As mentioned on the president's page, I have some concerns for the long term funding and financing of the club, particularly for when it comes to replacing aircraft. This may not be required for a few years yet, but it will definitely be necessary within 5 to 10 years.

I recently obtained a summary of the clubs profit and loss for the last 9 years. I don't have any figures from prior to 9 years ago, but I suspect that they show a similar picture to the past 9 years. Most years, the club has made a loss. In general meetings that I have attended this has been generally accepted without any questions being asked, perhaps because nobody wants to rock the boat or maybe because nobody remembers that in many previous years the club was also in a loss situation. The tendency may be to think "Oh well, we're only a club, we don't really need to make a profit as long as we keep going more or less OK!".

Sorry, but yes, we do need to make a profit - if only to preserve our capital which diminishes through inflation, let alone maintaining or accumulating capital for purchase of new aircraft and other infrastructure. Therefore, we need to make more business like decisions which will lead to greater profit (or at least no losses) for the club.

In the years 1999 to 2006 the club made a loss every year with an average loss over these years of over $36,000 per year - a total loss of $220,000 in 6 years. I'm pleased to say that the 3 years since then have been much better with a profit in 2 of the 3 years and only a small loss of $1284 last year primarily due to a substantial decrease in flying hours from bad weather and maintenance issues. These losses do not include any provision for inflationary costs for replacing aircraft.

In regard to utilisation of aircraft, on average, at current charge out rates our three aircraft jointly are still not sufficiently utilised to make a profit on the overall long term operating and capital costs of the aircraft, let alone extracting income for club administration and facilities, other expenses or allowances for long term replacement of aircraft.

It is generally accepted that an aircraft needs to do at least 500 hours a year in order to be economically viable. This presupposes that the hire out rate is set appropriately. If the hire rate is a bit low, it can require a lot more hours. Currently, KSR is the only club aircraft that is doing the required hours to make a profit. Both the Sports Cruiser and KOT are doing about half the number of hours per year to be profitable. This is offset to a certain extent by the fact that the club makes a profit margin on the cross hired 172's without having to incur any costs

The cost of our premises will very soon be rising substantially. There will be some offsetting factors, but there is no doubt we need to obtain increased income to meet the cost increases.

It's pretty obvious that, whilst we are not about to go out of business, this situation must be addressed for the long term survival of the club in its current form.

What can we do about this?

We need to:

a) Try and cover fixed operating costs as much as we can by including all members in membership subscriptions and increasing subscription fees. This will include making a clear distinction between the benefits that apply to people who are paid up flying members of the club and those who are not.

b) Increase the profitability and utilisation of each aircraft, particularly the ones not now making a profit.

c) Create defined packages for introduction to flying which can be sold as products aimed at people who might like to have a go at flying but would either not be able to afford or not be prepared to meet the cost of a full licence.

d) Consider new ways of marketing to economically raise awareness of our services and products, particularly to younger people.

e) Where possible, obtain income from activities other than club member flying eg hangarage, subletting of premises, other services and products.

f) Work towards improving the social amenities of the club.

g) If possible, come to arrangements with other organisations with complementary facilities in order to reduce costs, eg sub-letting part of our premises and sharing a receptionist, computer facilities etc.

h) Work towards being complete masters of our own business. Currently, we are not.

There is a lot to do here and it is not all going to get fixed with a snap of the fingers. It will take a program of changes over quite a long period but we need to make a start now.

a) Increasing and Extending Subscriptions to all members, including students

Currently, new students who learn to fly do not pay a membership subscription until they have qualified for a GFPT or been in the club for a year. Even then, it is just over 1/2 the normal subscription.

This is illogical - the people who make the most use of club aircraft and put the most wear and tear on them contribute nothing towards the fixed costs of the club, whilst longstanding members, many of whom seldom (or never) fly club aircraft pay a full subscription.

I will be proposing the following to be considered by the committee:

1. All flying members, including students at whatever stage they are, pay the same annual membership fee.

2. Any person who is not a paid up flying member is not to obtain a member benefit from club equipment.

3. A person, including a flying student, may choose not to pay the membership fee and may still obtain training through the club and Freycinet with club aircraft but in that case they will be charged the non-member rate for aircraft hire. Currently, the non member rate is $15/hr higher than the member rate.

4. This to apply as from the start of the 2010/2011 financial year on 1st July 2010.

5. There may be an allowance for a reduced subscription for full time students and members of associated organisations such as air cadets operating through an affiliated or approved organisation.

The rationale here is to make a clear distinction between members and non members so that there is a good incentive to be a member of the club which currently for student pilots there is not, plus raise some extra funds.

I will also be proposing to the committee that the annual subscription be raised substantially. There is a catch up due for many years of not increasing subscriptions in line with costs and community income levels over the last 30 years or so. The amount of the increase is yet to be determined but I will be suggesting about a $50 increase this coming year with perhaps a further increase in the year after. This increase will be use entirely for the purposes of meeting the increased costs of our premises.

b) Increasing profitability and utilisation of aircraft.

I have done a bit of an internet and phone survey of other flying clubs and commercial training organisations with equivalent aircraft to ours in South Eastern Australia to see what they are charging. At the moment, we are the cheapest in flying rates that I found. The next cheapest per hour is RVAC at $190/hr for Piper Warriors. We are well below this for KSR and a bit less for KOT. Full commercial organisations are charging around $210 or more.

One flying school at Moorabbin charges $226 plus GST per solo hour for 172's and $312 + GST for dual, though this includes landing and air service charges. For aircraft such as the Sports Cruiser, the cheapest I found was $150/hr (also RVAC for their Sports Star). There may be a few small organisations who can charge less who are operating in regional areas where costs are less, but we need to remember that we are now operating in a high cost centre and we must act and plan accordingly.

1. Increased charges for flying:

To increase income, the committee has decided to increase the cost per hour by $1 per hour every month until we have caught up to a better return. This will apply to all aircraft operated by the club. It was decided to do this gradually rather than in a big hit at one time to be fair to current students who are already in progress with their training. The increases will apply every month until we decide to stop which could be 12 months or more in the future. The aim is to catch up aproximately to equivalent commercial organisations for the rate of hire to non-members but to have members able to hire at a reasonable discount compared to commercial rates.

... so if you are a student in training, it will pay you to fly sooner rather than later because it is going to gradually get more expensive.

2. Increasing utilisation by PPLs.

It is often the case that once a student gets a PPL their flying reduces substantially.

In order to encourage PPLs to fly more, I will be proposing that all PPL members be offered the opportunity to take up a "bulk flying scheme" whereby the member may pay in advance for a minimum nominated number of hours flying within a year and receive a discount per hour. If they do not use it within the year, unused amounts will revert to a credit to their account to be used for membership or flying at normal rates.

It may be the case that we will target specific aircraft such as KOT and apply the discount only to aircraft which are currently under-utilised.

3. Increased participation in competitions

I and the flying captain, Fank Liebfried, will be attempting to put together a new kind of flying competition which can be done as a crew in an aircraft under the command of a PPL in a more flexible way than our standard circuit based competitions or nav trials on a specific date.

These will be based something along the lines of the way that the Gliding Federation of Australia conducts its decentralised flying task competitions. The idea is that various standardised nav trials will be set which will be performed as a crew of two and scored according to various criteria that we will set according to the track, aircraft type and weather conditions prevailing. These will be able to be done at any time, not just on an appointed day, so this will get over the problem of weather cancelling a whole competition due to bad weather on the day of the competition. The GFA uses GPS data loggers to record details of the flight but initially we will have to rely on an honour system and an observer who will be on the flight. If it is successful, maybe we can get a data logger.

The idea is to get PPL's to fly more and keep their nav skills up to date plus just have fun flying about in places other than the circuit. As a crew, you will be able to share the costs amongst the crew in whatever manner you wish. If you are not a PPL, you can still be a member of a crew but would not be able to be in command. It will take some time for Frank and I to put this together, but hopefully it will be ready before next summer. If anyone is interested in helping set this up, please contact myself or Frank.

PPLs who purchase bulk flying hours would be able to use their prepaid hours in the comps if they wanted to.

As with all club activities of this nature, if they are not supported they will just die away so when it is introduced, please support it.

c) New "packages" and d) new methods for marketing.

Traditionally we just cater for the person wanting to learn to fly. The club revolves around this even though in GA we don't actually teach anybody to fly, we just hire the aircraft to Freycinet who do the teaching. This is aimed at the person who wants to end up  qualified as a pilot in GA or possibly RAA.

As we all know, the number of people who can afford to do this is limited, though there are quite a lot more who might like to have a bit of a go.

We are now in a "packaged product" world. To sell almost anything you need to market it in a systematic and well defined way. To take advantage of new methods of marketing, particularly through the internet, we need to develop "products" that can be described and sold. One product is of course an RAA or GA Licence but that is a very expensive product which you are not going to sell many of no matter what you do.

We will be creating less expensive packages aimed at people who want to have a go at flying, something more than a TIF but not a whole licence and which are much more affordable for a person who might be prepared to spend say $1000, but not able to come up with $10000+ for a licence. These can easily and economically be marketed in a targeted fashion using the internet as well as other traditional forms of advertising. In particular this will target the younger demographic of twenties to thirties to engender some interest in flying which may lead to them undertaking a full licence in later years when they have more time and/or money.

In particular, these packages will be targeted towards increasing the utlisation of the Sports Cruiser where the club can obtain a significantly greater financial return than we can with GA.

e) Income from other activities & products

Under the new lease of our premises (presuming it goes ahead as we anticipate) the club will take charge of hangarage and will raise income from aircraft in the hangar next to the club house and across the apron. We will need to structure the return from this so that it shows at least a small profit whilst at the same time not being too much of a burden on the aircraft owners. There may be other opportunities that arise for subletting premises.

It is not easy to be specific on what other activities might be. Generally, they will not produce large income streams, but every little bit helps. I'm not suggesting we make and sell Anzac biscuits for the club (unless someone really wants to) but there may be ideas that members may have which can produce some income with a little bit of effort. We have a couple of ideas that we are considering at the moment and I would welcome any ideas that anyone might have.

f) Improving social amenities of the club

We have been in a kind of  limbo for several years due I think primarily to uncertainty about our premises. This has very much led to a "do nothing" attitude because nobody has been sure if it was all just a waste of time or not. According to the airport owner, Mr Wells, the future of the airport is now assured for many years to come and I am very hopeful that our premises issue will soon be resolved. Once that is settled, we may be able to separate the flying operations from the social amenities by utilising the terrapin building that we have waiting for us.

I would then like to have the committee and other members work towards improving the amenities of the club so that it becomes not just a place for flying lessons and Sunday drinkies for the old boys but a place where all members can feel like it is a friendly place that they and family members can relax and feel like they can be a part of the aviation scene, or even just a nice place to have a cup of coffee or tea whilst a family member is off flying. I remember when I occasionally used to visit the club years ago when there was a club room separate from the flying operations and which was generally well frequented - we need to get back to something like this but even better.

I would also like to try and expand the social membership of the club to be attractive to other organisations who have some interest in aviation including those who might be perceived as commercial competitors. The aviation community in Tasmania is too small for us to not have friendly relations and socialise from time to time.

I have a few ideas to try to encourage more social activity, but these will have to wait until we have sorted out our premises.

h) Work towards being masters of our own business

This is a difficult one, but one which must be faced eventually for the long term benefit of the club.

Currently, flight training and charter work is done through Freycinet Pty Ltd who hold the AOC that we operate under. All income from GA instructing goes to Freycinet. For GA, the club obtains income only from the hire of aircraft but provides the premises, management of the booking system and aircraft as well as ancillary items of equipment used for training. This is all paid for out of the hire of aircraft and members subs. Freycinet pay a small monthly contribution towards the cost of the premises.

The relationship with Freycinet has worked to the advantage of both organisations. Freycinet provides the AOC, instructors, Chief Pilot & CFI at no cost to the club other than the instructor fees from flying which are paid directly by the students. The Chief Pilot & CFI is shared with other aviation operations which cuts the cost for Freycinet. However, it should, in my view, be the long term goal of the club to have its own AOC, employ its own CFI and instructors and be able to spend time, effort and money on promotion of its services and activities in the knowledge that it is all to the clubs benefit. Under current circumstances this is not achievable but it should be set as a goal in order to ensure continued viability of the club as an independent training organisation in the long term.

Summing up in brief

We are likely to have some difficult but possibly rewarding times ahead of us. The club needs to go through a kind of renewal phase in order to meet the commercial realities that it faces and also to adjust in some degree to the changing attitudes and practices of the younger generation.

The issue with security of premises should shortly be resolved, though at a cost. To meet these as well as the normal operational costs that we have, some increases in charges are required and these need to be spread as widely across the whole membership as we can. If possible new methods of raising income need to be considered.

We need to encourage more flying from our members who have PPLs and try and adopt new methods of marketing our services and attracting more people, particularly the younger generation into being more aware of what we do and provide. In addition, we need to try and improve the social amenities available to members once the issue of our premises is settled.

In the long term, we should be aiming to become an independent training and charter organisation in our own right.