The dynamics of obtaining professional flight training in the United States are no doubt complexwhich 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 flyersvital to our survivalsteer 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 Californiamore 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 processone 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 lowswhether seasonally or economically driven. And of critical importance: a commitment to escrow any customer funds taken in advance of trainingand 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.