Is RACWA on finals? YOU WERE WARNED!!
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As was previously brought up in this thread:
The hire rates are too low. Any unscheduled maintenance that occurs will blow these costs out of the water (eg corrosion, cracking of engine mounts, fuel tank sealing issues etc.). Any of those things that occur make the variable cost of maintenance per flying hour jump from $30 per hour to $80+ per hour. In my experience of aircraft ownership this happens once every 4 years.
Such contingency needs to be built into the hire rate and a further allowance made towards engine/prop overhaul/repainting/reupholstering/upgrading equipment.
Nobody at JT has been able to do this since RACWA, being the dominant player, kept the rates down. So now pretty much everybody's business is failing not just RACWA.
It is NOT sustainable hiring out an aging single engine aircraft of almost any type for less than $200 per hour without instructor.
Only solutions for RACWA are:
Increase hire rates to sustainable levels (I'd say at least 35% increase)
Increase membership fee
Sell off aircraft that do not achieve 300 hours per year
Review in 6 months
More radical thinking:
Shut down/sell Jandakot and base at Murrayfield only, or vice versa. 2 Bases of operation mean significantly increased overheads
Sell all aircraft, cross-hire only
The hire rates are too low. Any unscheduled maintenance that occurs will blow these costs out of the water (eg corrosion, cracking of engine mounts, fuel tank sealing issues etc.). Any of those things that occur make the variable cost of maintenance per flying hour jump from $30 per hour to $80+ per hour. In my experience of aircraft ownership this happens once every 4 years.
Such contingency needs to be built into the hire rate and a further allowance made towards engine/prop overhaul/repainting/reupholstering/upgrading equipment.
Nobody at JT has been able to do this since RACWA, being the dominant player, kept the rates down. So now pretty much everybody's business is failing not just RACWA.
It is NOT sustainable hiring out an aging single engine aircraft of almost any type for less than $200 per hour without instructor.
Only solutions for RACWA are:
Increase hire rates to sustainable levels (I'd say at least 35% increase)
Increase membership fee
Sell off aircraft that do not achieve 300 hours per year
Review in 6 months
More radical thinking:
Shut down/sell Jandakot and base at Murrayfield only, or vice versa. 2 Bases of operation mean significantly increased overheads
Sell all aircraft, cross-hire only
Fokker have you seen their rates lately? Higher than many two seat trainers on the field that are less than five years old and still able to make a profit despite the finance and insurance costs that you get with a new aircraft, but which are largely offset by having warranty and no nasty maintenance surprises.
The rate should be set on fixed costs+variable costs+ replacement costs+ business fixed and variable costs+realistic return on capital. Not what the neighbours are charging less a bit. (and it's been a long time since RACWA were the dominant players or were keeping prices down!) The trick is to keep the fixed costs down, an eagle eye on the variables and enough liquidity to weather any storms.
Selling off capital assets and asking for money up front (liability on balance sheet) might give you some temporary cash but won't solve the problems in the long term, especially if that barely covers the interest payments on the bad debt. You can't raise finance without equity.
Many operators all over the world have gone bust...common thread...unrealistic expansion into volatile/mass overseas training markets, top heavy management and then the sure sign the end is nigh...asking for large deposits just to keep the cash flow going for a few more days. Seen it in the USA, UK, over East, history keeps on repeating itself. Angry disullusioned students (see unsecured creditors) coming to flying school and finding a padlock on the door and wondering where all their money went (see the person driving off into the distance in the expensive car?)
BTW Wondering how you have access to the financials of all the other operators at Jandakot?
The rate should be set on fixed costs+variable costs+ replacement costs+ business fixed and variable costs+realistic return on capital. Not what the neighbours are charging less a bit. (and it's been a long time since RACWA were the dominant players or were keeping prices down!) The trick is to keep the fixed costs down, an eagle eye on the variables and enough liquidity to weather any storms.
Selling off capital assets and asking for money up front (liability on balance sheet) might give you some temporary cash but won't solve the problems in the long term, especially if that barely covers the interest payments on the bad debt. You can't raise finance without equity.
Many operators all over the world have gone bust...common thread...unrealistic expansion into volatile/mass overseas training markets, top heavy management and then the sure sign the end is nigh...asking for large deposits just to keep the cash flow going for a few more days. Seen it in the USA, UK, over East, history keeps on repeating itself. Angry disullusioned students (see unsecured creditors) coming to flying school and finding a padlock on the door and wondering where all their money went (see the person driving off into the distance in the expensive car?)
BTW Wondering how you have access to the financials of all the other operators at Jandakot?
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Clare,
I think you make my point. The other operators at JT are slow to increase their rates to healthy business sustainable levels. They will go out of business (and some have already). RACWA's rates forced this situation for years.
Re access to financials.
Don't believe me? Just walk around any JT flying school and see how many are sitting there with missing engines/props (ie awaiting overhaul). Plenty of places on COD accounts with Western Airmotive/Avial - no credit available. JAH knocking (or locking) doors to pay rent.
I still think these rates are below cost:
http://www.racwa.asn.au/getfile.aspx...&ObjectID=1219
(except instructor rates which appear to be rather high)
I think you make my point. The other operators at JT are slow to increase their rates to healthy business sustainable levels. They will go out of business (and some have already). RACWA's rates forced this situation for years.
Re access to financials.
Don't believe me? Just walk around any JT flying school and see how many are sitting there with missing engines/props (ie awaiting overhaul). Plenty of places on COD accounts with Western Airmotive/Avial - no credit available. JAH knocking (or locking) doors to pay rent.
I still think these rates are below cost:
http://www.racwa.asn.au/getfile.aspx...&ObjectID=1219
(except instructor rates which appear to be rather high)
Some, yes, but NOT all.
Sustainable pricing is something you can't calculate unless you have access to very detailed information which is surely confidential. And that has nothing to do with what RACWA or anyone else are charging because the successful operators have developed niche markets that others don't have and will have completely different costs.
What RACWA do and charge is largely irrelevant to others, they really aren't important in the big picture these days outside their own world.
You are very probably right about some of the operators, and I agree the evidence of mismanagement at some places is obvious, but NOT all operators are the same so to say "the other operators...will go out of business" is rather a sweeping statement!
Sustainable pricing is something you can't calculate unless you have access to very detailed information which is surely confidential. And that has nothing to do with what RACWA or anyone else are charging because the successful operators have developed niche markets that others don't have and will have completely different costs.
What RACWA do and charge is largely irrelevant to others, they really aren't important in the big picture these days outside their own world.
You are very probably right about some of the operators, and I agree the evidence of mismanagement at some places is obvious, but NOT all operators are the same so to say "the other operators...will go out of business" is rather a sweeping statement!
I think we should remember that RACWA has been recently screwed badly by incompetent management who have now done a runner. This is not a "normal" loss-making scenario for the members to be in. AE and his new team are trying extricate the club from the mess; we all need to make a decision to help out. Paying subs early to avoid the increase seems like a good start.
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AE and his new team are trying extricate the club from the mess; we all need to make a decision to help out. Paying subs early to avoid the increase seems like a good start.
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VG, no you didn't. It's an overdraft facility and it needs to be paid down by Jun 2011. They only incurred a new mortgage on lot 11 - the other lots were already mortgaged for the existing debts (purchase of YMUL and WAAC).
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I havent flown for about 8/9 years and went for my first flight last week...with a school at the other end of jdkt. In 2011 I plan to get my ppl current again and do some further training.
I was a member of RACWA for many years and completed alot of my training up there. I certainly don't want to see the club fail, BUT I wont be supporting the club when I crank up flying again.
In my opinion they probably destroyed alot of goodwill over the years with many people, by adopting the sausage factory approach. Having experienced some training supplied over at Bankstown (again some years back), whilst always being thorough and safe, it was done with a mindset that money doesnt grow on trees and if you needed some extra time on the ground for briefings etc, then it was done....rather than in the air with a low time instructor chewing up your hard earned.
Perhaps the Aero Club got too big for its boots, there is no doubt that as any organisation grows it runs the risk of losing touch with what made it good in the first place. Whilst I havent thoroughly researched the current schools up the strip, RACWA have some hard yards to do, to gain credibility back.
This is coming from someone likely to invest $ 30+ grand for CPL et etc etc next year.
And my assessment and decisions are not based on PPRUNE posts....hard earned experience of mine and others that have been around a bit.
Certainly dont wish the place to come un-done...had many great times and moments there and met some great and passionate instructors and people there albeit many moons ago.
I was a member of RACWA for many years and completed alot of my training up there. I certainly don't want to see the club fail, BUT I wont be supporting the club when I crank up flying again.
In my opinion they probably destroyed alot of goodwill over the years with many people, by adopting the sausage factory approach. Having experienced some training supplied over at Bankstown (again some years back), whilst always being thorough and safe, it was done with a mindset that money doesnt grow on trees and if you needed some extra time on the ground for briefings etc, then it was done....rather than in the air with a low time instructor chewing up your hard earned.
Perhaps the Aero Club got too big for its boots, there is no doubt that as any organisation grows it runs the risk of losing touch with what made it good in the first place. Whilst I havent thoroughly researched the current schools up the strip, RACWA have some hard yards to do, to gain credibility back.
This is coming from someone likely to invest $ 30+ grand for CPL et etc etc next year.
And my assessment and decisions are not based on PPRUNE posts....hard earned experience of mine and others that have been around a bit.
Certainly dont wish the place to come un-done...had many great times and moments there and met some great and passionate instructors and people there albeit many moons ago.
short flights long nights
Bloggs..just where the hell ARE the last lot??? They need to be found!!
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Flying Hire Rates
Fokkerinyour12. If you think the rates are below cost have a look at Manning River Aero Club Inc rates. C152 Dual (Training) $210/hr for Club members $230 for non-members. PA-28 Archer II $260-$280/hr. Instructor rate if owner a/c $75/hr. www.mrac.org.au for home page.
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The "Club" is an incorporated body, it should be investigated by ASIC there is enough "missing" money to warrant a full investigation, mismanagement on this scale is generally considered a criminal matter.
The term fraud comes easily to mind. Eother fraudulent management practices, or fraudulent uttereances by successive board members.
All in all it is a disgrace that the members assets are now worthless and the "club" has to use prescriptive tactics to just survive the next 30 days, the creditors must be circling !!!! Who will pay the fuel bill, let alone cover the overdraft and meet the covenants on the mortgages.
What a mess !!!!!
The term fraud comes easily to mind. Eother fraudulent management practices, or fraudulent uttereances by successive board members.
All in all it is a disgrace that the members assets are now worthless and the "club" has to use prescriptive tactics to just survive the next 30 days, the creditors must be circling !!!! Who will pay the fuel bill, let alone cover the overdraft and meet the covenants on the mortgages.
What a mess !!!!!
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Fokker I don't agree with your opinion that "Only solutions for RACWA are:
Increase hire rates to sustainable levels (I'd say at least 35% increase)
Increase membership fee"
According to what the committee, it was the lack of hours that was the problem.
If you increase the hourly rate, it will result in reduction in demand, and make the problem worst.
Cut the fixed costs, cut the variable costs, make flying more affordable, and more people will fly. Reduced costs means higher contribution margins, more hours flown increases increased revenue. Increased revenue and reduced costs = high profits!
In relation to someone's opinion that costs should remain a confidential, I say bull$hit, this is a not for profit organisations, members have the right to know that information. Members have a right to expect to receive benefits for their membership, the club doesn't need to make a profit, it just needs to be sustainable.
Ideally, members should pay cost price for all services.
If for-profit companies can stay in business charging the same price or less than RACWA for better, newer planes, then the problem with RACWA is costs being too high.
Increase hire rates to sustainable levels (I'd say at least 35% increase)
Increase membership fee"
According to what the committee, it was the lack of hours that was the problem.
If you increase the hourly rate, it will result in reduction in demand, and make the problem worst.
Cut the fixed costs, cut the variable costs, make flying more affordable, and more people will fly. Reduced costs means higher contribution margins, more hours flown increases increased revenue. Increased revenue and reduced costs = high profits!
In relation to someone's opinion that costs should remain a confidential, I say bull$hit, this is a not for profit organisations, members have the right to know that information. Members have a right to expect to receive benefits for their membership, the club doesn't need to make a profit, it just needs to be sustainable.
Ideally, members should pay cost price for all services.
If for-profit companies can stay in business charging the same price or less than RACWA for better, newer planes, then the problem with RACWA is costs being too high.
According to what the committee, it was the lack of hours that was the problem.
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Breaking news: Another Jandakot operator has gone into administration (unable to pay bills).
Flying is not more affordable these days. Everybody's rates are too low. Making flying more affordable benefits pilots but at what cost? Two operators this year.
Flying is not more affordable these days. Everybody's rates are too low. Making flying more affordable benefits pilots but at what cost? Two operators this year.
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An external administrator has been appointed at The Aeroplane Company.
ASIC Free Company Name Search
ASIC Free Company Name Search
After the lockout, and the subsequent migration of the bread and butter next door, aka ECU, it was only a matter of time.
I wonder if they will litigate against JAH?
Such a shame really, there goes a Cathay Captains retirement plan.
I wonder if they will litigate against JAH?
Such a shame really, there goes a Cathay Captains retirement plan.
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FokkerInYour12, you clearly have no idea what happens at jandakot. The only flying school that was on COD with Availl or Western Airmotive was the aeroplane company. The flying schools at Jandakot are MUCH better payers than about 90% of the charter companies out there.
Tell me what flying school (apart from the aeroplane company) has planes sitting around due to maintenance? Last time I looked they were all flying.
It is unfortunate what has happened to the aeroplane company. But it was a long time coming
Tell me what flying school (apart from the aeroplane company) has planes sitting around due to maintenance? Last time I looked they were all flying.
It is unfortunate what has happened to the aeroplane company. But it was a long time coming
AS for the theory that if prices are too low you will go broke...RACWA and TAC are/were the most expensive on the strip.
Proves my point about margins. No point having a high price that scares away the punters if you have even higher costs.
GG there was talk of litigation at the time but I think the problem lay with being able to accurately asses the losses. There was also a not very well hidden agenda by some other parties who wanted that hangar.
Proves my point about margins. No point having a high price that scares away the punters if you have even higher costs.
GG there was talk of litigation at the time but I think the problem lay with being able to accurately asses the losses. There was also a not very well hidden agenda by some other parties who wanted that hangar.