Dwindling Pilot Population – Creative Financing

In the previous part of this series I mentioned that the high up front cost of getting a pilot license is a deterrent for many people. Flying itself is comparable to other hobbies in cost, but many do not have high up front costs, or if they do you can get loans to lower the upfront investment.

In order to help lower the up front cost, perhaps we need to find a way for people to finance their flying. (For the rest of the post I am going to simplify things and say it costs $5,000 to get a pilot license, $100 to rent the airplane for an hour, and $35 for the instructor.)

Loans
One option is to allow the student pilot to open an account, and instead of paying as they go, set them up a loan. When they take their first flight, they take out a loan for $5,000 which is given directly to the FBO. If the student flies 3 hours in the first week instead of paying $405, they would pay around $160 for their monthly loan payment. The FBO would draw $405 from their account, so it would now have $4,595 in it.

If for some reason the student quit after that first week, they could withdrawal the money from the FBO, and use it to help pay off the loan. This would require the student to have good credit so that a bank would give them an unsecured loan. The FBO could work closely with a bank and get a kick back for sending the students to them.

If the student pilot did not qualify for an unsecured loan, perhaps the bank could work with them by securing the loan with a vehicle or some other possession of value.

While I personally think taking out a loan for a hobby is a terrible idea, most people think it is just how you do things. This would help lower the upfront cost for students, and the FBO would get the money right away so they can earn interest on the balance.

PrePay
Instead of having the student take out a loan, have them prepay for their training. Set the student up on a 3 year plan charging them $140 a month. After 3 years, the FBO would have the $5,000 cost of the pilot license. If the student takes longer to get the license, and it ends up costing more than $5,000, they would be responsible for the balance.

Sure the student pilot could do this themselves by opening up a separate savings account, but most people will not do that. This would provide them with a way of paying for their pilot license ahead of time and debt free so that they won’t have debt hanging over their head after earning the pilot license.

To help this sound more enticing, you could add another option where the student pays $150 and earns two free half hour rides in the airplane each year. Now at least they will feel like they are getting something for their $150 investment.

Those are the two alternate funding options that I came up with. What ideas do you have to help lower the upfront cost of getting a pilot license?

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