By Kyle Garrett
According to the Aircraft Owners and Pilots Association (AOPA) website, Wells Fargo Bank recently filed a lawsuit against the owners of the former Langa Air flight training academy in an attempt to recover over $172,000 in deposits paid “up front” by former students. In the article, Ian J. Twombly states “According to the complaint, Langa Air said students who paid for the entire course up front would be guaranteed a job flight instructing at the company after obtaining all the certificates, and the money would be held in dedicated accounts. Allegedly the money was not kept separate.” When Langa Air closed its doors, many flight training students lost their deposits.
Although this story is nothing new in the aviation training industry, incredibly, prospective students continue to pay for huge blocks of training in advance of receiving those services. As a business owner, I can’t help but wonder if these students know that while it may appear to be a good deal to pay in advance that they are actually creating a negative feedback loop that can, and often does, end in the closure of the school and the loss of the deposits.
Here’s the problem: a flight school gets into financial trouble and then says to itself “if only our students would pay us in advance, then we could pay off our bills”. The problem with this logic is that the school got into financial trouble in the first place because of failure to manage expenses verses income properly. If a school is not making money with its current business model, it either must close its doors immediately or change to a profitable business model. However, most schools simply keep doing the same old thing and expecting a different result, and they use student deposits to fund the madness. With nowhere to go but bankrupt, the schools finally close the doors and the money is never seen again. In the worst case scenario, dubious business owners have actually collected hundreds of thousands of dollars in student deposits and then closed the doors and left town.
The bottom line and warning to all prospective aviation students out there is to be cautious about putting money down for training. How long has the school been in business? What is their reputation? Are you hearing rumors the school is not financially stable? Don’t make the mistake of paying “too much” up front.
Most schools offer “block” time that can be purchased in modest quantities. Use your common sense and don’t hand your cash over to just any school.
What are your thoughts?
Good luck in your training!