Many thousands of frugal pilots continue to fly because of flying clubs. These clubs typically include a wide variety of pilots and at least two aircraft, bringing down the price of going up by sharing the costs of plane ownership and operation. This article continues the discussion with suggestions on how flying club agreements can be structured to meet the needs of a nest of persnickety pilots and aircraft owners.
Flying Club Help
Obviously, a flying club involves more assets, more expenses, and more members than a co-ownership or a partnership of pilots. That’s why anyone considering forming a flying club – or even investing in a club membership – should get some legal advice, especially from an attorney with aviation experience. If you have a business attorney, or know someone who can recommend one, start there. Other options include the Lawyer-Pilots Bar Association (lpba.com), the AOPA Legal Services department (aopa.org), and state bar associations.
However, many aviation attorneys specialize in FAA medical resolutions, NTSB aviation accidents and damages, or aviation tax matters. Look for one with experience writing contracts, especially flying club and partnership contracts. If all else fails, use a contracts lawyer and have the documents reviewed by an aviation attorney.
Flying Club Insurance
One of the sticker-shocks of starting a flying club is the cost of insurance. With individual pilots used to paying between $500 and $1,000 a year for aircraft insurance, it seems outrageous to pay that much just for their single share of a flying club membership. Yes, total flying club insurance can be ten times that of an individual pilot’s policy.
Why? Because flying club members typically aren’t as careful with the club’s aircraft as with their own. And most clubs have a wider range of risk exposure with aircraft of all types and complexity. In addition, flying clubs with aircraft used for training need more insurance than if membership is comprised of 5,000-hour pilots. Many who decide to form a flying club start by talking with aviation insurance brokers to make sure they can get the best rates while keeping risks to a minimum.
Flying Club Agreement
The agreement (sometimes called the constitution) establishing the flying club must cover a variety of legal topics to a level not required for co-ownerships and partnerships. More planes, more pilots, more misunderstandings, more to go wrong. The flying club agreement outlines how the club is formed and for what purpose, where it will get its assets (aircraft, etc.), how it will calculate and distribute expenses, the requirements for membership including costs, a job description for officers, and rules on how aircraft time will be managed and planes maintained.
A flying club typically is incorporated as a non-profit corporation, often as a 501(c)(7), a social or recreational club. The number refers to the IRS Code that explains their function as “organized for pleasure, recreation, and other nonprofitable purposes.” They are simpler to manage than a 501(c)(3) that covers charitable and religious groups. Make sure you understand the differences and follow your attorney’s recommendation when organizing your flying club.
Flying Club Bylaws
The flying group is formed and held together by bylaws, a legal document that outlines the terms of organization, membership, and operations including membership requirements, new member checkout, flight instructor requirements, unimproved airport operations, and insurance requirements. The bylaws will also cover dues, costs, and payments including fuel and oil purchases. Finally, the flying club bylaws will document how aircraft are scheduled and returned as the club’s agreement on handling aircraft damage and repairs. There will be more legalese about governing law and arbitration just to cover any future problems.
In addition, members will probably be required to sign a rental agreement each time they use a club aircraft. This document will be much shorter and will review requirements, costs, and penalties.
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Sadly, there aren’t as many active flying clubs today as there were three decades ago. However, new ones are still being formed, especially around specific interests: light-sport aircraft, high-performance aircraft, warbirds, and other specialized flying that require many owners to keep the costs down. As you plan and organize your flying club, focus on clarifying its purpose and keep its mission statement as your guide through years of successful growth and flying.