#88 - Flight Schools and Passive Income: Insights from Gordon Alvord

[00:00:00] Welcome back to Passive Income Pilots, everyone. Tait Duryea with Ryan Gibson. What's happening, man?

[00:00:06] Ryan Gibson I'm excited. We're talking airplanes today.

[00:00:09] Who doesn't like to talk about airplanes?

[00:00:10] Ryan Gibson Yeah. I took this podcast from the car on the way to the airport. Unfortunately, I had to dig out a little early on this one to go fly. So I exit from the conversation like a curling puck.

[00:00:24] Ryan Gibson We call that an Irish exit. So on this show, you're going to notice Tait's in the beginning and then I kind of take it to the end, which isn't as fun. But however, this podcast will be fun because I know that there's people out there looking for side hustles and there's also people looking for passive income streams. Guess what? We're going to show you both.

[00:00:42] Ryan Gibson So if you're like an inspiring entrepreneur and you're looking for ways to make money, and one of those ways is to go the familiar route, which is what you already know and love and trust, which is airplanes.

[00:00:54] Ryan Gibson We're going to get into how you build a flight school, like a whole a whole flight school from from soup to nuts. And we're going to talk to a guy who built the flight school, and he was also an airline pilot. So if you think you don't have enough time, guess what? That's not an excuse today. You have enough time, right? Or maybe this guy made the time or prioritize the time. And that's an important thing. But also, if you're like, I don't really want to learn how to how to make a flight school, we're going to show you how you can participate passively and make income in flight schools as well.

[00:01:21] Ryan Gibson But who we're bringing on today is someone that I actually rent airplanes from. And they've got a world class flight school right here in the Puget Sound right here in the Seattle, Washington area.

[00:01:32] Ryan Gibson This is Gordon Alvarod, who is one of the founders of Rainier Flight Service. They have dozens and dozens of airplanes, mostly Cessna products, and they're at multiple airports all around the Puget Sound here in Washington.

[00:01:48] Ryan Gibson And we're going to talk about how they built a flight school, built a great culture. And also for those that are listening, that maybe are aspiring aviators, if you are looking for a place to go via CFI or train folks, and you want to go to a school that has a good culture, pay attention, this might be a school that you put on your shortlist to go build your hours. And likewise, if you're in the Puget Sound area, and you're looking to learn how to fly, this is a great place to go as well.

[00:02:13] Ryan Gibson Exciting episode. Let's get to it.

[00:02:19] Ryan Gibson Welcome to Passive Income Pilots, where pilots upgrade their money. This is the definitive source for personal finance and investment tactics for aviators. We interview world-renowned experts and share these lessons with the flying community. So if you're ready for practical knowledge and insights, let's roll.

[00:02:39] Ryan Gibson Gordon Thank you so much for coming on the show. We appreciate you coming on.

[00:02:42] Ryan Gibson My pleasure. Thank you for having me.

[00:02:44] Ryan Gibson So you are quite the business mogul.

[00:02:46] Ryan Gibson 70, how many airplanes?

[00:02:48] Ryan Gibson Oh, it varies a little bit. Between 70 and 75.

[00:02:52] Ryan Gibson 70 to 75 airplanes at the flight school. That's unbelievable. All right. Well, we're going to get into that before we do that. It turns out we're colleagues.

[00:03:01] Ryan Gibson We are. Yeah.

[00:03:02] Ryan Gibson Yeah. Give us a little bit about your background and your airline career before we get into the flight school stuff.

[00:03:08] Ryan Gibson Sure. My background is Alaska Airlines captain along with my business partner, Brad. Our backgrounds are almost identical.

[00:03:16] Ryan Gibson We met in college at the University of North Dakota and then got hired at Horizon and then later Alaska within months of each other. So we've been good friends and partners for a long time.

[00:03:29] Ryan Gibson It's fantastic. And yeah, we're going to be on the same seniority list here coming up. So the gloves are off.

[00:03:37] Ryan Gibson Fantastic. Well, I can't wait to meet you in person. Welcome to the air group.

[00:03:42] Ryan Gibson Thank you.

[00:03:43] Ryan Gibson All right. So you got to tell us about this flight school. What was the genesis around this?

[00:03:47] Ryan Gibson Well, it was never a plan. You know, that's a question that we often got is, you know, what in the world were you thinking starting a flight school? Because I think we all know that they come and go far too frequently. We actually started Rainier in 2008. We were furloughed by Alaska. And I'm sure we all remember that was a pretty difficult time, not just for the airlines, but the economy in general.

[00:04:10] Ryan Gibson And quickly realized we're not really qualified to do much with our lives besides flying airplanes. But we also had a passion for teaching and instruction. So we thought, well, why don't we just join a local flying club? You know, make some cash. We're going to get recalled in three months anyway.

[00:04:27] Ryan Gibson Well, three months turned into three years. And during that time, we decided we wanted a little bit more control over the quality of the aircraft, the scheduling and so forth. So we started with the leased airplane, eventually grew to a few more. Then we ended up buying some airplanes. And eventually, some other instructors saw what was going on and asked, hey, would you mind if we joined you guys? I think I like what we're seeing here.

[00:04:57] Ryan Gibson And it just took on a life of its own. By the time we were recalled at Alaska, we actually had a legitimate business. And Brad and I always decided that why don't we just see where it goes? As long as we're not trying to keep it afloat with our personal puns, or if we just wake up dreading to go to the airport, let's see what happens. And here, geez, almost 15 years later, we haven't hit that wall yet. So we're having a pretty fun journey.

[00:05:22] Ryan Gibson Yeah. And I'll just say, I personally rent those planes. And my impression of your flight school was a very professional one. And you can feel the airline procedures in the culture. There's equipment on the ramp and the maintenance and just the safety culture that you guys have adopted there and the safety video that you have to watch and the classroom instruction that you guys offer for free.

[00:05:48] Ryan Gibson Well, I don't know if it's free. Well, I don't know if it's free, but there's some safety courses that you have on mountain flying and VFR flying and transitioning in the time of the season to mountainous terrain and the impacts of icing and things like that.

[00:06:02] Ryan Gibson I've just always been very impressed. And it's been fun watching you guys grow. I jumped in my first plane there, I think in like 2015, when you guys just had the rent in location.

[00:06:19] Ryan Gibson Yeah. And then also to the north, I think at Renton and then also to the north, I think at Paynefield. And then I think down in Auburn or something, right, too?

[00:06:27] Ryan Gibson Yeah. We recently opened Auburn this last year as kind of an overflow. Renton as our main facility is by far the busiest, but it's also single runway limited. So even if we added more aircraft and instructors, they're just going to wait for takeoff, you know, and I hate wasting time and money.

[00:06:45] Ryan Gibson So by opening Auburn, we're trying to shift some of that demand south and keep people training efficiently.

[00:06:51] Ryan Gibson This is how busy Rainier Flight Service is. I always rent your planes, do charity flights. I donate to auctions and things like that. And I was running the 182 the other day and I taxied out to just, you know, to get on to Alpha to go down and take off runway 34.

[00:07:06] Ryan Gibson And the controller said, hold for flow in the pattern. Like there's so many airplanes. There's so many airplanes from Rainier in the pattern.

[00:07:16] Ryan Gibson Gave hold in effect.

[00:07:17] Ryan Gibson Yeah. Like there's like an edict for just getting in the pattern there. It's such a busy airport, but also just such a fun place to fly. You know, you get to take off to the north. You get to see beautiful mountains. You take off to the south. You see beautiful mountains on most days in the summertime.

[00:07:32] Ryan Gibson And, you know, you've got Boeing Field, SeaTac, seaplanes everywhere, mountainous terrain, and you're kind of just threading this needle in aerospace. Just a fun place to learn. I think it's pretty cool to be part of that program. The instructors have always been fantastic.

[00:07:48] Ryan Gibson Also, Gordon, I don't know if you know this, but Brad did my Alaska Airlines interview prep, which I passed my interview and worked for Alaska for a few years.

[00:07:56] Ryan Gibson Yeah.

[00:07:56] Ryan Gibson And actually, I ended up working for you guys and I did your airline prep. So I was actually working. I think it was Monica, I think was her name.

[00:08:05] Ryan Gibson Yeah.

[00:08:05] Ryan Gibson Yeah. So I did airline prep for some Alaska airline pilots. And I love that. You know, I don't do it anymore. Obviously, I'm a little bit busy, but I had so much fun doing that. And I was 100% completion rate. Anybody who went through,

[00:08:17] Ryan Gibson Just to toot my own horn here for a second. Anybody who got my prep ended up passing the interview. So congrats. Appreciate all of your help.

[00:08:27] Ryan Gibson It was super fun. Well, Gordon, we want to get into the business side of flight schools. The idea on the show is we want to elevate our listeners' acumen when it comes to finance and investing. And alongside that comes with understanding how businesses work.

[00:08:44] Ryan Gibson And I think that it would be a very fun exercise on this episode to discuss what goes into a balance sheet, a profit loss statement, and a cash flow statement as it pertains to a flight school.

[00:08:58] Ryan Gibson Because a flight school is something we can all relate to. We all went through it. We all saw the business model. So it's a business that we can all innately understand. And it would be, I think, the perfect backdrop to explain how those numbers work on each one of those counting sheets. So would you mind breaking that down for the audience?

[00:09:17] Ryan Gibson Oh boy. We might need some more time.

[00:09:20] Ryan Gibson I'll start and then you steer me in the right direction. I would say that just like any business, a flight school is really no different than a restaurant or a franchise of some kind. You essentially have assets that you're hopefully using to produce revenue. You want to invest in areas that are going to drive growth, all while balancing the culture of the company.

[00:09:46] Ryan Gibson You know, treating your employees fairly, you know, maintaining safety and having a strategy behind what's the long and short term direction of the company.

[00:09:57] Ryan Gibson So specifically with the balance sheets and those accounts, you know, we've been very fortunate to have a fantastic team behind us that help drive the decisions Brad and I make.

[00:10:06] Ryan Gibson But we're always looking at when we're spending money, is it going to deliver value? You know, that's ultimately all a business does, right?

[00:10:15] Ryan Gibson It creates or destroys value. So when we're making those strategic decisions, it's usually in investing in aircraft and or people. Because those are the two things that are going to improve our position in the marketplace.

[00:10:29] Ryan Gibson Now, Gordon, not every airline pilot who gets furlough can start an organization with 76 airplanes and continue to be successful. What do you think was the difference between what you and Brad did and maybe what other people try to do and fail? Because I mean, that's a lot of scale and a lot of success in a relatively short time. I mean, 15 years or so right now. So I mean, that's not a lot of time.

[00:10:55] Ryan Gibson I mean, you know, you've got a lot of time. And it seems like you've pretty much dominated the Puget Sound market for flight training. What was behind that?

[00:11:02] Ryan Gibson I would say two things were really in our favor. One was timing. You know, when we started in 2008, most of the other operators in the area were struggling because they were used to having a robust business.

[00:11:14] Ryan Gibson And then when their markets kind of dried up, it's a lot more difficult to pivot in established operation than it is to kind of start from scratch, which is where we were from.

[00:11:26] Ryan Gibson So a lot of it just had to do with being in the right place at the right time. If even we had started at 2008 in a different market, like, oh, I don't know, rural US or, you know, even California, it probably would have been a much different story.

[00:11:43] Ryan Gibson But in the Puget Sound area, we were familiar with the market, we knew the other players, and we're able to take advantage of opportunities as they arose.

[00:11:51] Ryan Gibson Yeah.

[00:11:52] Ryan Gibson The second thing that I really think drove our success was Brad and I coming at this as partners. He and I have, you know, different opinions, different perspectives. But between the two of us, we somehow managed to figure out, you know, the best outcome.

[00:12:09] Ryan Gibson For example, I may have a vision. And I'll put together a strategy and explain to Brad, this is what I'd like to do. This is my goal for the next six months.

[00:12:20] Ryan Gibson And he'll say, fantastic, you've got a budget of $200. Make it happen.

[00:12:26] Ryan Gibson So I think that, you know, us balancing each other out has been very useful in our business growth because, you know, we poke holes in each other's ideas. And between the two of us, we come up with a good plan.

[00:12:42] Ryan Gibson Not every fellow pilot makes a good business partner. What was it about you and Brad that made you go, this is going to work? Just happen to be in the same furlough class? Or what was the attraction there?

[00:12:54] Ryan Gibson I guess you guys went to UND together. But what was the, what made you guys go, I think this is going to be a good idea?

[00:13:01] Ryan Gibson I think it was just luck.

[00:13:04] Ryan Gibson Yeah.

[00:13:04] Ryan Gibson You know, we often tell people, it's kind of like a marriage where, you know, Brad and I have a family, which is a business with employees. And it takes two of us to kind of manage the family, much like a personal relationship. You know, there's give and there's take. And, you know, between the two,

[00:13:23] Ryan Gibson You make it work. If it was just me or him individually, it would have been very difficult.

[00:13:30] Ryan Gibson Yeah.

[00:13:31] Ryan Gibson Because without that sounding board, you just don't have a frame of reference. It's someone to kind of gank you back when you need it sometimes. But our personality matches just really well.

[00:13:41] Ryan Gibson Yeah.

[00:13:42] Ryan Gibson And I don't think there's anything else than luck in just finding the right person.

[00:13:47] Ryan Gibson That makes sense. Getting back to Tate's question about the P&L and the balance sheet and kind of statement of cash flows. For our listeners, in your P&L, that's your profit loss statement. On any business, you have things that are your biggest contributors to revenue, which is your top line. And then you have bigger things that are contributed to your expenses. And then on your balance sheet, you're going to buy things and capitalize those to the business.

[00:14:15] Ryan Gibson What would you say are your biggest revenue drivers, maybe your top three revenue drivers to the business?

[00:14:22] Ryan Gibson In our operation, because we don't do outside maintenance, we don't do fuel sales like a traditional FBO. It's really aircraft rental and instruction. And we have some ancillary, you know, revenue streams. But those are really the two main things that we focus on and try to execute as efficiently as possible.

[00:14:43] Ryan Gibson Yeah. And what would you say on the expense side? What's your biggest line item there?

[00:14:49] Ryan Gibson Probably payroll and just overhead expenses, rent, utilities, and so forth.

[00:14:56] Ryan Gibson Yeah.

[00:14:56] Ryan Gibson As you know, airport property is not cheap. And there's a finite amount. We can't pick up shop and just, you know, move down the street. So negotiating with the municipalities is, you know, a challenge sometimes, but that is the cost of doing business.

[00:15:13] Ryan Gibson Yeah.

[00:15:13] Ryan Gibson Yeah, that makes sense. And what, I mean, how do you even go about getting a lease at Renton Airport? I mean, are you renting from the municipality there or what's who you're renting that from?

[00:15:22] Ryan Gibson Every airport's a little bit different, but for Renton in particular, it's actually an owned asset by the city of Renton and managed by the city council. So we lease the ground and the facility from the city. There are cases where if you build a facility on a long-term ground lease, then you amortize that.

[00:15:45] Ryan Gibson Yeah.

[00:15:46] Ryan Gibson But other airports are different. Some are county, some are city, some are even private.

[00:15:52] Ryan Gibson Yeah, that makes sense. I think you're expanding, yeah? You're actually getting ready to do a pretty big demo and build of a new flight school in Renton. Is that right?

[00:16:01] Ryan Gibson It's something we're currently evaluating. You know, like I was explaining, going through the decision-making process, you know, you have to quantify as much as you can so that you can actually plan around realistic numbers. So we engaged a company to...

[00:16:16] Ryan Gibson Do an assessment on, you know, what would the marker rate be? What's the cost of construction and so forth? So we're gathering that information to see, is that going to be our best long-term plan or are funds better used elsewhere?

[00:16:31] Ryan Gibson Yeah. No, that's great. What would you say are the biggest ticket items that you've had to purchase? Because I believe you're doing all leasebacks on these planes, yeah?

[00:16:39] Ryan Gibson We started with majority of lease, but fortunately, by the time that we were recalled to Alaska, we didn't have to rely on this business being our, you know, sole source of income.

[00:16:50] Ryan Gibson Yeah.

[00:16:50] Ryan Gibson So we've been fortunate in being able to reinvest the money we do make, the profit margin back into the operation. So every year, we've slowly accumulated, you know, two or three airplanes a year as acquisitions.

[00:17:06] Ryan Gibson Oh.

[00:17:06] Ryan Gibson One, that improves our equity position and value of the company. And two, when you get into the taxes, especially with the bonus depreciations, that's been very helpful to offset the income and the tax liabilities.

[00:17:21] Ryan Gibson We talk awful lot about a bonus depreciation on the show. We've actually had your neighbor across the way, the Flight Academy on the show to talk about serious leaseback. Talk to us about that bonus depreciation and your philosophy there.

[00:17:34] Ryan Gibson I think our listeners love to hear, it's like you're earning income from this endeavor, and then you have taxable income, and you're basically reinvesting that income to basically get that bonus depreciation from the aircraft that you're buying, which is offsetting your gain. Do I have that right?

[00:17:53] Ryan Gibson Yeah, that's essentially it. You know, at the end of the year, you add up your profits and losses. And if you come out ahead, you're going to owe the government a percentage, right?

[00:18:04] Ryan Gibson

[00:18:06] Ryan Gibson You know, you're going to owe the money.

[00:18:36] Ryan Gibson Interesting. So you kind of got started doing leaseback. So you find people who are willing to buy the airplane, and then you entered that into service, took a spread on what you lent it out to the student on and maybe collect some revenue from the flight instructor's income.

[00:18:52] And then over the time you take those monies that you earn, and you basically start buying your own airplanes. I assume you just paid cash for those? Or did you lever those? Or what was your strategy there?

[00:19:05] Ryan Gibson A combination of both. It depends on our cash position for the year.

[00:19:09] Ryan Gibson Yeah.

[00:19:09] Ryan Gibson How much do we want to retain for kind of an emergency position? You know, you want a little bit of cash in the bank just for, you know, payroll and so forth. Sometimes we've leased, especially with, you know, new aircraft these days. If you place an order with Cessna, one, they are dramatically more expensive than they were even five, 10 years ago.

[00:19:33] Ryan Gibson I bet.

[00:19:34] Ryan Gibson And two, you're probably not going to take delivery for at least, you know, 18 months.

[00:19:39] Ryan Gibson Wow. So you have to forecast that in advance, and you can only take that depreciation when the assets put in service. So it's a little bit of cash planning as well.

[00:19:50] Ryan Gibson Yeah, that's great. I want to go back in time a little bit. So 2008, your furlough, you start this flight school, and then the airlines come say, hey, time to come back. And actually, I remember Brad actually taught my new higher ground school at Alaska.

[00:20:03] Ryan Gibson Mm-hmm.

[00:20:04] Ryan Gibson So he was my in-doc, not in-doc instructor, but some one of those weeks, you know, where somebody comes in and talks to the more new hires. What's it like? I mean, our listeners, you know, the show is called Passive Income Pilots, right? We're looking for passive income or passive income ideas. But we also tend to talk a lot about active income to offset your, you know, active income to that has maybe tax benefits or whatever it might be. But what was it like when you got recalled running a business? You know, kind of how do you do that?

[00:20:33] Ryan Gibson How do you straddle that? You know, being an airline pilot full-time and also being a full-time business owner, what's that like?

[00:20:41] Ryan Gibson It is a very careful balance. The key that we've found is finding the right people to handle the day-to-day. So we are only as actively involved as we choose to be.

[00:20:52] Ryan Gibson Realistically, especially at this point, Brad and I could really step back and do very little intervention because the team does a fantastic job making sure that we maintain a safe operation. It's efficient and profitable. However, like I said at the beginning, we still enjoy it.

[00:21:12] Ryan Gibson Yeah.

[00:21:12] Ryan Gibson You know, I love going to the airports on my days off and, you know, talking with the instructors, being a mentor, steering the ship, making sure that we're still on track with a long-term strategy. So that's by choice.

[00:21:25] Ryan Gibson No, that's great. I mean, finding something you're passionate about, you won't work a day in your life, right?

[00:21:30] Ryan Gibson Exactly.

[00:21:30] Ryan Gibson And, you know, that's fantastic. What's your long-term plans? I mean, are you going to keep growing this and extend into the east side of the state?

[00:21:41] Ryan Gibson Yeah.

[00:21:42] Ryan Gibson What's your, you know, kind of what's your 5, 10, maybe 30-year plans for the flight school?

[00:21:47] Ryan Gibson That's a great question. We haven't spent a whole lot of time thinking about it just because we're so busy laying the track.

[00:21:54] Ryan Gibson Yeah. I know what you're talking about.

[00:21:55] Ryan Gibson I'm not quite sure where it's going to end up.

[00:21:58] Ryan Gibson Yeah.

[00:21:59] Ryan Gibson But I think for now, our strategy is proven effective. We like being in a position where when opportunities arise, we can act quickly upon them.

[00:22:09] Ryan Gibson And you never know what's going to happen next year in five years if there's another location and it makes sense and we can move into another market and expand.

[00:22:21] Ryan Gibson I think we've demonstrated by this point that we can effectively manage remotely with the central, you know, command and control type structure without sacrifice and the quality or safety.

[00:22:32] Ryan Gibson So we'll see what happens.

[00:22:33] Ryan Gibson Yeah. If I'm an airline pilot and I'm listening to this and I'm like, huh, this sounds like something I'd be interested in. I love going to the airport. I love doing the flight school thing. I know a lot of good people. I have some resources. How would you even go about deciding that Auburn Airport is a place that you would drop into your next location? How would you even know that's a good place to go have a flight school in your mind?

[00:22:56] Ryan Gibson Well, it kind of goes back to just basic business principles. I started off with a very basic business plan.

[00:23:03] Ryan Gibson When we decided to actually make this legitimate operation and with some help from like the small business administration and some mentors, you know, we filled it out, including a SWOT analysis.

[00:23:15] Ryan Gibson Yeah.

[00:23:16] Ryan Gibson And it's a royal pain in the butt to go through that exercise, but you can't cut corners by looking at your competition and identifying your strengths and weaknesses, opportunities. You know, all of those things, it forces you to be realistic.

[00:23:32] Ryan Gibson And when we're evaluating different airports like Auburn, you have to look at the market and say, you know, what strengths or values would we bring? What's our biggest barrier to, you know, the opportunity? What would our competitors do? You know, is there enough client demand? So it takes some time and effort, but when done properly, it pays in dividends.

[00:23:55] Ryan Gibson Yeah. How do you go about finding people that are willing to buy aircraft to lease back to? Is there a market for that?

[00:24:04] Ryan Gibson There is. In fact, we probably have more airplanes or more people willing to lease to us than we can really manage. It's been a very good relationship when done properly. I'm sure we've all heard about these leaseback agreements that have gone sour for a multitude of different reasons.

[00:24:23] Ryan Gibson Oftentimes, oftentimes it just comes down to the relationship and communication. Unless it's fair and benefiting both parties, you know, the fight school has to use that asset to make money.

[00:24:36] Ryan Gibson Yeah.

[00:24:36] Ryan Gibson If the owner is losing money in that relationship, then they're not going to want to lease it very long.

[00:24:41] Ryan Gibson Yeah.

[00:24:41] Ryan Gibson So it's got to be, you know, beneficial to both groups. And if you can maintain that open communication and, you know, when the unexpected arises, the prop needs an overhaul, the starter needs a replacement, and you've got a decision, you know, are you going to replace it with new and get the airplane flying right away? You can send it out for overhaul. Having that conversation with the owner in advance so that your expectations are aligned.

[00:25:09] Ryan Gibson Yeah.

[00:25:09] Ryan Gibson I think that's really key to a good leaseback agreement.

[00:25:15] Ryan Gibson That makes sense. If I'm an investor thinking I want to give you an airplane, what does that look like for me? If I want to try to lease back a plane to you, what kind of plane would you even accept? Which ones would you not accept? You know, what would the terms be? What kind of break? If you wouldn't mind, could you break down some of the economics behind that?

[00:25:33] Ryan Gibson Yeah, definitely. I think it starts with what kind of airplane do you want to own, first of all, because let's say this.

[00:25:50] Ryan Gibson

[00:25:52] Ryan Gibson

[00:25:56] Ryan Gibson

[00:26:08] Ryan Gibson

[00:26:10] Ryan Gibson I'd say, man, that's not quite our market. You know, what we really need are more modern aircraft. They don't have to be brand new, but they've got to be clean. They need to have an appearance that reflects our company and be consistently with the, you know, avionics.

[00:26:30] Ryan Gibson So from a training experience, the students are able to operate this airplane versus another, and it doesn't require differences training. It just makes the whole operation a lot easier to staff, to train, to inventory in parts.

[00:26:47] Ryan Gibson Yeah, when I said you run it like an airline, I wasn't kidding. I mean, that's the basics, right, of the good airlines that you see, like Southwest, Alaska, many others that use common fleet types.

[00:26:58] Ryan Gibson You know, they try to get a very specific dialed in type of airplane so that the parts are the same, the training is the same. They don't have to, it's not a big deal when they integrate an airplane. And I remember that was a big thing when I was at Alowaz kind of before Virgin America. But that was one of the biggest things that, you know, they had all the same kind of standardized 737s. And that was an easy way to kind of make the airline run really well.

[00:27:20] Ryan Gibson Yeah.

[00:27:50] Ryan Gibson So we do try to bring on aircraft like a 182. Maybe not a great primary trainer, but for someone that has a private, maybe they're working on their instrument and they want to volunteer with some charitable organizations.

[00:28:05] Ryan Gibson There we go. There it is.

[00:28:07] Ryan Gibson That's a perfect way to keep that client involved and opportunities to continue their passions.

[00:28:13] Ryan Gibson And you'll take on my 185 that I'll buy, right? And you guys will have a little tail dragger program?

[00:28:20] Ryan Gibson Oh boy.

[00:28:21] Ryan Gibson We'll throw some floats in the hangar and, you know, we could do some float plane training. That won't be too different than what you do, right?

[00:28:27] Ryan Gibson We actually tried it at one point and I got to say it was a lot of fun. Not the most profitable, but we had a good time doing it.

[00:28:36] Ryan Gibson I bet. Yeah, I bet. There's just so many cool places to fly and, you know, I would love to get something like that, but just, you know, something I could lease back and kind of justify.

[00:28:45] Ryan Gibson Speaking of which, do your lease agreements, the last guest we had on, he had a way of kind of setting this up as an active business for participants so they could, in effect, get the bonus depreciation from leasing back.

[00:28:57] Do you guys do something like that where you kind of keep your owners actively involved in some way?

[00:29:00] Ryan Gibson We do. And I can't speak directly to all of the legal requirements. I know there is some amount of owner participation that is required. Obviously, our lease agreement addresses that. We had legal review and make sure that, you know, everyone is compliant. We don't want to have audits and go down that rabbit hole.

[00:29:23] Ryan Gibson But honestly, I like actively involved owners. If we're just making all the decisions and they're kind of, you know, non-existent, it makes it really difficult to understand, you know, is this working out for you? If you have concerns, if you have ideas, this is a collaboration.

[00:29:41] Ryan Gibson Yeah.

[00:29:41] Ryan Gibson And I prefer working with those individuals that are engaged and wanting to find mutually beneficial solutions.

[00:29:50] Ryan Gibson Looking back, is there any regrets that you have? Any things that you would have done differently with the flight school that, you know, having all this experience now, you would say, man, I wish we would have started buying airplanes sooner or leased up faster or whatever it might have been?

[00:30:05] Ryan Gibson Oh, boy. I don't have regrets per se. You know, you can always look back and see, well, maybe there was opportunities that we could have jumped on. But by nature, I think we're fairly conservative.

[00:30:17] Ryan Gibson Yeah.

[00:30:17] Ryan Gibson And I don't like operating so lean or overexposing, you know, our debt position so that if anything happens, we're really in a pinch. So we like to, you know, try to make decisions so that we've always got a B plan and a C plan, just like a pilot, right? You know, if you're, you know, on approach and you've got wind shear reports, you know, well, our plan is to land. Well, what if we get a wind shear alert? What's the plan? Are we going to divert? Are we going to circle back around?

[00:30:47] Ryan Gibson I think we integrate that same, you know, aeronautical decision making into our business.

[00:30:54] Ryan Gibson Yeah, that makes sense. Looking at trends, it looks like you guys are growing quite a bit. And so that would suggest that more people are getting into flight training. Or maybe you're just making it more accessible by geographic region. What would you say the trend is right now? Are there more people engaging in flight schools than they were 15 years ago? What's the what's the trend there?

[00:31:16] Ryan Gibson Clearly, over the last five to seven years, you know, everyone's seen the news headlines about the pilot shortage. You know, there's a lack of proficient pilots, you know, the airlines can't hire enough. Over the last year or two, I think we've seen that slow down. And it's kind of interesting because people like you and I who have been around for a while, see this is kind of returning a little bit back to normal. It's not really a slowdown. It's just not chaos.

[00:31:44] Ryan Gibson Right, right. I think the trend is stabilization in the short term. If you read the Boeing reports and the different market forecasts, there's so many retirements coming up in the next 5, 10, 20 years that the demand is going to be consistent. But there's going to be some little ebbs and flows, hopefully not the wild swings that we've seen the last five years.

[00:32:09] Ryan Gibson Yeah. What trends are concerning to you? And likewise, what trends get you excited? I mean, what are you seeing like the wave of the future of this is kind of like, man, this is going to keep me up at night if this trend continues, or maybe things that you're just thinking of that might concern you long term for the school?

[00:32:26] Ryan Gibson What concerns me? I think overall, the quality of the training. I know this isn't specifically business related. But you know, you and I, you know, we still fly with people.

[00:32:39] Ryan Gibson I think the change that's coming. Maybe it's just me getting old.

[00:32:44] Ryan Gibson I was going to say, yeah, we're all that way, right? But no, there might be some legitimate concerns. Yeah. I mean, it might be real, right? There's some probably truth to everything.

[00:32:52] Ryan Gibson Right. You know, everyone's, you know, read the articles about children in a magenta line. You know, it's the lack of experience and situational awareness that just comes with time.

[00:33:03] Ryan Gibson So I think that's probably the biggest thing that I don't worry about. But I think about, you know, here's an industry challenge. And I'm in a position to directly affect at least the clients within our organization.

[00:33:17] Ryan Gibson How can I make our instructors more effective? How can I better prepare them for a long term career? How can I teach our students to, you know, integrate some of those threat and error management principles that will serve them a long time?

[00:33:33] Ryan Gibson From a business standpoint, I think one of the largest challenges is just bureaucracy. You see the costs of maintaining airports, of, you know, facility improvements. You look at just about any airport around the country, and a lot of those buildings were from the 50s, right?

[00:33:53] Ryan Gibson Yeah.

[00:33:54] Ryan Gibson So the economic cost of developing and improving these facilities and the infrastructure is high.

[00:34:03] Ryan Gibson But it's difficult for GA to bear the burden of that expense.

[00:34:08] Ryan Gibson Yeah. You know, that's a good point. I mean, you fly around a lot of these GA airports in Washington, and they're beautiful airports and beautiful locations. But it kind of makes you wonder, like, who's paying the bill, right? I mean, tax dollars are to an extent. But I mean, this is a long runway that needs to be resurfaced.

[00:34:25] Ryan Gibson It is.

[00:34:26] Ryan Gibson That's not cheap. And, you know, lobbying for that. Yeah, I can imagine it's going to get more and more difficult as funding is.

[00:34:33] Ryan Gibson Yeah.

[00:34:35] Ryan Gibson Do you guys, do you guys participate at all in some of the state level, you know, advocations for airports or what, you know, kind of what's your involvement politically? I mean, it seems like you're now playing a pretty big role at multiple airports and you're the future of aviation. We literally as a country rely on what you're doing to produce pilots to run our airlines, right?

[00:34:56] Ryan Gibson Mm-hmm.

[00:34:57] Ryan Gibson And, you know, so what kind of sway have you gotten into there?

[00:35:03] Ryan Gibson Not nearly as much as I would like.

[00:35:05] Ryan Gibson Yeah.

[00:35:06] Ryan Gibson By nature, I'm not a very political person.

[00:35:09] Ryan Gibson Sure.

[00:35:09] Ryan Gibson I like saying it like it is. And let's actually address the root issues and not just talk and pat each other's on the back.

[00:35:18] Ryan Gibson Right.

[00:35:18] Ryan Gibson What we have tried to do is engage with other industry partners. So if we can work with like local school districts.

[00:35:26] Ryan Gibson And help them put together a more robust, you know, STEM curriculum that exposes kids to aviation, whether it's, you know, flying, engineering, you know, there's so many different facets.

[00:35:39] Ryan Gibson Maybe some of them will actually start a career and get into aviation at some level.

[00:35:46] Ryan Gibson I like working with those partnerships because now we've got a larger group with shared interests.

[00:35:53] Ryan Gibson And it's not just my company saying, hey, we need to work on this problem at the airport and you need to get, you know, X number of dollars of funding for it.

[00:36:01] Ryan Gibson It's us and the school districts and these other, you know, nonprofit organizations and so forth.

[00:36:08] So by consolidating, I think we've got a stronger voice.

[00:36:13] Ryan Gibson Yeah, that makes a lot of sense.

[00:36:15] Ryan Gibson What gets you excited about the future?

[00:36:17] Ryan Gibson I mean, let's let's, you know, the doom and gloom.

[00:36:19] And by the way, for those listeners that he said children of the magenta line, if you're not in aviation, that's okay, you're in good hands here.

[00:36:25] Ryan Gibson That just means that, you know, the magenta line is the GPS line that the pilots can program in.

[00:36:31] You know, we used to be on round dials and steam gauges and have to do a little bit more navigation with maps and things.

[00:36:38] And now you kind of just plug it in and it draws a line and you just kind of fly that line.

[00:36:42] Ryan Gibson So anyway, that's an over explanation of what he meant by that.

[00:36:46] But, you know, what gets you excited about the future?

[00:36:48] Ryan Gibson Another great question.

[00:36:49] I think there's so much opportunity for companies that are well run and they can, you know, they have the staying power to weather the ups and the downs.

[00:37:01] Ryan Gibson There's always going to be a demand for pilots.

[00:37:05] And I think that those that are adopting technology instead of pushing back against change that are, you know, leveraging some new tools that weren't available in the past to make training more efficient, more effective.

[00:37:20] Ryan Gibson I'm not an early adopter, I'd say.

[00:37:23] Ryan Gibson Yeah.

[00:37:24] Ryan Gibson But I'm always keeping my finger on the pulse of, you know, where is augmented reality at these days and what role will it play?

[00:37:32] I don't think there's any question that it will be pretty significant once the technology has matured a little bit.

[00:37:37] Ryan Gibson But I'm thinking about, well, in 10 years, maybe it will be there.

[00:37:41] And how can we position ourselves today so that we can take advantage of it for the benefit of our clients?

[00:37:48] Ryan Gibson Yeah.

[00:37:49] Ryan Gibson You know, what opportunities are out there?

[00:37:51] If I'm listening to this and my son or daughter is an aspiring aviation airline pilot, talk about the flight instructor programs that you have.

[00:38:01] Do you have many openings?

[00:38:02] Do they, you know, it seems like you guys do a pretty good job.

[00:38:05] Flight instructors come in, they fly for a few thousand hours or maybe a few hundred hours sometimes, and they get kind of sucked up to the airlines.

[00:38:12] And it seems like a pretty good steady flow of instructors.

[00:38:15] You know, what's it like being an instructor here?

[00:38:19] Ryan Gibson We are fairly selective.

[00:38:22] I think for every 10 applicants, we probably hire two.

[00:38:26] So it's not a given that you just apply for a job and you're going to get it.

[00:38:30] Ryan Gibson Yeah.

[00:38:31] Ryan Gibson That being said, we're always looking for good people.

[00:38:35] Ryan Gibson Yeah.

[00:38:36] Ryan Gibson Because we can always train you to be a better instructor, a better pilot.

[00:38:41] Ryan Gibson I can provide you the knowledge and the skills to excel, but I can't change really who you are.

[00:38:48] So if you've got a willingness to learn, a willingness to stretch and grow professionally and personally, we can definitely work with you.

[00:38:57] Ryan Gibson But if you're just looking to build time and, you know, this is just a stepping board, then we're probably not the right place for you.

[00:39:06] Ryan Gibson We know you're going to be gone in a year.

[00:39:08] That's fine.

[00:39:08] I was there myself.

[00:39:10] Ryan Gibson But while you're working, we expect, you know, the best that you can offer because our clients deserve it.

[00:39:17] Ryan Gibson Yeah.

[00:39:18] Ryan Gibson Yeah.

[00:39:18] Ryan Gibson And the last question I have for you, and then I'll let you get back to it.

[00:39:21] Ryan Gibson I know that you've got a bunch going on, and we appreciate you coming on and talking to us about it.

[00:39:26] Ryan Gibson What about airline interviews?

[00:39:28] Ryan Gibson Do you guys still do airline interview prep?

[00:39:30] Ryan Gibson We do.

[00:39:31] Ryan Gibson That was kind of a side thing that we started simply because we had so many friends or friends of friends asking,

[00:39:38] hey, I want to apply at Alaska or Delta, you know, do you have any tips or tricks?

[00:39:44] Ryan Gibson And we thought, well, after doing so many of these, maybe we should kind of formalize it a little bit and, you know, be paid for our time.

[00:39:52] Ryan Gibson I don't mind helping friends, but friends three removed is a little different.

[00:39:58] Ryan Gibson Yeah, Brad did my prep.

[00:40:00] Ryan Gibson So I felt like the godfather did my airline prep.

[00:40:03] Ryan Gibson He did a great job, and I actually learned a lot from his prep, and I carried that through and gave that back to others when I did that.

[00:40:10] Ryan Gibson Are there any opportunities?

[00:40:11] Ryan Gibson You know, if you're an airline pilot and you're sitting around a layover and you want to give back and make some extra bucks,

[00:40:16] are you guys hiring in those positions, or how does one even apply for something like that?

[00:40:22] Ryan Gibson Oh, we are based off of demand.

[00:40:24] I think we've all seen the last year slow down a little bit.

[00:40:28] Ryan Gibson Yeah, yeah.

[00:40:29] Ryan Gibson And I think that's probably healthy, but it will pick back up.

[00:40:33] We're always looking for people that are willing to, you know, devote some of their time.

[00:40:37] Ryan Gibson Yeah, yeah.

[00:40:39] Ryan Gibson Yeah, and hopefully, fairly make it worth your while.

[00:40:42] Ryan Gibson Yeah, totally.

[00:40:43] Ryan Gibson But almost more importantly than that, it's really helping these people that are looking to further their careers.

[00:40:49] Ryan Gibson They want to get from that regional to the major, you know, that's been their life goal.

[00:40:53] Ryan Gibson Yeah.

[00:40:53] Ryan Gibson But how many of us interview, you know, three, five times in our career?

[00:40:59] Ryan Gibson Yeah.

[00:41:01] And it's a daunting process. So all we try to do is take the mystery out of it, let you know what to expect and try to see it from the perspective of the hiring panel. What are they looking for in an applicant and how can you make it as easy for them as possible to determine you're a great fit?

[00:41:19] Yeah, that's great.

[00:41:49] You know, taking some online courses, traveling to some conferences to practice your interview skills or meet with people. You should spend money because it's worth it. If you can get hired on that first round, that could be the difference in hundreds of seniority numbers. And, you know, you should put your best foot forward, you know, and maybe it's not 10 grand, maybe it's five or whatever it is.

[00:42:12] But don't be afraid to invest some money in yourself to prepare you for the interview, because that's what it is. I don't even know what your prep costs these days, but it's worth it. It's worth every single penny. It doesn't even matter. It's probably undervalued in what you get in the prep.

[00:42:26] So if people want to learn more about you, Gordon, and your flight school, maybe come down to, oh, and that's one thing I wanted to bring up too. You know, if you're listening to this and you're like, I don't fly, I'm not a pilot. This is interesting, but I kind of want to take a step and learn how to fly.

[00:42:41] Can you tell us about this, you know, discovery flight? Because I talk to so many people, they're like, so I can just go down and just do this thing. And then we're in an airplane and I'm flying it within a couple of minutes. Like, yes, you can. Would you mind kind of talk about your discovery flight?

[00:42:54] Yeah, of course. It's, you know, if you don't have a background in aviation or that uncle that was an airline pilot to help introduce you, it can seem a little intimidating.

[00:43:05] Yeah, totally.

[00:43:05] You know, if you show up to the airport and all you see is cyclone fence, you don't really get that welcoming kind of vibe.

[00:43:11] But please know that, you know, whether it's us or really any flight school, if there's a small airport near where you live, I almost guarantee you that you can find an operator there and just explain to them, hey, I'm interested in flying, but I really don't know what to expect.

[00:43:28] You know, am I going to get motion sickness or this is going to be the best thing I ever did?

[00:43:33] And you never know until you try it.

[00:43:36] Yeah.

[00:43:36] So just go out and ask around. I would also encourage you to look at organizations like the Experimental Aircraft Association.

[00:43:45] They've got local clubs that will take people for free flights.

[00:43:49] Oh, cool.

[00:43:50] If aviation is something that you think you might be passionate about, just get involved.

[00:43:55] And I think your journey will just take a natural flow from there.

[00:44:00] But what's the cost now to get your pilot's license?

[00:44:03] I mean, I know that, you know, some people whip it out in 40 hours and some people can get it done in 100 or some people take a lot longer than that.

[00:44:12] But what would you say the average is there?

[00:44:15] Realistically, I think people really need a budget like 20, 20, maybe $25,000 at the top.

[00:44:22] Yeah.

[00:44:22] You know, we fly with people all the time that say, well, I remember when that $152,000 was, you know, $18, you know, including gas.

[00:44:31] Yeah.

[00:44:32] Yeah.

[00:44:32] Times have changed.

[00:44:34] It is more expensive.

[00:44:35] The training regulatory requirements are a lot more comprehensive than they used to be.

[00:44:42] We have to train more in the same amount of time.

[00:44:44] So, yes, the regulations haven't changed.

[00:44:48] It's still, you know, 40 hours for your private or 35 if it's 141.

[00:44:52] The average realistically is 70, 75.

[00:44:58] And the last thing I want to see people do is, you know, get up to the end of their training, run out of funds, take a long break and get rusty.

[00:45:07] Yep.

[00:45:07] So, yes, it is expensive.

[00:45:09] But, you know, so is just about any other hobby.

[00:45:12] If this is important to you, then just dive in, have a plan, and it's worth every penny.

[00:45:19] And start in, like, April if you're going to go to Gordon's school because then you'll have all summer to enjoy the nice weather.

[00:45:27] You know, I wouldn't recommend maybe starting in, well, you can start in October, but a little bit more challenging.

[00:45:33] Well, that's when you spark instrument rating is in October.

[00:45:35] That's, yeah, there you go.

[00:45:36] Your instrument rating, exactly.

[00:45:37] Just got to stay on the west side of the Cascades and you'll be great.

[00:45:40] Well, thank you so much, Gordon.

[00:45:41] How can listeners get in touch with you and learn more about Rainier Flying Service?

[00:45:45] Is it Rainier Flying Service or Rainier Flight Service?

[00:45:48] RainierFlightService.com is our website.

[00:45:49] There's a lot of information on there.

[00:45:52] We try to be as transparent as possible to make it easy to find the information you're looking for.

[00:45:58] If you can't find what you need, please just call, email us.

[00:46:02] And for those of you on social media, I think we have Instagram, Facebook, that kind of fun stuff too.

[00:46:08] But we're happy to assist in any way we can.

[00:46:11] Great.

[00:46:12] Yeah, and if you're coming out here in the summertime in Seattle, stop by Rainier Flight.

[00:46:16] We'll take you up on a scenic flight or an intro flight or discovery flight, whatever it might be.

[00:46:21] And it's a great way to see the area.

[00:46:23] Yeah, we'd love to have you.

[00:46:24] Yeah.

[00:46:25] Thanks for your time, Gordon.

[00:46:26] And appreciate you coming on the show.

[00:46:28] My pleasure.

[00:46:29] Thank you, Ryan.

[00:46:30] Thank you.

[00:46:31] Thank you.

[00:46:32] Thank you.

[00:46:32] Thank you.

[00:46:33] Thank you.