Fixed vs. Operating Costs

[Mike Lysik]

Hi Guys...

I modeled my spreadsheet just as Steve has mentioned.  I have broken out the 
fixed costs into a yearly or monthly "dues" from each member.  I'll send out 
the spreadsheet tonight.

Mike
----- Original Message ----- 
From: "Steve Gordon" <steve at media-phile.com>
To: <eefc-core at workingcode.com>
Sent: Sunday, April 05, 2009 11:37 PM
Subject: Fixed vs. Operating Costs


> 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
>
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