StephensProject

In the future, I would like to open up a small business giving flight tours in an undecided location. Could somebody go into detail on what all you would have to do to achieve this?

I know I would need a commercial license to be able to get paid and an instrument rating, but as far as expenses, how would that work? Obviously I would assume you need to own the plane/helicopter you are flying... But more than that, you would need to cover fuel, a hangar fee to keep your aircraft parked... What more would you need to do? I know I'm obviously missing a lot.

bedrock

You don't have to own the plane, sometimes owners will lease you the plane on the condition you maintain it. As an operator for hire, you'd have to get regular 100 hr inspections OR have a progressive maint. plan in place. But you sound like someone who has little experience in this area, so the costs would be pretty high if you don't know how to maintain your own aircraft.

widespreadflyer

Also you'll need a LOA from the FSDO to allow you to operate under 91.147. Basically you'll just need to have a drug testing program in place.

Twin Wasp

You plot costs versus hours you plan to fly and figure an hourly rate. Say you plan 6 half hour flights a day and you'll fly 6 days a week. That's 18 hours a week, 72 hours a month. Some costs are figured monthly. Say your hanger costs 350 a month. So for each hour you fly $4.86 is put away for the hanger. Same thing for insurance, it'll be a monthly amount divided by hours flown. Some costs are by the flight hour. If the engine overhaul is $20,000 and has to be done every 2000 flight hours you put $10 dollars away every hour you fly for the overhaul. Oil change every 50 hours at $100 dollars - there's another 2 dollars an hour. Add all the costs up then add some for unplanned expenses. Say you have to change a tire or fix a radio. Put $15 away every hour and hope nothing happens the first couple months. Add all your costs up and you'll have an operating cost per hour. Then decide how much you want to be paid and add that on top.

MaxThrustPower

Quote:

Originally Posted by Twin Wasp

You plot costs versus hours you plan to fly and figure an hourly rate.... Add all your costs up and you'll have an operating cost per hour. Then decide how much you want to be paid and add that on top.

That's not a bad start. But it's more complicated than that and you'll need to be flexible about how you plan your costs per hour. The million-dollar question is, how many paying passengers are you going to be able to find and how much are they willing to pay to take your tour? You can't take demand for flights out of the equation and just expect to fly x number of flights per day/week/month. You can estimate, of course. But realize that you may find you can't fill every flight. You may find you can find 100 passengers a week who will pay $75 ($7500) for a flight but only 60 passengers who would pay $100 ($6000). And how much is your competition charging for the same tour? Finding the right price point is critical. It might be a good idea to pay a consultant to do a "market study" for you before you sign any commitments for airplanes, hangars, or spend money promoting your tours.

Or what happens if there is weather? Or the plane is down for maintenance? Or you're too ill to fly? Ultimately, you'll need to have some padding on your numbers to cover your "fixed" costs such as the monthly hangar rent (due whether you fly or not.)

In air touring, there may be a "seasonal demand" more in some times of year than others. Maybe you can fly 6 flights a day during those busy times but only 2 per day during the off season. Can you break even on your fixed costs during the off season to keep the business afloat? You might consider if you can find a "sideline" flying business to fill those gaps. Or a nonflying business that supplements your main flying gig to keep bread on the table.

Of course, you'll need to plan how you're marketing your air tours. Advertising, websites, brochures, and the people cost associated with that needs to be accounted for. Picking a good company name and logo can make you or break you. You'll probably find it's best for you to hire experts to find you customers instead of you making amateur efforts to figure out how to best do it. Use your time for your expertise, flying the airplane.

Depending on the scope of the operation, you might even need to hire someone to man the phones, handle scheduling and administrative tasks.

Taxes are complicated on a business operation. You'll probably need a CPA to handle your books on a weekly or monthly basis. How much is that going to cost you?

You may need some special liability insurance for a commercial operation. Insurance on just the airplane itself is not enough. What happens if there is an injury or mishap and you get sued? Or if someone sues you for breach of contract or other types of business liability?

And how much money do you need to get this business going? Almost every business starts out in the "red" before they start turning a profit. Don't mix your personal funds with your business funds and set a limit on how much you'll invest before you walk away if it fails.

There's a lot more to business than some pilots estimate. That's why so many airline pilots start businesses that don't survive! It's not as easy as you might think.