SkyHi Success

SkyHi Success

Flight school touts instructor compensation, targeting top clientele

By John F. Infanger, Editorial Director

March 2001

NASHVILLE — Some eleven years ago, Jim Allen packed up his flight training company and moved to Nashville International Airport, transporting two decades of experience as a flight school operator to a more promising market. He left behind his Texas roots and a very oil-dominated and
unrebounding market in Midland-Odessa. He brought with him some key operating principles, however, which have led to renewed success in the center of the U.S. Jim Allen, president, JMA
Aviation/SkyHi Nashville

Explains Allen, 61, "Midland-Odessa has a history of a roller coaster with the oil patch. Everybody seemed to think it would rebound, but of course it didn’t. The people that survived there are basically the old money people who pulled a lot of money out of the oil patch years before, but for the average small businessman and workingman it was time to move on."
A visit to Nashville led Allen to look around the main airport for opportunity and to explore the local market potential. "I got a real good feeling that we could do well here," he says, "and I can truthfully say that the feeling paid off. It’s been a very good move."
Allen negotiated a 20-year lease as a subtenant of Stevens Aviation, today Mercury Air Centers. His leasehold includes some 16 covered ports for aircraft storage, office facilities, and an arrangement to purchase fuel at discount for his aircraft and those of his customers. The only rate increase written into the lease calls for an annual rent adjustment of 6 percent.
SkyHi Nashville operates under the umbrella company, JMA Aviation Corporation, which also offers aircraft rental and limited aircraft sales.
Allen explains his business philosophy is one that says if you surround your business with good employees and customers, you can be successful. With a flight school, that means attracting and retaining quality certified flight instructors (CFI), an ever-growing challenge for many such small businesses today.

Allen started his career ferrying freight DC-3s and Convair 440s for companies around Dallas, before venturing out on his own in the early ’70s and purchasing a flight school in Midland-Odessa. In time, he had two schools in the region. Along the way, the "school of hard knocks" taught him that how he compensates his instructors could be critical to his long-term success, he says.
"We have never taken a penny of the instructors’ money," he explains. "It’s one thing that I have always done, and it’s something that probably not another flight school in the United States does this way.
"In other words, if the instructor’s fee is $30 an hour, which it is now here for a single airplane, whether they’re in the classroom, the simulator, or the aircraft, they get that rate of pay. We take nothing from it.
"This is not the norm. Flight schools, for some reason, think that they have to take 40 or 50 percent of the fee. What you wind up with is a revolving door of instructors who know that they can’t make a decent living while they’re there. Are they going to give it their all? Probably not.
"On the other hand, we’ve got instructors here who can make a decent living. All of my instructors make between $750 and $1,000 a week. That’s kind of unheard of in the industry."
Allen says that his compensation plan helps motivate instructors to have personal involvement in the success of the individual students. "They’re eager to do anything to help promote the business," he says.
"If you were training here with Instructor A and he got sick, we’d call you up and tell you we would like you to fly with Instructor B. Well, what’s happening here in the interim is that Instructor A has thoroughly conferred with Instructor B about you and your experience. There’s no guesswork involved. Instructor B will later talk with Instructor A about what you did and what you were assigned for the next lesson. So, what we have here is a very tight chain.
"By running the business with that kind of chain link between instructors, we have a very good response from the clients — a trust."
SkyHi offers a fleet of 13 singles and twin-engine aircraft, and owns three of them (two new 172s and a Duchess). How he structures the leasebacks, he says, is a critical component of being a profitable flight school.
"It’s not rocket science," he says. "You cut a deal with an aircraft owner to put his or her airplane on as a working airplane. The way we do it is simple: We say, whatever we’re going to run an airplane per hour here, JMA Aviation will take 15 percent. Then we make money on fuel to a degree; we make money on selling school supplies; and we well a few airplanes."
SkyHi is also a Cessna Pilot Center, and Allen says his affiliation with Cessna affords opportunities to sell the manufacturer’s line of new single-engine aircraft it brings to the flight school.
"There’s a lot of ways that the business owner can make a good living out of this without taking the instructor’s money," he says. "I think the key to all of this is the clientele. The selectivity of the people who trade out here has a lot to do with it, because they will continue to come back again and again. And, they’re going to tell another good person. If you reach a peak in clientele to where it continues to feed on itself, the only way you can stop it is if you the owner decide you want to try and be everything to everybody."

In May 1999, Allen saw his offices and aircraft destroyed by a tornado, and his company got up and running by working with Cessna and assistance from his landlord, Mercury, which provided a 10x20 trailer for offices and access to the FBO’s ramp.
"Cessna came down with a good sales pitch and it was an opportunity to get some airplanes online quickly," recalls Allen. "We definitely needed to get back up in the air."
Having survived a tornado and total relocation of his business, Allen has made it through challenging times. Yet, he says some operators today face even greater survival battles, particularly because of insurance and the new dynamics of how students are being trained.
"The insurance providers have dwindled down to two," he explains. "It hasn’t affected my business, but I think we’re one of the most blessed businesses in the industry. We are insured with USAIG, which by nature doesn’t insure flight schools. It has an awful lot to do with our track record. As long as we keep our nose clean, we’re fine.
"However, the other schools, especially the smaller ones, are not fine. From what I hear, in most cases the insurance companies have doubled the rates and in some cases even gone beyond that. From what I understand, they’re putting in a stipulation that if you have less than five airplanes, they don’t want to insure them. And if you’re a new kid on the block without much experience, they don’t want to touch you either.
"In the past six to eight months, I’ve seen a number of small flight schools in the area go out of business."
On the positive side of the flight training business, Allen says the new regulations instituted by FAA in 1998 have been a plus, particularly the cross country requirement for night flying and one for a minimum of three hours logged time flying in the aircraft under instrument flight rules.
"It’s an exposure factor that is a very safety conscious way to write it into the regs, and it probably should have been here a long time ago," says Allen. "They’ve also added some meat to the multi-training. In other words, in 1998 they added some real good things to the curriculum."