The Golden Rule of GA..........

[BRL]

Just read on another thread someone has paid a huge wad of cash upfront for flying lessons. I know it is up to the individual so I am not knocking him for doing this at all, as I say, everyone for themselves and all that. I always thought though the golden rule when starting out is NOT to give cash upfront.

Some may disagree, hence the question, 'what do you think the golden rule/s of GA are as far as you are concerned'......?

[stiknruda]

1 - The only hard thing about flying is the ground

2 - Gravity will always win, eventually

3 - It will always cost more than you expected


Stik

[leeds.flyer]

Well, I just wanted to comment on why I had decided to do this. I know you're not knocking me for doing so BRL, but just wanted m say :-)

Basically, the money was one less thing to worry about when booking lessons. When I origianlly started out, it had more to do with when I could afford it, as opposed to, when do I WANT to fly.

I guessed that it was highly unlikely that such a big copmpnay as Multiflight would go bust/close down etc. and I felt my money was safe.

Also, if I ain't got it - I can't spend it on other things :-)

I would however like to hear why people are against doing this??

Cheers
Paul

[G SXTY]

Never pay up front unless you have to, and if you do, pay as little as possible. I stumped up a $500 deposit to visit a well-known school in Naples, only to find they'd been shut down when I got there.

They very quickly refunded the money, but I could have done without the aggro, and I can well imagine a less scrupulous operator pulling the shutters down, taking the phone off the hook & leaving students with a large hole in their bank account and no school.

Caveat emptor

[KCDW]

leeds.flyer

This recent thread provides an example of the risks...

http://www.pprune.org/forums/showthread.php?threadid=142168

[Gertrude the Wombat]

I would however like to hear why people are against doing this?? The school is essentially borrowing money off you.

Now, you wouldn't pay them up front unless their rate-per-hour for people who paid up front was sufficiently lower than then rate-per-hour for people who pay as they go that you were going to be better off, would you, ie the discount on the hourly rate is the interest they are paying you for borrowing your money.

Plus, given all the stories around of flying schools going bust and taking their students' money with them, you're going to want a bit more to cover the risk, aren't you.

So, in order to get anyone to pay up front, the school ends up having to offer a discount to up-front payers which is more than the interest they would have had to pay had they borrowed from a bank instead.

There's only one reason they would pay you more money in preference to paying the bank less money, which is that they've already tried the bank and the bank refused to lend them anything because their finances were too dodgy.

(This is roughly what I posted last time we had this discussion and nobody has pointed out any flaw in my logic or arithmetic.)

[tmmorris]

I think I had a lucky escape at Welshpool in 2001: as a novice I knew nothing of the dangers and paid upfront (though the majority was paid on day 1 of the 4-week course); subsequently the flying school closed but not until I'd finished my course...

Tim

[distaff_beancounter]

From my experience as a cynical old beancounter:-
Customers (or student pilots) are often the last to hear that a company is becoming insolvent
The directors have to keep everything quiet, as a rumour about insolvency would prevent a financial rescue effort
Insolvency may have been creeping up for some time, but customers are only aware after the company has ceased trading
With hindsight, everyone says that the directors should have stopped taking deposits, but they were accepting every bit of money that they could lay their hands on, in order to try & rescue the business

Then once a liquidator has been appointed, the proceeds of the sale of the company's assets has to be distributed in the order specified by the Insolvency Act. The order for this is broadly as follows:-
[list=1]
Liquidator's fees & expenses (of course!)
Secured creditors - usually the bank & finance companies who have funded aircraft. These are paid the proceeds of assets over which they hold a charge. Banks often hold a charge over all the company's assets.
Preferential creditors - Inland Revenue, Customs & Excise & employees
Unsecured creditors - this includes everyone else, including customers who have paid deposits up front
Shareholders
[/list=1]
In many liquidations, there are only sufficient funds to pay 1 and 2 in full. If any funds do trickle down to 4, unsecured creditors often only get a few pence in the pound of what they are owed.

[J.A.F.O.]

GA Rules? My top 3

1 - The only hard thing about flying is the ground

2 - Gravity will always win, eventually

3 - It will always cost more than you expected


Stik
Stik

Almost with you on that except my list would be:

1 - It will always cost more than you expected

2 - Gravity will always win, eventually

3 - It will always cost more than you expected

I know that I said "It will always cost more than you expected" twice, but that's because it costs so much more that it counts as two.

[down&out]

Fortunately I didn't have to pay to learn to fly (thanks HM taxpayer and the UAS)

Unfortunately I bought into what looked like a reputable outfit "European Flyers" Euroshare Gold scheme, run by Tony Holden. This company had been around for 10+ years and looked OK - but hey this was a hobby and I was naive - our friend the beancounter had not posted his words of wisdom. Also I assumed, but did not check, that my "share" was for part of an a/c. So when the company was folded, I - and around 50+ other people in the same situation, lost our money.

We all thought the company was stable and financially sound and all proven wrong (the aircraft had seperate mortgages on them so the banks took all the proceeds of sale of the a/c):ugh:

So I totally agree, if the reduction in costs are greater than the company going to the bank be very aware. Other than that, be aware - too many schools have folded and I am sure will do so in the future......

[DubTrub]

1. Don't hit the ground.

2. Don't hit another aeroplane.

[v6g]

3 useless things in GA:-

Runway ... behind you
Altitude ... above you
Fuel ... on the ground

[High Wing Drifter]

Never go where your brain didn't arrive 5 minutes before.

[Pull Back]

V6G Just a small addition .........


-------------------------------
3 useless things in GA:-

Runway ... behind you
Altitude ... above you
Fuel ... on the ground - unless you are on fire:)
------------------------------------------------------------



PB

[distaff_beancounter]

V6G Just a small addition ......... AND ..... The 4 lifejackets that somehow got put into the nose luggage locker of the twin, before we set out on the long direct route over the sea, UK to Antwerp ......:O

[squibbler]

Hmmmm, cash up front. No, no, no.

A few years back a neighbour of mine was telling me a tale of woe. He'd paid £3000 up front to a flying school (who shall remain nameless) and ,you guessed it, 7 hours into his flying the school went tits up. Further into the conversation he mentioned how large his credit card bill now was.

"Did you pay via credit card then?" said I.

"Errr yes" said he.

"No problem then, ring your credit card peeps & explain your situation. They've effectively lost their money to the flying school, not yours - you should get virtualy all your money back"

"Well b**gger me" he said. I declined.

He did get the balance of his £3000 back within a couple of weeks less an £80 admin fee and was an extremely relieved and grateful man.

Golden rule? Whatever you're buying, be it £3000's worth of flying lessons or a new sofa from from DFS, use the credit card!

[gingernut]

Yeh, its something to do with the consumer credit act. The cc companies tend not to shout about it, but I seem to remember that you have protection if you spend £100 or more. Interestingly, if you spend only £101 on the credit card, and pay the £2899 balance cash, the cc company is liable for the £3000.

The law may well have changed, so check before relying on my words of wisdom.

[RodgerF]

"If you've time to spare"

"Go by air"

[BeauMan]

My three golden rules?

1 - Never pay for anything upfront

2 - Never let the aeroplane go somewhere my head hasn't already been five minutes earlier

3 - Never stop learning

Seems to all be working so far... :ok:

[Hampshire Hog]

I live near Blackbushe where the European Flyers debacle referred to above took place. I wasn't on the receiving end, but I know several people who were and I wouldn't have wanted to be one of them!

There are very few flying schools, no matter how big or well established, with which you should invest vast sums up front. If you absolutely insist, get hold of a copy of their accounts for the last 3 years or so and (if you don't understand them) ask someone who knows to explain the school's financial history and current financial risk. If the accounts aren't published and the school won't let you have them, don't place your money with it. Doing this at least allows you to make an informed judgment.

Paying up-front for a discount might seem attractive, but it is better to manage the funding for your flying yourself (and to view that experience as part of your career development).

The simple message is: If you give your money to a flying school in advance, you may not get your flying and you may never see it again!

[surely not]

If you have the funds to pay to the Flying School, why don't you invest them in an account with a bank that enables you to access funds at 10 days notice or faster, and earn interest on the account for yourself!!

[distaff_beancounter]

Hampshire Hog Whilst I agree with your advice about getting the accounts of schools, that in inself may not prevent students losing deposits. Over the last twenty years, I have seen many insolvencies in GA, including European Flyers.

For a private company, accounts do not have to be filed at Companies House until 10 months after the company's financial year end. A lot can change in those 10 months.

Also I have seen a lot of "creative accounting" as in European Flyers supposed sale of "shares" in aircraft, mentioned above.

When looking at published accounts you need to be able to look at the more subtle factors such as whether the "cash at bank" is more than the "students deposits". Are the larger creditors (including loans to the company by the directors) secured & so will thus rank above the the students deposits in the event of a liquidation? Have the assets, including aircraft, been revalued in the balance sheet? This makes the balance sheet look more healthy, but does not actually put a penny into the bank account.

Apart from the accounts, you need to look at the Register of Charges at Companies House to check just what assets have already been pawned to the banks, finance companies & even the directors. These creditors will all rank ahead of the students in a liquidation.

Anyhow, why is there a culture of large deposits up front in flight training? I can understand a double glazing firm wanting a deposit before they manufacture a dozen windows to fit a house, It the customer defaults, then the windows already made, are only worth scrap value. So what costs does a FTO have to incurr up front, especially for PPL training?

My advice is always - do not pay up front!

But, if you must, then pay by credit card, so that you may be able to reclaim any losses from the credit card company if the school does go bust.

[High Wing Drifter]

distaff,

People pay up front because the hourly rate is reduced. You can knock £500 off a PPL by paying up front. I just lobbed a grand in at a go for convienience.

[Ian_Wannabe]

I got caught by this - gave around £2k up front for 21 ish hours to a school in North Wales to get the reduced rates.

I only flew 8 hours due to bad weather, then when I had to move to Sherburn because of being at Leeds uni I ended up loosing £500 because the school owner wacked full price on everything due to not flying 21 hours.

Be careful with what you agree to - they're all nicey nice when you're giving them money, trying to get it back brings out the devil in people.

be careful

[Monocock]

Some may disagree, hence the question, 'what do you think the golden rule/s of GA are as far as you are concerned'......?

Apart from the well discussed "cash up front" debate.......

1. Do not allow yourself to be taught by an airline wannabee.

2. Go flying with an instructor for an hour every Spring (however many hours you have).

3. Get good on the radio as soon as you can and know what you are actually requesting.

4. Be aware of the fact that 99% of airmanship is what happens between start up and the take off roll.

5. Visit 10 new airfields every year to avoid staleness in your methods.

6. Go to small landing sites frequently. On arrival insist on paying a landing fee even if they refuse. If the airfield disappears it won't ever come back again.

7. Take at least one child flying every year (although make sure he hasnt got 666 written above his hairline somewhere).

8. Fly in the winter as much as possible to keep nicely current.

9. Do not drink a drop of alcohol the night before flying. I don't care what anyone says, it does affect ones performance.

10. Do not listen to boring tossers waffling on at 4.30 in the morning just because their kid woke them up and they can't get back to sleep......:{

P.S If my pont number 1 has offended anyone then I'm not sorry because I think it's true!!!

[West Coast]

Never, ever, ever, ever stop flying the plane.

The plane flies because of Bernoulli not Marconi.

Or however you spell his name.

[Amabokoboko]

I'm not sure what the going rates are in the UK on credit cards but this is just about the worst piece of financial advice I've ever heard.

If you're going to pay off the credit card fast enough to come out ahead against the discount offered for paying up front, then you would have been better off saving for six months, holding the cash in an interest bearing account and paying as you fly (or arranging a fixed monthly fee with the school if this is simpler).

[distaff_beancounter]

I'm not sure what the going rates are in the UK on credit cards but this is just about the worst piece of financial advice I've ever heard. The advice to pay by C/C is ONLY in order to be able to reclaim your payment made up front, if the FTO goes bust.

I assume that any financially astute person pays off their C/C in full every month, this not incurring ANY interest.

If you save first, then pay a large sum up front by cash or cheque, then you have no recourse if the FTO goes bust, before you have flown off those hours.

[LowNSlow]

Never EVER tell your partner how much the Annual, hangerage, new radio etc really cost..............

[Monocock]

LowNSlow

Do you mean your marital partner or your aircraft group partner????

:}

[Amabokoboko]

Ah! Fair enough 'beans :ok: .

My golden rule? I'd have to go with :

"Pick a VERY still day the first time you take your significant other up on that first flight".

Not a very happy flyer, Mrs Bok :( .

[LowNSlow]

That'll be marital partner Mono anybody daft enough to be in a group with me would soon be fed up of my constant expenditure on the mistress living in the hangar :E :E

[Hampshire Hog]

Distaff_Beancounter

I agree entirely with everything you've said about my post re. checking accounts. Enron is probably the main example and there's always some new fiddle.

I simply recommend checking accounts etc. because there are always those who will ignore the advice NEVER to pay up front. Those people who should take action to minimise the risk. Research will at least permit a (more) informed decision. Also, if they have to take the accounts (and the info you recommend) to an adviser, there is another opportunity for them to be stopped in their madness.


Do not allow yourself to be taught by an airline wannabee.

Mmm! Yes and No on this one. I started at Blackbushe being taught by an 'airline wannabee', then moved to Wycombe, where my instructor is a highly experienced retired airline captain. When I started with my new instructor, he commented that I had been 'well taught' by that 'airline wannabee'. The golden rule is to find an instructor whose style matches your needs/wants and who does not put you in unnecessary danger.

HH