I need advice on steps to create a 135 operation

[jshaff]

Hi All,
I am currently enrolled in college seeking a degree in airline management. I have had a passion to fly all my life and I recently aquired my commercial/multi rating and would love to fly for a living. However, my big "American Dream" is to create a charter air service for the local businesses of my area.
This dream is turning out to be somewhat of a nightmare do to the complexity and regulations of the enterprise. I have hardly started to look into the steps I need to take in order to accomplish my goal, and it seems as though all odds are stacked against me. I am not one to give up at the first signs of trouble though.

I will state my current plan and then I will ask anyone with any information or suggestions to help me. Here is my plan:

1. Continue my education at college
2. Find a source of capitol (that will be the easiest part! just kidding.)
3. Find someone or a company to help me with a business plan
4. And start the company.

I know my plan lacks detail. That is the problem. I don't even know whether a degree in Airline Managment is the best option or if I should go with something else. So my questions are: What would be the best degree to shoot for? What suggestions do you have on raising capitol? I am a realist, and I realize this is not going to happen in a short period of time. I am thinking that it will take several years (i.e. 5-10yrs) for this dream to materialize. Considering that, raising the capitol should be an attainable goal.
When it comes to creating a business plan, should I plan on leasing or buying an aircraft? I suppose I could "rent" the aircraft from a company and use it that way. I just don't know. How does this generally work?

And any other questions that you think I should address or ask myself would be greatly appreciated.

My next small step is go to some local Part 135 operators and see if they will show me how their operations work.

If anyone has any insight or help to offer, I would gladly accept it?

Thank you,
jshaff

 

[Timebuilder]

First, the common sense response is this: why in the world would a bright young guy want to start an operation that in the vast majority of the examples seen tends to lose money, create ulcers, and leave operators wondering how they can compete in this high expense/low return business?



So, first I'd counsel you to spend some time in aviation before deciding that you want to run an aviation business. My standard advice includes things like: can you imagine yourself doing something else, or is this the ONLY thing you can imagine yourself doing? It has to be that much of a passion, and that passion has to be tempered with well-informed experience of at least a few years.



You'll have to do a lot of investigation, including acquisition costs and upkeep for planes, costs of pilot salaries and training, insurance, advertising, and the ability of the market to support what you need to charge to pay for all of this.



The people I know who have made a go of this pay their pilots low wages, and don't own most of the aircraft they use. They charge others to manage the aircraft, and pay the owners for the time the aircraft is used by the company. This essentially makes the airplanes pay for themselves and shifts the cost burden to the well-heeled owners who only occasionally need to fly somewhere for business or pleasure. If the operators owned all of the airplanes, they'd be in the hole.



Aviation as a business is highly competitive, litigious, regulated, cutthroat pursuit that reminds me of my contacts in the construction field. These guys are type A personalities that are generally unfriendly, driven, stressed out people who have great difficulty enjoying life in general. While pilots have to worry about staying healthy enough to keep their current medical standing and have the added burden of competing for employment with the glut of available pilots, the people who run aviation businesses know that on any given day they could be shut down by an inspection or a terrorist act, and possibly lose their entire life's work as a result. This has actually happened to businesses at three DC area airports.



So, if you can't see yourself doing anything else, and you want to compete against the hundreds of already struggling outfits that are facing rising insurance costs due to litigation, then do your homework and prepare well to jump in.



I hope this gives you a different perspective to consider.

Oh, and the Atlanta FSDO has info on creating a 135 company. There are several metric tons of paperwork and dozens of hoops, which seem to keep changing as you fulfill the requirements. Good luck.

 

[Flyingmariner]

135 Startup

I wouldn't want to be one to crush anyone's dream but forget this one. Having started the exercise a couple of years ago I found out that not only are the odds stacked against you financially but if that doesn't get you the regs will.

Not sure about your local FSDO but I was required to have a $1 million liability policy in place before even getting the operation cert. (yes, that's right before you even turn a prop)

My best suggestion would be buy an existing operation.

 

[350DRIVER]

Best advice is don't do it....


You have too much to loose and very little to gain.


3 5 0

 

[Gatorman]

Danger Will Robinson!!!

Hey, if you have the mo-la to do it and you can find a FSDO to help you, I would still warn you against doig something like that. If you will not listen to the pilots reporting to you, listen to this mechanic...don't do it....not a good investment.

I recently spent a year at a DAL 135 company the has a bad reputation in the area as being "illegal". (wink..wink..nudge..nudge..say no more)
With that experience behind me now, I can tell you, you will need a crack chief inspector, and a top notch mechanic to keep your operations running or you will find uncle fed looking over everything you do and then some. The down side about it (pilots listen up) most of the maintenance performed on those aircraft are accomplisted by contractors!
Where i am currently employed, we have brought it 5 contractors to help wit the work load, I think we will be sending 4 of them home because they do sub-par work.
This is what you will be up against.

My BEST suggestion, if you are still dreaming, hire on with a 135 operator, learn the ropes, get into the books (both fiancial and log books), talk to the 'hired help' and listen to what other people around the field have to say about the comapny and take notes...lots of notes. Find out who the FAA inspectors in the area are and then concider getting counceling.

But, if you do make thus far, give me an IM and I will help you wit a few connections.

 

[RipCurl]

As somebody in approximately the same position as jshaff, this has been a concern of mine for some time now. In a year I'll have a bachelor of business in Aviation Management, and be commercial-multi certified. My dream was also to have my own little island-hopping 135 operation, but this seems more and more unreal as every day goes by. I have no interest in the airlines, but I know that I want to fly, period. So where do I go from here? LOL should I just take all that training money up the chute, get LASIK and join the AF? It's almost looking like a viable option at this point...

 

[jshaff]

It doesn't sound like STARTING the operation is the way to go. My dream is to own and run a small charter style operation... not to lose every dollar I put into it. One option that Flyingmariner offered was to "purchase an existing operation". Is this a viable option? By purchasing the operation, I assume that most of the hoops and regs will have already been negotiated.

I don't know all of the differences between a 135 op and a 91 op, but if I switched my focus to a 91 operation, could that be more obtainable and profitable?

People keep telling me that I shouldn't start a 135 operation... So, assuming I don't start the operation, but I still want to do something of the sort, what are some options? Has anyone seen any type of operation that tends to be, at least, partially successful?

I am not too concerned with making lots and lots of money. However, I don't want to live on the corner of 8th and Main, looking for my next meal and ride to the airport. I know that the path I have chosen is a hard one and I believe I am preparing myself for that. I'm just not ready to give up and find something else. For those of you that say "find another job. (i.e. be a doctor, lawyer, dentist)" It just won't work for me. I have been obsessed with flying for as long as I can remember. I appreciate everyone's opinion... even those who tell me to give up. However, I also want to hear from those who have suggestions on how it COULD be done.

Already I have received a lot of valuable information and I am greatly appreciative for that. Please, keep writing. Anything and everything helps.

-jshaff

 

[jshaff]

Another option someone recently informed me of was purchasing a certificate off of Trade-a-plane or something like that. Then hiring the personel I would need, with the appropriate hours, and then aquiring the aircraft somehow. Is this a good option? Well... reletively speaking, is this a good option?-jshaff

 

[Gatorman]

A little more help

I was thinking a little more about how to get this thing started, own your own aircraft capable of operation as a charter aircraft and do it. Start with one aircraft and see how it goes. Do your own recruiting for pilots, do you charter sales, and make your own assestment. That way you will not sink too much money into the project, afterwhich, you can decide to jump into it deeper or bail out. Don't try to make a big operation of it all at once.

 

[Kingairrick]

Here's another view.

Gatorman hit on it. There are several levels of 135 operation. The easiest to get is a "single pilot/crew" certificate. There is much less paperwork required to get this type. You do have to meet the "exclusive use" clause in all 135 ops. In other words you have to own or lease the aircraft you will put on the certificate. You may then charge people to ride on the aircraft. Your reference to a Part 91 op doesn't make ant sense to me. Part 91 means that you can't charge people to ride (oversimplification, I know) so how would that work?

Anyway, even a single pilot 135 will take you approximately 6 months of full time work to get the cert.

One misconception is that you can buy a certificate. You must buy the whole operation. The Certificate goes with a company. You can buy the company, and then change the management with the FSDO, but then you are looking at the potential liabilities associated with buying a company.

I personally don't think that getting a single pilot 135 looks to be that difficult. Making money with one would appear to be quite another story. Most of the 135 ops that I know of are set up to lower operating expenses for the aircraft owner by having a little income offset costs, as opposed to actually trying to turn a profit.

As always, just my .02. Good luck. I believe that aviation needs more entrepreneurs...

 

[Publishers]

difficulty

One thing that Kinairrick pointed out was the issue of buying an existing certificate. Even if you buy the company and all the inherent problems that may or may not come with that, the FAA can consider you a new operator as there has been a substantive change in ownership and management.

My suggestion is you try and find some 135 manuals and if yoiu are serious about it use your school time to write a manual. That way you will know everthing that is in it and how it works. It will be a great learning experience.

Having a charter company for the most part is about realtionships and contacts. Those relatioinships may help you find aircraft to lease or manage as well as to find customers and prospects. Standard ways of advertising do not work particularly well. You need a mentor who is in the business community to help you establish the contacts. The actual operation is not that difficult.

The one aircraft way is OK but everything falls to you. If you are flying, who is selling or handling the billing etc. The most difficult aspect is the growth between 1 and six aircraft. Once you get past that it become a good deal easier.

 

[Jedi_Cheese]

I believe that aviation needs more entrepreneurs...

...or less regulation...

 

[JetPilotCA]

getting started

actually the easiest part of the 135 is go talk to the FAA or more specifically the FSDO (flight stardards district office) While starting up my operation, I developed a great relationship with the FAA and they gave me all the material needed. The FAA really scared me at first, but got to develope a friendship and that made all the difference there.

Hi All,
I am currently enrolled in college seeking a degree in airline management. I have had a passion to fly all my life and I recently aquired my commercial/multi rating and would love to fly for a living. However, my big "American Dream" is to create a charter air service for the local businesses of my area.
This dream is turning out to be somewhat of a nightmare do to the complexity and regulations of the enterprise. I have hardly started to look into the steps I need to take in order to accomplish my goal, and it seems as though all odds are stacked against me. I am not one to give up at the first signs of trouble though.

I will state my current plan and then I will ask anyone with any information or suggestions to help me. Here is my plan:

1. Continue my education at college
2. Find a source of capitol (that will be the easiest part! just kidding.)
3. Find someone or a company to help me with a business plan
4. And start the company.

I know my plan lacks detail. That is the problem. I don't even know whether a degree in Airline Managment is the best option or if I should go with something else. So my questions are: What would be the best degree to shoot for? What suggestions do you have on raising capitol? I am a realist, and I realize this is not going to happen in a short period of time. I am thinking that it will take several years (i.e. 5-10yrs) for this dream to materialize. Considering that, raising the capitol should be an attainable goal.
When it comes to creating a business plan, should I plan on leasing or buying an aircraft? I suppose I could "rent" the aircraft from a company and use it that way. I just don't know. How does this generally work?

And any other questions that you think I should address or ask myself would be greatly appreciated.

My next small step is go to some local Part 135 operators and see if they will show me how their operations work.

If anyone has any insight or help to offer, I would gladly accept it?

Thank you,
jshaff

 

[123]

Don't let these guys get you down on your idea. It will be hard work and more expensive for you if you don't have a lot of flying and business experience, but not impossible. You do need to look at the costs and hoops you need to jump through associated with the business. Insurance is going to be a big one. Check around with different aviation insurance companies to determine the amount of time they will require the pillot to have in order to be insured. I am assuming that you want to be one of (if not the only) pilot's on the certificate. A single pilot certificate is MUCH easier to attain than a multi-pilot certificate. Break down all the costs that will go into developing and running your business and don't freak out when you see how big the numbers are. Think of as many possibilities for creating revenue and what your companies Mission and Vision will be. How are you going to distinguish yourself as different or better than your competitors, or do you have a new nitch market? Work on your business plan starting now. There are many examples of business plans that you can download off of the internet to get an idea of how to write one. You will need a good and sound business plan in order to attain financing. Also, contact your local SBA (small business administration), most have councelors that will help you with your business plan and ideas on where to look for financing, and best of all, it is free.

Just don't give up, if it is something you truely desire. Too many people have great ideas but don't have the guts or drive to make it happen. And don't expect everything to come easy. Most importantly though, make sure you finish school!

Idea for you: in addition to providing on demand 135 charter, you could possibly use the aircraft for flight instruction, which could help to provide extra revenue. And as for the $1 million dollars of liability insurance, that is pretty standard for any service related business and frankly, I am surprised it is that low.

 

[mattpilot]

actually putting all the paperwork together isn't that difficult. The school i attend has a requirement in one of its courses to put together a 135 operation. Thats everything but actually applying and buying the aircraft! Just filling out the paperwork. The average project included 3-4 students and had to be done in less than a month. Finished projects filled on avg a 2-3 inch binder. Unfortunatly, the instructor i had in that course decided to NOT do it this particular month, so i feel like i kinda missed out . But as someone else said, go to the FSDO and ask questions - they will give you EVERYTHING (which btw, the school mentioned above also required its students to do).

 

[DJS]

Single Pilot 135 Operation

Ah, memories. About 2 years ago, I was (a) between companies and (b) fell in love with flying. So I spent a couple solid days and put together the first draft of a single pilot part 135 business plan. Your post made me go through and re-read it again this evening.

I created some spreadsheets, listed a bunch of assumptions about costs ranging from airplane lease (I called some existing 135s to get some cost details; they were more than happy to chat), fuel, maintenance, engine overhaul, marketing, insurance (I called an insurance company to get some details), etc. etc. etc.

I went through parts 61, 91, 119, and 135 with a fine tooth comb and extracted everything that seemed relevant and included that in my business plan.

I then called the local FSDO and they were incredibly helpful, sent me all sorts of documents, gave me both encouragement and advice on how a (at the time) 100 hour pilot might start looking into things.

Given everything, I figured I could gross about $50K/year (pretax) with the idea I had. That is, after I spent a while getting my CFI, then teaching for a while to get up to the 1000 hours for IFR flight. And then a while building my customer base. And this was assuming nothing went seriously wrong with the plane. Or the price of gas didn't skyrocket (ha!) or any one of a zillion other things didn't go seriously wrong...

While I had a blast researching the idea, I just couldn't bring myself to pull the trigger given my current life (wife, kids, mortgage, etc.). Now, if my spreadsheet had spit out $250K/year, things might have been different, but I simply couldn't fudge the numbers enough to make that happen with any sense of realism.

It was a fun notion and I'm enjoying being a weekend bug-squisher instead...but I will no doubt always have that "what if" thought tickling around the back of my head.

 

[philo beddoe]

I'm currently right in the middle of the 135 process. You will be amazed at each new layer of things you must accomplish. It's like restoring an old car. Every time you pull of a part to work on it, there are two more underneath that need even more effort.

The big initial hurdles:

1) Business model. Have you thoroughly researched your prospective client base? Opening a popsicle stand in the middle of Alaska won't do as well as it would in PHX. Make sure that the aircraft and pricing structure is compatible with the region.

2) Money, and lots of it. You can't scrimp on maintenance and other expenses. Just like some people buy more plane than they can afford and then maintain it poorly, some go into 135 with unrealistic cost estimates based on blue-sky thinking. Plan for every contingency.

3) Regulations. Do you have the necessary knowledge to deal with the regulatory side of 135? There are many subtle issues to be dealt with. Your local FSDO is not going to spoon-feed every point to you. You will need to learn about a million new things.

4) Management personnel. Depending on where you live, it can be very hard to find persons qualified to staff these positions. If you cant find the required people, you are done for.



Lastly, consider a single-pilot, single aircraft operation.

If you are in a region where VFR weather is consistent, you could even start a VFR 135 operation when you hit 500 hours. How about that?

If I can answer any questions for you, PM me, and I will help you as much as I can. No sense in both of us wandering around in the dark.

Good luck, and get out of aviation while you still can.

 

[mattpilot]

And something else:

I think everyone dreams of his or her own little little airline business - i know i do . I'd love to own 2-3 KingAirs and do some sheduled stuff. Not any money to be made, but sure sounds rewarding.

Anyway, a few thoughts:

- Have AT LEAST 2 aircraft in your fleet. You are bound to get maintence problems and if you do, you will be screwed. If you have a backup plane, you can delay your passangers a bit but still get them to their destination. Also, your aircraft will have to go 'down' and get checks done for a few days - the second plane can do a double shift and still keep you operating.

- Get some 135 experience yourself first. If you get at least 3 years of PIC experience in 135 operation, you can take up the role of Director of Operations and Chief Pilot yourself, otherwise you will need to hire at least one person which will cost you lots of extra money

- Depending on what you want to do, do your research properly! Try to find the best plane that fits your operation. For single Pilot operations with the least amount of regulations ( 8 pax seats + 1 pilot seat that may be occupied by a passenger), i'd recommend the Cessna Caravan. If you decide to get a twin then suddenly your Pilots will need to have an ATPL rating - Get a large aircraft (12500lbs+ like the KingAir 350) or even a jet and suddenly you need a SIC which will increase your operating costs. But maybe thats what you want, depending on what your objective is.

- Read through FAR 119 (faa.gov) - it covers everything you need for certification procedures/requirements for 135 & 121 operations. Then read FAR 135 to find out what requirements you need for certain operations. Remember, the bigger your operation, and the larger your planes, the more expensive it will be. Don't go out buying a RJ for a 100-200nm trip - a KingAir or a Cessna Caravan can significantly reduce your costs and perhaps let you sell cheaper tickets than competitors.

- Don't use Major airports - use smaller GA airports nearby - no pax terminal = no security lines. A good selling point.


Case in point, TUL-DAL is a bit less than 200nm. Cheapest flight to DAL (actually DFW) is Delta with 109 USD at the moment (round trip, of course). Next cheapest flight is something around 139 with AA i think. A KingAir 350 cruises at a bit less than 300 kts. Operating costs per hour is roughly 450 excluding insurance, hanger, etc ... and still excluding pilot pay (say 35/hr capo and 15/hr FO). And lets assume it seats 12 pax seats (the maximum for that aircraft i believe - tight, i might add).

Anyway, You can do the math yourself regarding how much it would cost to fly the route, but lets assume you need to cover your operating costs of say 500 for the flight -- 500$ <- thats what your trying to achieve per flight. So lets assume our aircraft will always be 3/4 full, say 9 pax. = So you need to sell a seat at at least 55 Dollars. Make that a round trip and your at 110$. Not quite like Delta, because you still need to add taxes, but the second cheapest airline flying that route. And your selling points could be - no waiting at security lines, arrive faster (no delay at gates because of huge check ins, no waiting in aircraft for long periods of time). Delta published i think 1hour and 9 min for the flight. Doing the math above, you could very well do from engine start to engine shut down in way less than an hour. Also you could cater to a 'higher' class of citizens by flying 'business' style .

The list goes on, and i'm tired.. so good night

 

[Kingairrick]

It's time to start your own research.

"Get some 135 experience yourself first. If you get at least 3 years of PIC experience in 135 operation, you can take up the role of Director of Operations and Chief Pilot yourself, otherwise you will need to hire at least one person which will cost you lots of extra money" Single pilot 135 does not require a Chief Pilot or DO, so there is no need for this.


"Case in point, TUL-DAL is a bit less than 200nm. Cheapest flight to DAL (actually DFW) is Delta with 109 USD at the moment (round trip, of course). Next cheapest flight is something around 139 with AA i think. A KingAir 350 cruises at a bit less than 300 kts. Operating costs per hour is roughly 450 excluding insurance, hanger, etc ... and still excluding pilot pay (say 35/hr capo and 15/hr FO). And lets assume it seats 12 pax seats (the maximum for that aircraft i believe - tight, i might add)." On a 200 NM leg, a King Air 350 will cost you LOTS more than $500. Direct operating costs are much closer to $600 per hour, and toal operating cost are more like $1000 per hour. That's before you add in the cost of capital on a $3M airplane.
"If you are in a region where VFR weather is consistent, you could even start a VFR 135 operation when you hit 500 hours. How about that? " You will find that there are some operational challenges there. The requirement for positive flight following is the biggest.

 

[mattpilot]

Sorry kingairrick .... I'm just going off of http://planequest.com/operationcosts/op_cost_info.asp?id=19 if you got a better source, post it.... in any case, i've found this website to be very accurate with most other planes.
Of course $450 doesn't include the lease or your own salary or office space or whatever... You'd still have to factor that in, but it would be kinda hard, not knowing the amount of hours that are planned per year, don't ya think?


"Single pilot 135 does not require a Chief Pilot or DO, so there is no need for this."
ABsolutely correct, but what if he doesn't plan on doing a single pilot operation? Is it still bad advice?