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Why daily deals are bad for business

I really dislike all the “daily deals” websites. I feel they are a terrible way to market your flight school. They train your customers to devalue your product. In the flight training business, your margin is razor thin already. Daily deals websites would like you to discount your product 50 percent or more and then split the revenue with you. Taking half of the money but leaving you with 100 percent of the fulfillment costs. In the typical “discovery flight” this could leave the flight school holding the bag for up to a loss of $90 per redemption. Any way you slice it, that is a high cost to acquire a customer.

Admittedly, our school tried it once with our simulator. I felt I could leverage the low operating cost of the simulator against the high discount and revenue sharing. The result was mixed. The simulator has about $10 per hour in operating costs plus the significant cost of the simulator. So if we ignore the cost of money to buy and keep the sim, we add the labor expense of the instructor, plus an overhead charge to pay for the operation of the flight school. (we still have to pay to have the lights on, pay someone to answer the phone and schedule the simulator ride, the expenses go on and on). There is a cost of $53 per hour to operate the sim. That is $10 for the sim, $25 for the CFI, and a $18 overhead charge. So we retail this experience for $155.00. The deal site wants to discount it to $50. We will get $25 per deal. So you can see we will be in the hole $23 per redemption. Even if I subtract the overhead charge we are in the hole $5 per redemption.

The promotion ran and 91 were purchased. About 50 are actually redeemed. So you might think if you do the quick math that we broke even on the deal, maybe even made a couple of bucks. You would be correct. However, the problem is revealed in the statistics of the redemptions. Of the 50 redemptions the average age was 15.4 years old. Six redemptions attempted to stack. Which is to say they showed up with two coupons and wanted twice the service. (which we prohibited on the coupon but people try anyway). Two redemptions were current customers who expected to use the coupon for flight training. (Which we also prohibited on the coupon). Finally there were zero conversions to a student pilot, zero enrollments in our Private Pilot Ground School and one conversion to a discovery flight. Also a loss leader.

On the surface, I feel like I am emphasizing the negatives. There is a diamond in the rough. The average age was young, a mere 15 years old. This means kids are still interested in airplanes. A response like this, while not producing immediate sales, makes an investment in the future whose returns are long term and not measurable on the balance sheet.

Here is the thing that bothered me the most. The purpose of any marketing promotion is to generate traffic in hopes that profitability will follow. When the coupon deal salesperson was making her presentation, she emphasized the fact that not all coupon sales would result in redemptions. That slack could be depended on to make the deal more profitable. Without redemptions I never get the chance to create a student from that redemption. Ultimately that is what a flight school wants: students.

This is an article from inbound marketing with a similar story. If you chose to do a coupon deal please do so with great caution. Know that a airplane ride as a part of the deal could be financially worse. Know that many of the redeemers will be chasing the coupon and not necessarily the opportunity to enroll in your school.

–Louie Hilliard, president and chief flight instructor at Hub City Aviation, a 61/141 flight school in Lubbock, Texas

This post originally appeared on Hilliard’s blog, Flight School Business Success

A new approach to ground school

For me flight training is such a remarkable experience. You go from knowing simply nothing about an aircraft with so many laughable misconceptions, to being able to become familiar and eventually comfortable enough to be in command of an aircraft operating solo.

I reminisce about my own training. I won’t go into the whole story, but eventually I did end up earning my ATP-L (Airline Transport Pilots License) and also became a CFI (Certified Flight Instructor). All of this required much discipline, dedication, and training as you might have imagined.

During my training I learned that there was good training, and not so great training. One thing I found many to get hung up on was the theory portion of training. After becoming an instructor myself, I really wanted to know if there was anything I could do to enhance the experience and to help my students to really learn the fine art of flying. I recalled that during my training in some cases the ground school portion of training was either done sloppily or was simply non-existent. Students in most cases were simply left to fend for themselves.

Another case in which I noticed flight schools letting their students down in was that they were simply teaching just enough for the student to pass the written exam. I couldn’t and still don’t think this is what being a flight school is all about. True we all have an agenda, we all want to see our students pass, and we all want our students to be successful. I also realized that students were at times were on budget constraints in regards to either time or money, if not both.

But I felt that these needs could be met by providing a more quality learning environment, and course material.

The numbers show that when students are neglected, are given sloppy ground training, or excessively high rates of unsupervised self-study programs this can in some cases increase the total cost of earning a pilot’s license by 25 percent. Further only 36 percent of self-guided pilots ever complete their training and most of them quit due to lack of direction, discipline and other life activities.

These astounding figures really bothered me; after all we are already facing a pilot shortage. So in some ways the industry is shooting itself in the foot by not starting the next generation off on a good foot.

So, what was my solution? I knew I wanted to bring a new fresh concept to the table. To do this I realized I had to really stand out in my training methods.

 

In order to assist in the training of those wishing to become a pilot, I created 10-week regular pace and a two-day accelerated course program for the FAA private knowledge test and the FAA instrument rating written test. With the support provided through the courses I feel that even busy individuals can gain the knowledge needed to pass the tests in as little as 2 days.

The courses are offered through Pro Aviation Trainers online live classes. (You can see a sample lesson here). Again my thing was not to just quickly help pilots make a passing grade; I wanted to give pilots in training the latest and most up-to-date aviation instruction. Another thing that I think is unique is that the classes are interactive and live, which means that pilots in training can ask the qualified instructors questions during the session. Each student can receive personal attention in the small classroom sizes; I never want the students to feel like cattle being rushed through a course.

After taking a look at the courses from a student’s perspective I feel that they are effective and enjoyable. Being able to receive aviation instruction from the comfort of your own home or anywhere you are, I think that aspect is simply priceless.

I felt so confident and proud of how I was able to put the courses together that I went out on a limb and attached a 100 percent guarantee to all of them. I thought it was only fair that if a student fails to achieve a passing score after training, Pro Aviation Trainers allows the student to retake the class as often as needed at no charge and then we will even pay for their next FAA test fee.

Now I am extending an offer to flight schools to partner with me and offer ground school to their students. In doing so I hope to extend the benefits of my online classes to as many as possible. Partnership with Pro Aviation Trainers will include both enhanced training opportunities for our partner schools along with financial benefits of being paid promoters of our courses. I consider this offer of partnership to be a unique opportunity for any school to really gain the cutting edge and superior reputation as a quality training provider; so really any flight school who chooses us as a training partner wins both ways.

I created these courses in a way I wish I could have taken my own training. I feel too that these courses address a lot of the problems in today’s ground school training environment. Flying is a passion for me, and I think that the courses I offer through my online ground school indicate that to be a certainty.

–Al Naqui,education director, Pro Aviation Trainers

Tomorrow’s lesson

What will tomorrow’s flight training be like? From the end of WWII until just a few years ago, methods for civilian pilot training in the US changed very little. Flight training was conducted on a one-on-one instructor/student basis, much like traditional master-and-apprentice training methods long used by tradespeople like masons and electricians.

That’s still true at many Part 61 flight schools catering to pleasure and personal business flyers, but over the past several years flight training at large-scale professional pilot training programs has really begun to change. Why the recent dramatic changes? And what do they mean for flight instruction in the future? The answers derive from pressing industry needs — many more pilots, generated far more quickly than in the past, in fewer training hours, and using far fewer instructors.

The only way to increase throughput like that, is through top-to-bottom integrated flight-training “factories” to meet tomorrow’s pilot demands and today’s business opportunities, all while targeting 100% safety. That’s a tough assignment, and industry leaders are still trying to figure out how to do it. While changes required to meet those objectives are already occurring, infinitely more remain to be introduced or even conceived — we won’t see flight training methods stabilize until today’s gross imbalance of professional-pilot supply-and-demand levels out.

Among changes already occurring at the big flight schools is formalization of our former freelance service business into an integrated and sophisticated industry. Traditionally, quality of pilot training varied almost solely by quality of instructor. There was plenty of room for CFIs to go their own ways, and to pursue their own teaching philosophies.

But the first step for increasing training throughput has been to heighten efficiency by homogenizing flight training to get more consistency — changing an art into a science, you might say. Today’s structured methods, particularly at larger flight schools, are designed to smooth out disparities between individual CFI methods through standardization, while increasing the number of students taught by each instructor. More students per teacher means greater training efficiency, and at the same time, reduced impact of the growing CFI shortage.

Until now, this change in student/instructor ratio has largely been accomplished through reduced one-on-one groundschool instruction — the trend has been toward transferring aeronautical knowledge via teachers in classroom settings, supported by highly programmed assignments and testing.

But more efficient classroom teaching of groundschool material is not enough to solve the staffing problem — that’s why down the road we’ll see a continuing trend toward self-taught “learn-at-your-own-rate” computer training. Many airlines are already doing it, along with the big corporate flight training organizations, and Cessna is leading the way into even the smallest flight schools with its exciting new multimedia Private Pilot program.

From self-taught computer groundschool training, it’s only a short step to addressing the next big instructor productivity block — all of that labor-intensive, one-on-one training we’ve traditionally done in airplanes. Sure, simulators have already been increasingly supplementing airplanes, especially for instrument training, but current versions don’t yet solve the instructor-staffing issue. To address that problem we’ll soon see “smart” simulators teaching maneuvers to flight students without the presence of an instructor, except for stage checks, help sessions, and perhaps an occasional flight in a “real” airplane.

Think of how much more efficient it will be when students can practice and master stalls on their own in the “smart simulator,” after you’ve introduced the subject. No longer will remedial lessons to conquer learning plateaus set student and instructor training schedules so far behind.

Automated simulator instruction will consist of preprogrammed exercises taught, administered, and graded automatically, which can be repeated by the student until performance standards are met. (United Airlines has already been computer-scoring pilot performance in simulators for years, for its pre-employment sim check.)

Increasingly, self-paced interactive computer ground instruction will be integrated with self-teach simulator sessions to diminish use of real aircraft for training, as is already happening at the major airlines. But just to show how far this technology is projected to go, the NASA-funded AGATE advanced technology project is working on “smart airplanes,” which will ultimately guide and diagnose student performance in actual flight.

What happens to the CFI with all this automation taking over? With decreasing one-on-one instruction, the CFI’s role will increasingly become one of project management, with emphasis on instructional design.

Draconian as that may sound, it’s not necessarily bad for CFIs, because with such changes flight instructing becomes a profession in a sense that it hasn’t been before. Instead of just playing someone else’s music, flight training pros will increasingly write the score as training managers.

Improved standardization in routine cockpit tasks and “standard” emergencies will result among our students, due to the total and ultimate patience and consistency of computers over humans — students will be able to practice challenging maneuvers and procedures over and over on their own, until getting them right. No longer will one instructor’s weaknesses or time constraints on a given day permanently impact the quality of a key lesson for a student.

Increased training automation is also good news when it comes to CFI compensation. With instructors devoting less time per individual student, they’ll have time to take responsibility for more of them, meaning CFIs can ultimately earn higher salaries. One reason airline pilots make more money than other pilots, is because their piloting skills are amortized over so many passengers. By breaking the traditional one-on-one student/instructor ratio, CFIs can service a larger customer base and therefore escape their current earning limitations.

Of course there are also huge instructor challenges with such changes in how training is delivered. How far can standardization go? Will student judgment and decision-making skills develop adequately with the reduced CFI involvement? Certainly we don’t want to see independent thinking bred entirely out of the new pilot ranks.

Then there’s the human element — with increasing standardization and automation, will CFIs continue their important roles as mentors, counselors, and cheerleaders? If not, we’d all better watch out.

If anything, increasing standardization makes it more important than ever to individually coach our students — to encourage comprehension of “the big picture” despite the detailed training, and to help students make it past the rough spots. And we’ll have to work extra-hard to continue delivering the joy, fulfillment, and confidence that comes with an “Attaboy!”

One must also question the potential loss of valuable learning that traditionally came from unexpected and unprogrammed flying events. Never have I forgotten my own surprise lesson of planning a trip to an Indianapolis area airport — only to learn when I couldn’t find it at the end of my flight, that the airport no longer existed. Let’s hope the wonderful opportunity to make real-world mistakes is never refined entirely out of flight training.

As for the CFI shortage, such changes will not likely totally solve it until pilot demand slows. In the meantime we’re going to face stiff staffing competition from other careers & professions both inside and outside aviation, meaning demand for professional instructors will go through the roof. That’s one reason I’m not personally concerned about the economic future for flight instructors. Demand for professional CFIs can only go up, and with it will go pay.

In fact, it’s only a matter of time until progressive aviation educational institutions see the light and begin offering “Professional Flight Training” options, along with their traditional airline, corporate, and management programs. After all, who else is going to develop the new technology, training methods, and materials we’ve been talking about?

By now I suspect that CFI readers of this column have divided into two camps — those enthused about this promising sci-fi future for flight training, and those who are at this moment red-faced, angry, and pounding their tables (if they haven’t already given up reading this and burned it, that is.)

With all this talk about computers teaching pilots, what happens to the romance of flying? How do computers and simulators fit in with grass strips and taildraggers? In short, what will happen to recreational training in the era of standardization? Well, those are darned good questions and will make a dynamite topic for an upcoming column.

But as the aviation industry inevitably leans more and more on standardization and technology to increase the efficiency of pilot training, our challenge as instructors will be to retain the individualized CFI attention so important to every pilot’s success… motivating and influencing people, creating better pilots, and growing the industry, all through our own very personal enthusiasm and caring.

Regardless of the exciting new tools available, let’s never, ever lose sight of the critical human element in flight training — us. That’s the secret of tomorrow’s lesson, and yesterday’s as well.

–Greg Brown

This blog entry reads as if Brown wrote it today, but it first appeared in “NAFI Mentor” in 1999. Although Brown is certainly a perceptive writer, the fact that his story is still relevant 15 years later is pretty incredible. Whether that says more about him or about the speed at which our industry evolves is debatable. 

What do you think of Brown’s ideas? And what of the fact that something written so long ago can still be so apt today? Let us know in the comments. –Ed.

Flight training ripe for disruption

As a Boston-based firm we have grown up surrounded by educational institutions that have had a fair amount of success producing thought leaders and disruptive innovators. Harvard and MIT have spit out their fair share of companies that have brought innovation to sectors like technology, finance, retail and education. Like many of the companies in this region, we subscribe to a healthy does of what we call disruptive innovation, a term coined by Clayton Christensen, a Harvard Business School professor and thought leader on commercial innovation. (See a video of Christensen describing the concept.)

As Christensen puts it, disruption is an innovation that creates a new market by applying a different set of values, which ultimately (and unexpectedly) overtakes an existing market.  We can point to examples like Apple, Kickstarter, BirchBox, and Coursera (leader in Massive Open Online Courses or MOOC).

Few areas in flight training have been exposed to such innovation. Sure Garmin put out the G1000 and Cirrus produced the SR20 to increase safety, but both products were built at a higher price point that only the top tier of the industry could access. True disruptive innovation transforms a product that only a small portion of the market can access (due to affordability and expertise) and makes it available to the majority of the market.

The opportunity is that there are plenty of areas within flight training that are ripe for disruption.

Student Recruitment 

Both collegiate and for-profit academies struggle to communicate their value to today’s students, the millennial. As an example, Coursera, a driver behind the MOOC movement has focused on bringing world-class education to everyone. They have figured out a way to attract huge amounts of both professors and students onto their platform because of the value they provide. That value is learning at your own pace on your own terms, and having access to a huge community of other learners interested in the same things as you. For flight training, having ground school taught online could not only save the student some money but could also open up the pool of potential program applicants.

As an example, National Aviation Academy is working with Broward College to provide distance learning by having students take all their courses online through Broward College. That way they can complete their course work and flying without having to travel back and forth between campuses.

Student Lending

We all know the cost of education for a student pilot is substantial. I believe there are ways we can offset that cost with new forms of student lending. Take a look at what CommonBond is doing to connect alumni with students to provide financing at a lower rate. Why can’t this be done for aviation? Pilots are a tight-knit group that generally cares about the future of aviation and many are looking for a way to give back. For collegiate aviation it is easy. Alumni can invest through CommonBond and help an aviation student fund their education while earning a competitive return on their capital. Why not expand that same model to academy training?

Cost of aircraft

New aircraft are expensive. We heard at the Redbird Migration Conference a new Cessna 172 will be priced somewhere north of $400,000. As the prices continue to rise, the number of training programs and the number of students will continue to diminish. As an industry, we are squeezing out many organizations and preventing them access to equipment. The good news is that a handful of companies have started to take action and are working on putting a lower cost aircraft into the marketplace for flight training.

Accessibility of training equipment

Combine the cost of new with the average age of training aircraft in the market today (40-plus years old) and the problem of accessibility begins to grow. We get calls everyday from flight training programs that are looking for ways to upgrade their fleet of 1972 Piper Warriors or 1975 C 172s. Accessing replacement aircraft for these programs is a challenge because there just aren’t many options. Most programs have a certain margin stack that they need to fit all of the aircraft costs into in order to break even and not charge the student more money. From a leasing/financing perspective there are very few products that can do that effectively for the majority of the market.

A company that has had success in another industry is Zipcar. They were able to create a model that gave urbanites affordable access to vehicles on an as-needed basis that made more sense than owning the car outright. What if we could do that for flight training? What if we could give flight training programs the ability to “rent” aircraft hourly for one flat rate that included maintenance and insurance? Could that change the way aircraft are consumed?

So many other companies and industries have faced many of the same challenges flight training faces and have been able to innovate and change. As companies and individuals start to go after the opportunities in our industry all of flight training will benefit from the disruption. What other opportunities do you see?

–Nick Abate, director of marketing and analytics for Brown Aviation Lease

The story behind the awards

As we embarked on the 2013 Flight Training Excellence Awards process we sought to build on the fantastic customer response in the nominations for the 2012 awards. Using the newfound knowledge that many flight training customers are willing to tell us about their experiences like they do for other services, we decided to change from a nomination process to a poll. We gave people a balanced mechanism to describe their experience, positive and negative.

Our reward is a look through the eyes of 3,375 consumers that show not only what constitutes a high-value training experience, but also lets us contrast that to those that had a low-value training experience. This consumer-derived report card will be presented at the Flight Training and Pilot Community Summit on October 9 in Fort Worth, Texas, and in Flight School Business communications. We hope this information will help you inform your decisions and priorities for your flight school.

With the new data collection mechanism of the poll we can show a distinct separation between the experiences that customer’s value and those that customers do not. We have used the separation to name not only the one “Best” and top 20 percent “Outstanding” in each category, but we will also able to recognize an “Honor Roll”.

Most consumers will only give a new hobby or leisure pursuit one try. If that experience doesn’t meet with their value expectation we will likely not get another chance as an industry to get them back. By acknowledging these schools and instructors on behalf of their customers we are helping to illuminate beacons that guide prospective pilots to experiences that will more likely result in not only a certificate, but lifelong pilots.

To the recipients of the 2013 awards thank you for converting on the one shot we as an industry had with your customers. We say congratulations, we hope you display your awards physically and electronically with pride and new customers find you because of your achievement. Keep up the good work and your customers will make you a 2014 award winner next year.

–Shannon Yeager, vice president of strategic initiatives, AOPA’s Center to Advance the Pilot Community