Fixed vs. Operating Costs

[Steve Gordon]

Thank you James for setting up this mailing list so quickly, for the
thorough minutes from today's meeting, and for the very detailed squawk list
on 976.  I am extremely excited to see the progress made already.


First I have a question I would like to pose to the group.  EAA chapter 106
which is based at LWM has a roster of over 200 members (myself included).
Some EAA members may be interested in joining a flying club (I spoke with
one today who is actively looking for a club).  Would anyone have an
objection to announcing our forming club to the EAA folks?  Perhaps we can
pick up a few more members.


Second point: During today's meeting I detected a bit of ambiguity regarding
what should go in the fixed cost column and what should go in the operating
costs.  Here's an excerpt from AOPA's FAQ on flying club costs I want to
throw out to the group for consideration:

" Problems frequently stem from the fact that some clubs try to recover a
portion of their fixed costs along with the direct operating costs. This
often forces the total hourly rate, which should equal the direct hourly
operating cost, higher than necessary. It may also compel members to pay for
a minimum number of hours per month whether or not they fly. The result is a
vicious cycle with members flying less because the hourly rate is high
which, in turn, pushes the hourly rate higher because members fly less. In
some areas, a spate of poor weather may be all that it takes to reduce
flying hours and begin the vicious cycle."

The above paragraph articulates a minor concern of mine.  During today's
meeting we entertained the idea of lease-back as a means of meeting an
assumed minimum number of hours required to meet the basic costs to keep the
aircraft airworthy.  The idea of having to meet a minimum number of hours
concerns me.  In my humble opinion, if an aircraft needs to meet a minimum
hour requirement to balance the budget, then something is in the wrong
column.  The club should be able to keep that aircraft airworthy whether or
not it leaves the ground.

In order that we do not fall into the "vicious cycle", I submit that only
those costs that are directly proportional to the number of hours flown
should be included in the operating costs.  These should be limited to
fuel/oil, overhaul, and any other maintenance directly tied to hours flown
(oil changes, tires, vacuum pump, magnetos, and routine avionics
maintenance).  All other costs, maintenance or otherwise, should be covered
by monthly dues.  Keeping fixed costs out of operating costs will produce a
much more predictable budget and keep us from scrambling to meet some
artificial minimum flight hours.

Thanks,

-Steve