What's It Going to Cost and How Do We Pay for It?

No matter how small or large you plan your flying club to be, there will be costs associated with its start-up and long-term operation. These costs can be mapped out on a spreadsheet and managed by the club treasurer or you may choose to simply enter a few basic headings in a ledger and track them as you would your household expenses. Every option is as good as any other. As long as your financial management system gets the bills paid on time, and balances those expenses against the club’s income, you’re doing fine.

Some of the more important economic considerations you will want to take into account will be insurance, financing, maintenance costs, and the space your club and aircraft will inhabit. There are options and alternatives for each of these items, so let’s consider them separately.


Insurance is one of the more significant costs your flying club will incur. Even if you lease the aircraft your club flies, the club, not the owner, will need to carry a non-owner’s policy to cover liability at a minimum, and in most cases, additional hull insurance that covers the actual aircraft.

Liability insurance is exactly what it sounds like. It protects your club from the risk of liabilities resulting from lawsuits or other claims. Hull insurance covers the costs associated with the repair or replacement of damage done to the aircraft itself. You might think of it as being similar to collision insurance coverage you carry on your car.

Several variables will affect the cost of your insurance policy, all of which are within your control to some extent. Operating complex aircraft, amphibious aircraft, or aircraft with a high value will typically result in higher insurance costs. Premiums and deductibles may also increase if your club includes a large membership, permits student solo flights, or allows aerobatics.

Then again, you may be able to mitigate some of these costs by establishing strict currency standards, encouraging safety education for club members, and restricting certain activities—be sure to discuss these with your insurance company and try to negotiate some discounts.

As for the issue of higher insurance costs for clubs with larger memberships, that can work to the advantage of your club’s members, even as the club grows.

An experienced pilot with more than 1,000 hours total time owns an older Cessna 172 valued at $40,000. Liability and hull coverage for this pilot is priced at $875 per year.  The XYZ Flying Club with seven flying members, two of whom are student pilots, operate a similar C- 172, and contracts for similar insurance coverage. Their policy is priced at $3,200 per year.

While it might appear the club pays significantly higher insurance costs, when calculated on a per-pilot basis, it comes out to just $457 per year, per pilot. This means that a low-time pilot flying the club airplane actually pays less for insurance each year than an experienced pilot who personally owns and operates an equivalent aircraft. By being part of an active, well-run flying club, pilots at every level of experience can realize considerable savings while remaining current and enjoying the privileges of their pilot certificate.  This is a truly wonderful advantage of flying clubs—costs are shared among all members.

When shopping for insurance, speak openly with your insurance broker to find ways to get the coverage you need, while keeping your costs to a minimum. AOPA's insurance partner, AssuredPartners Aerospace, provides a staff of professionals who are very experienced in dealing with flying club policies.


Financing in the strictest sense of the word is only pertinent for equity flying clubs; that is to say, flying clubs that own the aircraft they operate. Non-equity clubs lease their aircraft, so the owner carries any financing costs, not the club. In this case, we recommend that you negotiate an exclusive-use lease of at least one year in duration and that you further negotiate a lease fee that is fair to both the club and the aircraft owner.

You might also contact an existing club to ask if they would share the language of their aircraft lease with you. AOPA’s Flying Club Finder can be helpful in locating clubs with similar characteristics. Most operational clubs are happy to share their club documents with new clubs in formation.

As for flying clubs intending to purchase an aircraft, there is a wide assortment of financing options available. Ideally, you’ll utilize an organization you have a relationship with, one that is willing and able to work with you to accommodate the unique needs of your specific flying club.  A good place to start is the AOPA Finance group, who have extensive experience working with flying clubs.

Typically, a down-payment of 20 percent to 50 percent will be required when borrowing from a traditional lending institution for the purchase of an aircraft. Unless your flying club has been in operation and financially stable for several years, it is also likely the lender will require an individual, or several individuals to personally guarantee the loan.

As with any large purchase, shop around for services that will meet your financial needs and be prepared to negotiate the best deal possible for your club and your situation.

Of course, lending institutions are not your only financing option. Many equity clubs require significant buy-in from members when they join. This buy-in cost is often several thousand dollars and can be used to purchase the aircraft outright or to provide the down payment.  As an example, if XYZ Flying Club establishes their buy-in at $10,000 per member with a requirement of 15 members, the result is a liquid fund of $150,000 to use for the purchase of an aircraft and equipment, payment of insurance premiums and a budget for initial maintenance needs.

This method can be advantageous because it removes the cost of debt service or interest on the debt since there is no debt in this model. The club buys the aircraft with cash, providing each member with access to an aircraft for only a fraction of its full purchase price.

In the case of equity clubs, the club’s legal entity owns the airplane. The members each own an equal share of the club, which happens to own the airplane. Should a member decide to leave the club for any reason, the club bylaws can be constructed to allow them to sell their share to someone else, recouping their initial buy-in cost and further lowering the cost of the flying they did while an active member of the club.

An alternative model is to use a lower membership buy-in for the down payment on a loan and to spread the financing payments by adding to the monthly dues.


In aviation, flight is optional, but maintenance is mandatory. At a minimum, your aircraft will require an annual inspection, or if it is an experimental aircraft, an annual condition inspection. There also will be oil changes to consider, tire and brake replacement, Airworthiness Directives that need to be complied with, and perhaps an eventual upgrade to the panel, an engine overhaul, or new paint and interior. All these things carry a cost that should be figured into your flying club’s rate structure—we’ll talk more about this in the section on budgeting.

Often clubs will add maintenance costs into the hourly rate. Using a Cessna 152 as an example, the club might charge $30 per hour, dry for the operation of the airplane. That breaks down to $15 per hour for maintenance expenses and $15 per hour to go toward the engine overhaul fund. By calculating the Time Before Overhaul (TBO), rates can be set to cover both the estimated aircraft maintenance costs and an engine reserve.

A larger aircraft with a more powerful engine and a more expensive overhaul would very likely incur higher costs, requiring a higher hourly rate, but the principle is the same and can be calculated with reasonable accuracy for most aircraft.

Budgeting for future expenses is the best way to ensure the club is in a good financial position and can help prevent unpleasant financial challenges from arising.

One of the most perplexing maintenance questions faced by flying clubs is whether they are required to perform 100-hour inspections on club aircraft, as per FAR91.409(b).   A more complete treatment of this topic is provided in the Downloadable Resources,  but in short, if a club follows the rules related to compensated flight training in club aircraft, then they may not have to perform 100-hour inspections.

Now, there’s legal, and then there’s safe.  If your club falls outside of FAR91.409(b), we suggest that you think about it as an opportunity for flexibility rather than not needing to do the 100-hour.   For example, if a club plane has flown 95 hours since the last annual and you anticipate another 15 hours being added before the annual is due, you might decide to wait for the annual.  If, however, the aircraft has flown 95 hours in the first few months since the annual and you anticipate another 90 hours being flown before the annual, it would be prudent to consider performing a 100-hour inspection.  Don’t let cost be the factor here.  If the 100-hour inspection costs, say, $1,000, then add $10 onto the aircraft per-hour cost, and the problem is solved. 

Home Sweet Home 

Where the club chooses to store their aircraft, and what sort of a space the club will meet in are decisions that have long-ranging implications. The primary consideration may not be the monthly cost of the rent, although that is certainly a factor. Instead, your club should consider which option will provide the best protection for the aircraft and the most agreeable meeting space—while keeping costs down.

In the desert southwest, where the weather is dry for much of the year, it may be a reasonable choice to keep your aircraft at a tie-down. The cost difference between a tie-down and a hangar can be considerable, and that difference in cost will more than likely influence some members to keep operating costs down by storing the aircraft outside.

In the humid southeast, or the snow and ice prone northern parts of the country, outside storage may save money in the short term but lead to expensive maintenance issues in the longer term. In many parts of the country, T-hangars, or even shade hangars that provide some protection from the elements, may be a better choice in the long run, even if they are more expensive on a monthly basis.

As for meeting space, that is a very club-specific question. Many flying clubs meet in the hangar where their aircraft is stored. If your membership can support an executive hangar with space for the aircraft, seating for members, and perhaps even a restroom, you’ll have everything you need in one package. If on the other hand, your airport has a public meeting room available that meets your needs, your club may find real success without the need for funding a large space to use on an exclusive basis—another good reason to be on good terms with your airport operator!

Don’t rule out the option of joining forces with other organizations to share meeting space. Many aeronautical and social organizations meet on public airports. They very well may see the inclusion of your club into their meeting schedule as a real benefit. Your club may find sharing the cost of meeting space with another organization allows you to meet in a larger, more appealing space than you might have been able to afford on your own.

Get creative and be broadminded as you search out a home for your club. If you ask, you may find your airport operator is willing to offer you a discount on rent because your club is a non-profit social organization. If you throw in the possibility of an in-kind contribution like lawn mowing, or something else that might benefit the airport on a regular basis, you may enhance your chances of receiving a favorable rate.

It never hurts to be a good neighbor, especially at your local general aviation airport.

Creating Your Budget 

If the idea of creating a budget makes your eyes glaze over, fear not! Creating a budget is pretty straightforward. See the Downloadable Resources for budget examples. At the end of the day, budgets are a cash-flow issue, so spend time thinking about the numbers—and timing—of cash in and out of the club coffers. It is wise to set fees a few dollars higher, rather than cutting it too close and having to dip back in the well by increasing dues or levying an assessment.

Here are some of the things you should consider when budgeting for your club:

Start-up Costs:  These are the initial, one-time costs involved in setting up the club:

  • Filing costs for incorporation with your state’s business agency
  • Fees to apply for tax exemption status
  • Lawyer’s fees for the above
  • First year’s insurance—usually required upfront
  • Hangar deposit—often the first and last month payment is required upfront
  • Aircraft procurement costs—for example:
    • Down payment on a loan
    • Initial lease payment
    • Aircraft registration with the FAA. $5, but it all counts!
    • Sales tax—don’t forget this!  The rate depends on your state and can be a surprise if you haven’t budgeted for it.
    • Pre-buy inspection
    • Escrow, title, and damage history search
    • Getting the aircraft home—ferrying costs, etc.

For a new club, the start-up costs set the initial buy-in fee, sometimes called the initiation fee, members fee, or something similar.  Basically, add up all the start-up costs and divide by the number of club members, to get the per-member contribution.  Don’t get hung-up on membership numbers.  If five people establish the club, then divide the start-up costs by five.  As other members join, re-balance ownership by paying back the founding members until everyone shares equally in the club.

The Pre-buy

Buying an airplane is easy. Buying a “good” airplane takes time and care! Once you’ve found the perfect airplane, a pre-buy inspection is an absolute must. Complete and up to date log books, damage history, ADs that have (or have not) been complied with, and corrosion are just a few of the things a mechanic will check during a good, thorough pre-buy inspection. Spending a relatively small amount of money on a pre-buy can save you a huge amount of money later.  Find an independent mechanic for the pre-buy—one who does not know the owner or the airplane is preferable. AOPA has a pre-buy checklist here:

If you don’t know where to start in finding a mechanic, call the FBO where the airplane is located and ask for a recommendation. Also, there are several companies that can be found online whose purpose is to help you with the pre-buy process.

Bear in mind that there are no standards for pre-buy inspections and so you are somewhat at the mercy of the mechanic—so choose wisely.  You might also want to consider doing an early annual inspection as this is covered by standards and checklists.

Depending on where the airplane is located or where the pre-buy inspection was performed, you may need to make arrangements to get it home. You can do it yourself, or you can contract with a ferry pilot.  Ask your local maintenance provider, flight instructor, or FBO for recommendations—but make sure you include some budge to cover this cost.

Escrow/Title Search

Before writing the check, you want to be sure the airplane has a clean title and is free of liens or other encumbrances—just like when buying a house.  That’s where the title search comes in. The title company will do all the legwork to make sure everything is in order.   You also may want to use the services of an escrow company to handle the actual financial transaction.  This protects you from an unsavory seller! Again, there are a number of companies who can do this for you.  AOPA has some very good information at this link:

Getting the Airplane Home

Depending on where the airplane is located, you may need to make arrangements to get it home. You can do it yourself, or you can contract with a ferry pilot. Ask your local maintenance provider, flight instructor, or FBO for recommendations. Also look in the classified section of the many aviation magazine and newspapers.

Before you actually fly your new aircraft, be sure that the paperwork is fully in order. You can find lots of interesting and important information, as well as the required forms, by searching for “Buying an Aircraft” on the AOPA website, and in Chapter 5 of the “Guide to Starting a Flying Club,” in the Downloadable Resources.

Cost of Operations

After the club is established, there will be recurring operational costs—we’ll separate these into fixed and variable costs.

Fixed Costs:  These are costs you incur whether or not the airplane flies:

  • Hangar
  • Insurance
  • Tax filing and annual legal entity renewal
  • Average base cost of the annual inspection.  Some years will be more, some less depending on what work is necessary
  • GPS database updates
  • Scheduling software
  • IT costs, e.g., website fees, etc.
  • Budget for social events

Determining your fixed cost is the basis for your monthly dues.  If for example, a club has 10 members and monthly fixed costs are $1,000, then the monthly dues should be at least $100 per person.  We say at least, as you’ll be wise to tack on a few dollars more to start a reservethings can and do happen!

Variable Costs:  These are costs that are incurred as a direct result of flying the airplane, including:

  • Fuel (if you are going to charge "wet" rates)
  • Oil consumed
  • Pro-rata per hour for hourly-based inspections
  • General maintenance reserve (things like brakes, tires, replacement bulbs, etc.)
  • Limited-life parts reserves, such as engine and propeller
  • Other "what-ifs"—a few extra dollars per hour to handle things that pop up—like ADs, etc.

These variable costs are the basis of your per-hour usage rate. As with the monthly dues, your hourly rate should, at the very least, cover those costs, so don’t be shy to round-up a bit to help handle the inevitable unknown.

As you are building your budget, please keep this in mind:  Even if you’re operating as a non-profit with tax-exempt status, it doesn’t mean that you can’t maintain a positive balance.  If you build your budget so that you’re only just covering your costs, you’re courting financial disaster! If your fixed costs are $100 per person, then set your monthly dues at $110 per person.  If your hourly rental rate is $60/hour dry, then set your hourly rental rate at $65/hr.

These are just examples, but you get the idea.  Set your rates with the idea of not just maintaining, but increasing your cash reserves.

Stash Some Cash

Regardless of what airplane you end up with, you’re going to need some operating capital—extra money—in the bank.  This is your cash reserve.  Establishing a cash reserve up front is very important.  It allows you to handle unexpected expenses without having to resort to an assessment, which is a polite way of asking members for more money. You’ll also use this fund to pay your normal monthly expenses. Some clubs choose to have more than one bank account with each being earmarked for a separate expense, for example, one for engine reserve, one for unexpected expenses such as ADs, and one for general operating costs.  As with so many other aspects, there is no single right or wrong answer.  As long as you have sufficient cash reserves, you’ll be fine, but remember to consult a tax attorney or CPA about tax implications.

Next Section: Make It Official