a bit odd coming from the Flying Clubs team, whose mission is to get more people, not fewer, flying in flying clubs. Well, this article is about ensuring sustainability, and, as all gardeners know, sometimes you need to prune to encourage growth. We look forward in hearing back from this club in the near future.
The last element to discuss in this treatise on viability, is that of club procedures—such as bylaws, operating rules, and of course, culture, which can insidiously affect the tenor of any club.
As with any club-based organization, flying clubs are composed of individuals, from different backgrounds, with different expectations, and with different motivations and egos. In the case of a flying club, members share complicated flying machines, hence the need for rules that not only safeguard the club’s reputation, but also considers the wider good of all members. In many ways, club rules must provide levels of protection to club members, from club members.
We often get asked to give our opinion on bylaws and operating rules. By the way, they are different as you’ll read in these past Question of the Month articles:
What is the difference between Bylaws and Operating Rules?
Now, we are not aviation lawyers so do not give any legal advice, but we been at this for a while and know a thing or two, so we are pleased to give a broad opinion in the context of setting-up and running functional flying clubs. Many long-established clubs have dusty old bylaws and rules that have been simply added to over the years. This might remind you of the FARs…when something happens and the FAA deem it necessary to protect us, they add a regulation, and the rule book soon becomes unwieldy and disjointed. Some new flying clubs base their rules on what they find during an internet search, and so end up with bloated rules and procedures. Don’t get me wrong here—rules are important, but they also have to make sense, be enforceable, and be enforced, otherwise the crocodile has no teeth.
We are always pleased when a forming club asks us for information on rules, as we can point them to examples on the Flying Clubs Downloadable Resources website and explain the importance of clear and concise rules and the ramification for not following them.
We strongly advise all clubs to do a regular review of their bylaws and operating rules as part of a biennial strategic planning exercise. This makes good sense as it allows the reviewers to consider rules as an integral part of the club’s mission and behaviors (culture). We also advise you to be careful with bylaw amendments, since, from experience, even the most mundane sounding change will get some people heated and factions will emerge. Also, from experience, allow at least 3-4 club meetings (months) for this exercise as it will require much protracted discussion prior to agreement—and don’t assume that agreement will be unanimous! Nevertheless, it is worth doing, so keep the faith.
Some final words on viability and procedures:
Well, that’s it for now on the topic of club viability. As always, please feel free to contact Steve and Drew, the Flying Club Crew, at [email protected], but before we end, we promised a hint about some future ideas and directions for the Flying Club Initiative.
Part of AOPA’s mission is to continually advocate and provide for General Aviation, and to ensure that GA remains accessible to as many people as possible, especially in the face of changing generational expectations and demographics. Flying clubs are extremely well positioned to support this mission by helping new and returning people to aviation find welcoming and cost-effective places for them to “own their aviation journey”. We’ll be developing this opportunity for flying clubs much more in subsequent editions of Club Connector, but as a teaser, think about flying club operating newer composite aircraft with avionics very familiar to people who enjoy using flight simulators, and also the place of electrically propelled aircraft in a club’s fleet—clean, modern, efficient, low emissions, low operating costs…and very likely to attract a new breed of aviators.
Fly lots and fly safely.