California Law Needs A Go-Around: Cessna

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The dynamics of obtaining professional flight training in the United States are no doubt complex—which is why we focus on the elements of finding a good flight instructor and training organization whenever we talk to prospective pilots about learning to fly. The consumer must be their own best advocate, because those flight training organizations vary widely. But how can we help these budding flyers—vital to our survival—steer clear of those unethical organizations that have so visibly failed?

Cessna Aircraft Company has been in the aviation business since 1927. A critical part of our company's mission lies in ensuring the development of new pilots to help sustain the aviation industry. We support this through our flight school affiliate network, Cessna Pilot Centers. There are 275 Cessna Pilot Centers around the world, with the majority within the United States.

There are currently 37 flight training organizations that are designated Cessna Pilot Centers within the state of California—more than 14 percent of Cessna Pilot Centers nationwide. This demonstrates the importance of California in flight training in the United States.

Assembly Bill 48 (AB 48), signed into law late last year, and the regulations put forth by the Bureau of Private Post Secondary Education are intended to ensure that students pursuing post-secondary education in the State of California are treated fairly and receive a quality education.

As written, AB 48 removes the exemption for FAA-approved pilot schools that was present in previous versions of the authorizing legislation for the bureau. The inclusion of flight training into the Bureau of Private Post Secondary Education imposes a series of requirements, designed for larger classroom-type institutions, on the unique and primarily small business-owned flight training industry, as well as on individual flight instructors.

Most of California's flight training providers were unaware of this major shift in regulatory policy until they received letters from the bureau demanding payment of a $5,000 approval to operate application fee. Then they learned of the other onerous provisions to meet in order to continue operating their businesses, including submitting audited financial statements, remitting 0.75 percent of their annual revenue to the state and other administrative and recordkeeping requirements.

One of the most burdensome requirements is that these flight training providers must submit audited financial statements demonstrating a 1:1 asset to liabilities ratio. Like most other small businesses, flight training providers do not have the resources or staff time available to submit to annual audits. It is estimated that fulfilling this requirement alone would cost each business between $12,000 and $30,000 annually. Additionally, because of their unique operating environment, many flight training providers may not be able to meet the 1:1 asset to liability requirement. Since flight training facilities are located at airports, they usually do not own their facilities; similarly, a flight training organization often does not own its aircraft, but leases it from an owner.

The total cost to adhere to AB48 for one year? About $50,000.

Unlike other technical schools and colleges, FAA-approved flight training providers already submit to extensive regulation. This regulation ensures that students receive quality flight training consistent with FAA regulations, and adds significantly to the cost of doing business. Requiring these training providers to submit to an additional set of regulations from the state will drive the cost of providing flight training out of reach of most small businesses.

The National Air Transportation Association's Flight Training Committee has been working with flight training organizations in California to enact interim legislation (AB1140) that will give time to develop a reasonable and less burdensome process—one that will not bureaucratically and financially cripple our small business partners. NATA has determined that roughly 90% of current flight training organizations in California would operate with a zero or negative margin if forced to comply with the current bill. Most would opt to close their doors, leaving a significant vacuum.

When we vet a prospective Cessna Pilot Center, we look at the same key elements that a customer should also feel assured of prior to engaging in flight training. A company that's been in business in that market, with a proven record of graduations. A company that has a well-maintained fleet of aircraft appropriate in number and model to the flight training provided. Adequate financial resources to manage the inevitable highs and lows—whether seasonally or economically driven. And of critical importance: a commitment to escrow any customer funds taken in advance of training—and a business model that is not based on large up-front payments.

Because the customer doesn't have the same ability to vet these elements, we are also working with an industry association, the Flight School Association of North America, to develop accreditation standards that are modeled on our processes.

An industry-driven accreditation model can provide consumer confidence at a reasonable cost to the flight training organization. Going the way of California will serve only to generate a patchwork of state regulation that is painful at best and crippling to the flight training industry at worst.

Comments (20)

Thank you Julie for your insights and comments. I might add that although the financial aspects of the California Law are the most visible burden, and the most easily to quantify burden upon flight schools, the documentation, inspection, reporting and metrics that must be adhered to under AB 48 are a far heavier burden than the financial ones. Please, (which ever Part of the FARs you fall under-and you aviation maintenance schools too), help make this right by supporting AB 1140 to gives us time to develop a workable solution.

Posted by: MARC SANTACROCE | August 12, 2010 5:29 AM    Report this comment

I've been a Part 141 Chief CFI in the past, all at schools that operated "pay-as-you-go". This prevents large scale financial loss for the student if the school folds. Having an industry driven accreditation setup would be, in my opinion, the best way to go as it would keep the government out of the process and perhaps make quality and ethical operating practices less expensive to certify, and perhaps more practical to obtain on the school's part. If the industry method is used, it would be up to AOPA, EAA, AVWEB, and many of the alphabet groups, in addition to the schools, to get the word out or mainitain a listing of certified schools. Prospective students often may not know where to go to get good validation of a schools ability to do the job "financial-wise", which is what is being discussed here. I have never liked the idea of a school requiring a student to put out a lot of money up front. It puts the student's funds at great risk when times get hard for the school. A quality school will survive on pay-as-you-go and student commitment will be there. Joe Paterno, Penn State football coach said something to the effect that "success is fine, but quality can stand alone". The first step in any proposed financial stability or certification process should be with schools that require a lot of money up front.

Posted by: Unknown | August 12, 2010 8:27 AM    Report this comment

This is an articulate, well thought out politically correct response from the flight training community. We agree completely. What it does not mention is that the California Legislature is seeking funding for the BPPE - which we believe is one of the primary reasons they included flight schools under AB48.

Ed Rosiak CALPILOTS www.calpilots.org

Posted by: Edward Rosiak | August 12, 2010 10:33 AM    Report this comment

An extrememely well written article by Julie Filucci, and thoughtful comments by subscribers illustrate the talented readership of Avweb. As an employee of a major ab initio flight school in California, I can illustrate another aspect of problems surrounding AB 48. Our flight school does not accept students “off the street”, but rather we train foreign students who are under contracts and are sponsored by their respective airlines in other countries. Our agreements are with the airlines to train “their” students. A bill such as AB 48 makes our costs rise even further, making us less competitive in the international market. This further drives the GA/Training industry and activity out of California and possibly out of the US altogether. One more nail in the coffin to a cost effective pilot training solution in California.

Posted by: Kevin Gruener | August 12, 2010 10:47 AM    Report this comment

I am a former chief instructor of 2 schools that paid into a state fund that refunded a student's money that was left when the company went out of business. Another company didn't have such a plan and when he closed up several students lost quite a bit of money, and the 3 instructors lost a couple of weeks pay. I would support an insurance fund.

Posted by: Unknown | August 16, 2010 1:35 PM    Report this comment

As a Viet Nam era military trained pilot, as were most of my airline peers, I've always had a somewhat different perspective on the civilian training experience. The gross unfairness of the entire process always appeared as a major hurdle. A young man or women could spent hundreds of thousands of dollars, and depending on timing, health or general economy have very little opportunity to move forward in their chosen career. This was brought home about 20 years ago as I was preparing to fly the "red eye" back to the east coast. A gate agent asked if I had time to talk to a young pilot. Turned out he was a graduate of a very well known university with a very large and well established flight training academy and had acculated just under a hundred thousand in college dept. The sad part was his making thirteen hundred a month flying night checks in a Lear. I let him ride the jump seat so he could get home, but as we talked and watched the sun rise, I marveled at his determination and enthusiasm, but could sense his frustration, almost desperation as he looked for something better, and I sincerely hope he found it. I don't know of another profession that places such a burden on it's young with such an uncertain future. If a young person is accepted into Medical or Law School, they're fairly certain of a place in the profession. Their future success depends on their respective talents. In the airline industry, (probably most young people's goal) it is exactly opposite.

Posted by: Burns Moore | August 17, 2010 9:59 AM    Report this comment

Perhaps ab initio training is the answer, but unfortunately I see more problems that solutions, but having said that, I think we as a profession need to do a better job of nurturing our future coworkers. As a conservative free market capitalist, I believe in competition but not cannibalism.

Posted by: Burns Moore | August 17, 2010 9:59 AM    Report this comment

Perhaps ab initio training is the answer, but unfortunately I see more problems that solutions, but having said that, I think we as a profession need to do a better job of nurturing our future coworkers. As a conservative free market capitalist, I believe in competition but not cannibalism.

Posted by: Burns Moore | August 17, 2010 10:00 AM    Report this comment

Julie, I am in complete agreement with your comments. The problem here is that California goofed while trying to stay ahead of the for profit colleges that are popping up to take advantage of federally backed student loans, in the same way as banks and mortgage lenders took us into the financial crisis by lying, cheating, and committing outright fraud. Yes, the legislation is wrong. Yes, the flight schools are by and large innocent victims, but we have already seen this criminal behavior by some result in millions of dollars of taxpayer money being spent to cover the loses of fraudulent student loans. Remember the helicopter school in Las Vegas that went belly up leaving students owing tens of thousands for nothing. There is a bigger picture here of the true face of "Gotcha Capitalism" that is ruining honest financial institutions, individuals, and our nation since the period 1994 - 2006. I honestly fear that Americans, spoon fed selective propaganda by "news" organizations owned by non citizens, will not awake to the destruction of our nation in time to prevent it. God help us all if "government of the people, by the people, and for the people" is allowed, finally, to perish from the earth.

Posted by: RICHARD GIRARD | August 18, 2010 5:44 AM    Report this comment

The BPPE is here to help us? Private flight instruction works with very slim profit. The added costs is not good for the industry so it's not good for the consumer. Another nail in the Coffin for business in California.

Posted by: Mark Fraser | August 18, 2010 2:19 PM    Report this comment

AB 1889 is on the senate floor for the 3rd reading (3 readings required before a bill becomes law). Although it does provide a delay in implementing BPPE regulations until 1 July 2011, it has been amended to remove the requirement for "public informational hearings for the purpose of reviewing the appropriateness of regulating educational programs in flight instruction and aircraft maintenance...". Still no word on AB 1140 which, at last, was in the Appropriations Committee, and friends of ours are attempting to get it released on to the Senate Floor for a vote. At this point, due to the Legislative schedule, that almost certainly requires a rules waiver, which I do not know we will get. This could be a major set back because the indications have been all along that AB 1889 will likely be vetoed over a personnel and funding issue with the Service Employees International Union (SEIU) over whether the new BPPE positions will be in LA County or Sacramento. If both bills die, we will be out-of-compliance with the California Law. I'll post more as I learn more.

Posted by: MARC SANTACROCE | August 19, 2010 9:10 AM    Report this comment

Julie,

What protection does the FAA or Cessna offer to protect the tuition of flight school students that do not receive what they have paid for? Thirty Six Million Dollars ($36,000,000) has been lost by flight school students in California over the last 4 years when the flight school did not deliver the contracted training.

What part 61 flight schools are "FAA-approved pilot schools"? As far as I know, the FAA does not approve or certify any part 61 flight schools.

In fact I don't believe the FAA even requires Part 61 flight schools to even register with them. This may be the reason that the FAA does not even have a list of part 61 flight schools.

Posted by: Unknown | August 23, 2010 4:43 AM    Report this comment

Mark, the way I read AB 1889, the delay would only apply to "FAA Certified Flight Schools".

Part 141 flight schools are FAA approved.

Part 61 flight schools are not FAA approved or certified.

So it appears that if AB 1889 passes, that only part 141 flight schools would get the delay.

Part 61 flight schools would still have to comply with the BPPE regulations as of August 1, 2010.

Posted by: Unknown | August 23, 2010 4:55 AM    Report this comment

Ben, I understand your position. In fact, the original MOU did not address Part 61 (Only parts 141, 142, 65, and 147. This can be interpreted two ways (both for the 2000 MOU and the current legislation). (1) The whole ball of wax never applied to Part 61 and independents) or (2) only the "certified schools" were exempt as you indicate, and the Part 61's and independents are not to benefit from the delay. That was why Assemblyman Niello was pushing AB 140, because it had broader language in that it referenced "all flight instruction". Keep in mind that neither the California Business and Professions Code, nor the Education Code, nor any of the BPPE regulations even mention "flight schools, flight instruction, or aviation maintenance instruction". This gives credence to those who say we need not worry because we are not involved. My personal opinions waiver on this. If you email me at fly@astound.net I can send you more information.

Marc

Posted by: MARC SANTACROCE | August 23, 2010 9:02 AM    Report this comment

So that we do not lose focus, it is important to note that this matter of regulating flight schools created the Bureau of Private Postsecondary Education (BPPE), NOT under the Department of Education, but under the Department of Consumer Affairs. Whatever measures we come up with have to satisfy the consumer protection interests of the Sate and the students.

Posted by: MARC SANTACROCE | August 25, 2010 9:16 AM    Report this comment

UPDATE; The amended AB 1140 has been moved out of Senate Appropriations and is now on the Senate Floor to be heard Tuesday morning Aug. 31. It is expected that this bill will be signed by the Governor and be effective immediately until June 2011. During this period flight instructors and flight schools are to register with the BPPE but we would remain exempt from fees. Our work to eliminate the fee and regulatory structure shall continue. Marc Santacroce and NATA have been leading and helping the effort to do away with this detriment to California's flight training infrastructure. Please pass along or email to others.

Rafael Sierra Palm Springs Pilots Association

Posted by: Unknown | August 31, 2010 8:46 AM    Report this comment

Give NATA the credit, I've just been monitoring.

Posted by: MARC SANTACROCE | August 31, 2010 9:00 AM    Report this comment

PLEASE! Nanny State? We don't need more regulation! Putting money up front for flight training is an ADULT decision! We don't need the government holding our hand for everything, do we (and taxing us for their inefficient solutions and killing small business in the process)? Let's rethink this entirely! At the MOST, require a letter to be signed by every flight student that states that Big Brother does NOT recommend putting money up front for flight lessons, and doing so will be at the students own risk. After that, let the ADULT decide. Flying is serious business for those with a mature adult mindset. If they can't make mature decisions on the ground, they shouldn't be flying. Having the government play "Daddy" to us "children" is ridiculous, specially when they destroy businesses in the process. Let's get the overreaching, job killing government OUT of our lives as much as possible.

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