A flying school at Shoreham has just gone bust
22k for trial lesson vouchers is amazing. It shows what a revenue generator this is.
A sad story though. Assets of £20 in the bank, plus a C152 thought to be worth 25k.
I had the opposite situation – training delivered but not paid, decided to close the school and file lawsuits. The success was partial and I was able to recover some funds but not even remotely the total debt.
You must trust people more than anyone does around here 
The most you will get here is 1 flight and you won’t get another until you paid for the last one.
It is a sad story and probably a typical one for the PPL training business. A few items of note are:
… although it had some profitable years, the company was unable to make sufficient profits to reduce the deficit which was being financed by sales of trial lessons and prepaid flying by customers We all know schools do this – the money you prepay is not held in escrow – but rarely does one see it written down.
… a disastrous year due to two aircraft operated by the company being severely damaged in a taxi accident They must have been insured but either not for hull value or the insurer did not pay up.
… of the £82k, many of the balances are very small and/or very old. The director believes the actual amount claimed will be much smaller This illuminates another aspect of PPL training: people pay up for lessons and then don’t turn up to have them, or have them all. Hard to believe but clearly it does go on.
Over the years, the owner of the company drew very little out of it. He would have got 2x that by working as a plumber.
It’s not clear to me how a club can “go bust”. A commercial entity like a football club, yes, they go bust every now and then, but the are not really clubs in the common sense of the word. I guess technically it is possible if the club has loans and expenses they cannot manage, and all the members simply leave.
@peter I can’t see that on companies house? Which entity is it?
@lesving with very few exceptions, ‘clubs’ in the UK are companies but just call themselves clubs. There is no real legal construct for a club to operate unless as a charity and even then the legal construct is very similar to a company anyway.
I have always moved every club/school I’ve been involved in to a dry lease construct, in my opinion it is the only way to survive long term in a GA operation
@MattL this has only just happened so probably not filed yet. Company number 2795671.
They did lease their planes, except for one C152.
We have had this debate of “club” v. “school” many times. No matter how one constructs the operation, the money received has to at least equal money spent And if you have people pre-paying lessons (to get a discount, obviously, otherwise nobody would prepay) and selling “trial lesson” vouchers, then you can run the operation with a deficit in assets but without a deficit at the bank.
Most trial lessons are not really trial lessons. It is just a device to get around the legal issue that if you take up paying passengers for a flight, usually A-to-A, you would need an AOC and all sorts of other crap. So via the method of giving a “lesson” you can get quite a lot of money in. And a % will become PPL customers. I am sure every country has a similar system.
@Peter
Most trial lessons are not really trial lessons. It is just a device to get around the legal issue that if you take up paying passengers for a flight, usually A-to-A, you would need an AOC and all sorts of other crap. So via the method of giving a “lesson” you can get quite a lot of money in. And a % will become PPL customers. I am sure every country has a similar system.
We can perform such flights in Switzerland under “marginal activity”. This is provided in part NCO. Our authority has published a GM for this purpose. local copy
I believe it is quite common that up to 30% of trial lesson vouchers sold are never redeemed
LeSving wrote:
It’s not clear to me how a club can “go bust”. A commercial entity like a football club, yes, they go bust every now and then, but the are not really clubs in the common sense of the word. I guess technically it is possible if the club has loans and expenses they cannot manage, and all the members simply leave.
My understanding is that no aeroclub in Sweden has ever gone bankrupt. Sure, there have been cases of clubs shutting down, but not with net debt. But then clubs in Sweden are always tax exempt non-profit organisations.
Those trial lesson vouchers could be dating more than 20years? or just last year? they are bought in Christmas but never flown
Under NCO it has to be a marginal activity “in a club” but they may represent 90% in some individuals logbook
