It’s Time for An Annual Review of your Flying Club
Aircraft are inspected annually, and pilots are required to have periodic medical exams. It is easy to overlook the fact that flying clubs also need annual checkups or inspections. Taking time to do an annual evaluation of your club can prevent problems and help insure another year of trouble-free operation.
Start with the five areas outlined below and add any items unique to your club’s operations. When you have cleared all items from your inspection list, sign off the club annual, but keep the list on file for next year’s checkup.
-Insurance: Review both hull and liability coverage. Aircraft values may have changed significantly since your last insurance review. If you have added new avionics or other accessories, make certain that the value of each aircraft listed on your policy is adequate to replace the equipment in the event of a total loss.
Also take a careful look at liability coverage. No one can decide for you how much liability coverage is enough, but in this lawsuit-prone society $1 million per occurrence for bodily injury and property damage is minimal. Get some advice from an insurance professional if you do not understand each aspect of your coverage.
While you are looking at insurance, it may be time to evaluate your deductibles. By taking a slightly higher deductible it may be possible to purchase higher liability limits without spending more money. Club members will have to determine if they are willing to accept the financial risk of the larger deductible, but now is the time to consider the question.
Legal: If your club is not incorporated, do it today. A properly incorporated club can provide protection for members who otherwise may be jointly liable for the actions of other members. If in doubt, talk to an attorney with experience in aviation matters. If you are already incorporated, check with the state corporation commission to verify that your corporate status is current. Check the corporate record book to be certain that it is up to date and that it contains your bylaws and meeting records.
Finally, make a check of aircraft documents to insure that each aircraft is carrying the airworthiness certificate, registration, operating limitations and current weight and balance data. If the aircraft has an Approved Flsight Manual, it must be on board and up to date. Keep on file copies of all member’s certificates, medicals and flight review endorsements.
Financial: First take a look at accounts receivable, (money owed to the club). If a significant amount is more than 30 days past due, begin collection efforts. This is never a pleasant task, but it only get worse as time goes by.
If regular financial statements are not prepared, have them done at least annually. It is difficult to get a good picture of the club’s financial situation without a current balance sheet.
Review the dues and rates charged for each aircraft and make adjustments as necessary. Don’t wait for money problems to dictate adjustments in flying charges.
Verify that personal property taxes have been paid on each aircraft and that any required tax forms have been filed. Many clubs mistakenly believe that if they are not for profit organizations they are not required to file federal and state income tax returns. All corporations are required to file federal returns and most states have a similar requirement. Board members could be fined for not filing, even if no tax is owed. If you are not up to date in this area a trip to a CPA is highly recommended.
Check engine reserve accounts against projected cost of overhaul or replacement. Remember that you must project overhaul cost to the probable replacement day. If you rely on the cost of an engine today, you will come up short two or three years down the road.
If the club has borrowed money, check the interest rate against the current market to determine if refinancing is advisable. If the club has cash reserves, make sure that they are earning a competitive rate. Online money market account may prove the best place for any excess cash.
Maintenance: Review the club’s maintenance policy. If you don’t have one, try to set up some basic guidelines. Establish a status board or sheet for each aircraft. Members should be able to tell at a glance at least the following: due date for the next inspection, time for the next oil change, transponder and pitot static system check, ELT battery replacement date and time or date for any AD due before the next inspection.
All too often, maintenance is properly performed and paid for but the paperwork does not get completed, which can cause problems with the FAA or other legal difficulties. Check the logbooks to make sure they are complete and up to day. Make sure you have complete copies of the logbooks and that the original books are kept in a safe place, not in the aircraft.
Long-range plan: Long range planning is one of the most important, yet neglected areas for flying clubs. Review your long range plans by asking at least the following questions: What is the optimum size for the club? What major purchases will be made in the next two to five years? If equipment is to replaced, could the club benefit from standardization? How will aircraft eventually be replaced? Should the club enter the Sport Flying area?
If your club is large enough, an evaluation committee can divide up the workload and report back in a matter of days. Even if your club is a one-airplane, three member group, the club annual will help you catch problems while they are small and plan for another year of enjoyable flying. The larger the club, the more important the review will be.
Fly safe. Mike Likavec