In my position at MyFBO.com it amazes me the number of odd questions I get about aircraft and instructor rates. Flight schools call and ask how to give discounted rates for all kinds of reasons. Although I am all for marketing / promotion, it amazes me how flight schools want to give irrational discounts on their rates. Not to mention that the rates are already to low to begin with, but that is another article.
For example, the average leaseback aircraft works with an 80/20 split. In other words the flight school keeps 20% of what they charge per hour. The same flight schools call and ask me how to give a 10% pre-payment discount in the MyFBO.com Software (the software does support pre-payment rates). This means the flight school is cutting their margin in half. In addition most folks pay with their credit and check cards these days which takes another 2% or more off the top.
For a $100 per hour, 50 hour per month leaseback aircraft, the yearly profit would be $12,000. With a 10% pre-payment discount and 2% in credit card fees this amount is reduced by $7,200, making the yearly profit $4,800. Note that I use the word “profit” loosely. Out of the remaining $4,800, other expenses have to be paid. The same logic above applies to the flight instructors as well.
What is even more amazing is that the same flight school will call back after some time and ask how to add surcharges and fees. Instead of doing away with or altering the discount they want to know how they can charge reservation surcharges, cancellation fees, fuel surcharges, and insurance surcharges. They also ask about surcharges for credit card payments, but this is not legal in most states. Although all the surcharges are supported by the software, they are generally a bad idea. Surcharges greatly add to the complexity of running a business and the worst thing about surcharges is they really make the students angry!
Anyway, what is the point of my ranting and raving? It is that Flight Schools should put plenty of thought into discounts before they publish them.
Come on, why can’t the price just be the price? Are we used car salespeople or Aviation Professionals?
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