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Dedicated to all of the hard working contract pilots I have met over the years.
Table of Contents What Do Contract Pilots Do? ................................................................................. 4 How to Get Started as a Contract Pilot ................................................................... 9 What Makes a Good Contract Pilot? .................................................................... 36 The Advantages of Being a Contract Pilot............................................................ 42 The Disadvantages of Being a Contract Pilot ....................................................... 48 Finding Clients ..................................................................................................... 55 Networking .......................................................................................................... 59 Looking for Work ................................................................................................ 64 Client Types ......................................................................................................... 68 Buying Your Benefits .......................................................................................... 72 Work Habits ......................................................................................................... 81 Taxes for the Contract Pilot.................................................................................. 87 Training………………………………………………………………………….. 94 Frequently Asked Questions ................................................................................ 98
Chapter 1
What Do Contract Pilots Do? “Anyone that tells you that having your own private jet isn't great is lying to you.” Oprah Winfrey
So you want to be a contract pilot. That’s great! Now it’s time to make sure that you have a good understanding of the type of career you’re getting yourself into. So, what exactly is a contract pilot? Contract pilots fly airplanes for individual owners, groups of owners, or aircraft management companies. Contract pilots are normally paid a daily rate and are responsible for their own training and currency requirements. They also have to pick up the costs for their health insurance, self-employment tax, and retirement. There are numerous advantages and disadvantages to being a contract pilot, so it is important that you weigh both sides of the equation before deciding if this is a career for you. On the downside, you may find that the airplanes available for contract pilots to fly are older models, or that other pilots think that you’re only doing this because you can’t find a regular flying job. On the upside, you may greatly enjoy the freedom that comes from being a contract pilot. The opportunity to decide your own work schedule and have a more flexible career is a big draw for many contract pilots. Perhaps the freedom to schedule time off is why you’re interested, or maybe you always wanted to run your own business. I’ll lay out the pros and cons, and the ins and outs of being a contract pilot in this book. Then you’ll know how to proceed, and whether or not being a hired gun is something that will truly suit your lifestyle. For now, let’s separate the fantasy from the reality of being a contract pilot.
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The Fantasy When pilots daydream about what it would be like to be a contract pilot, their expectations easily exceed the realities of the job. That’s especially true starting out, as the good contract gigs will be a lot tougher to come by for you when you’re a beginning contract pilot than they will be once you’ve become more established and have built a clientele. The fantasy might look something like this: You strap into the left pilot’s seat in a Gulfstream V business jet. Your copilot already has the FMS programmed, and he or she is ready to start the engines for an on-time departure. The weather is beautiful and clear all the way to your destination of Kona, the beautiful Big Island in Hawaii. Ride reports call for a smooth flight with a slight headwind. The gorgeous flight attendant pops her head into the cockpit to ask you how would you like your coffee, then glides away to take care of your order. Meanwhile, you flip through your day planner and notice that your flight schedule is jam-packed for the next two months. The funny thing, though, is that your weekends are still open. All of the flights that you have scheduled are with Fortune 500 companies, so your fee has been prepaid. It’s relaxing to know that your financial future looks good. Just as you’re wondering what you’ll do tonight in Hawaii, your celebrity passenger taps his assistant on the shoulder. The assistant sends up a business card, along with two backstage passes to a sold-out concert tonight. Suddenly, you have plans. You taxi out and the tower lets you know that you are number one for takeoff. Away you go into the beautiful blue skies and off toward Hawaii, a free concert, and boatloads of money. What a life!
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The Reality Hopefully, that will be you. But don’t count on it. While a few of the most talented, connected, and lucky contract pilots have a lifestyle that is somewhat similar to that fantasy, the reality is not the same for the rest of us. It might look more like this: You’re standing on a snow swept ramp in Des Moines, Iowa. You can’t feel your toes due to the cold, and a sports utility vehicle just rolled in at 6:30 AM. That’s a full 90 minutes past your scheduled 5:00 AM departure. Your soon-to-be passengers struggle and stumble out of their ride, obviously hung over, and then hand you their luggage. Their silence is your only thanks. They don’t even say good morning. That’s when you realize that you can’t feel your hands, either. You load the bags into the nose of a Citation 500. Your plane’s tired and has seen better days, but it’s airworthy. You feel the bitter winter wind cutting through your blue blazer. You remember the captain telling you that the trip would be a quick out and back to Orlando. That was two days and several clean shirts ago. Somewhere in there, you’ve gotten a little bit of sleep, but barely enough. The extra days don’t matter, though, because your schedule has been pretty lean this month. As you secure the door, one of your new passengers curtly asks you to get him a cup of coffee. By the time you wiggle into the right seat, the captain is firing up the engines. You make a quick call for taxi and Ground tells you that your clearance has timed out and you will need to refile. Just another day living the dream!
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How Much Money Do Contract Pilots Make? It is tough to provide an exact figure. Of course everyone wants to know whether or not he or she can make $100,000 a year as a contract pilot, while possible, the truth is that it depends on a number of factors. Depending on the length of a trip and the type of aircraft flown, a contract pilot’s rates can vary from $250 a day to $1,500 a day, according to industry sources. Then the question becomes how many days you are able or willing to work. Also, if you are doing this full time or just to pick up extra income without quitting your “real” job. Some pilots are able to work as many as 25 days a month, which is $75,000 to $450,000 a year, based on the above rates. Other pilots may struggle to find work five days a month. That leaves them with $15,000 to $90,000. The ability to find work is directly related to where you choose to live. Most successful contract pilots live within two hours driving time of three major airports. Think Atlanta, with PDK, FTY, and RYY. These are all busy corporate airports within a few hours driving time of one another. The Dallas, Texas airport is also booming. There you have ADS, DAL, and RBD, all a short drive from one to another. Of course, you could live in BFE, but trying to find contract flying in the middle of nowhere is not going to make you rich. Keep in mind that you’ll have the expenses of maintaining your own training and staying current, so that will affect the amount of money you actually put in your pocket. Since you’ll be an independent contractor, you’ll have to pay a self-employment tax, and you’ll need to account for your own benefits. So, the money can be great, but it is important to make sure that you account for expenses and factor it all in before making a decision on whether or not to climb into the cockpit as a contract pilot.
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Chapter 1 – Practical Pointers & Tips •
A career as a contract pilot has many pros and cons. Only after you are aware of these can you make an informed decision as to whether this is the right career for you.
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Work as a contract pilot will be slow going at first. You will not make much money in the beginning.
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Don’t forget to factor in expenses, making $500 a day is not the same as taking home $500. Expenses cut into your pay.
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The closer you are to 3 major airports, the more likely you will be successful as a contract pilot.
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The fantasy perpetuated other pilots doesn’t always live up to the reality of being a contract pilot. It is hard work.
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The type of plane flown is the main variable that determines your rate of pay. Bigger plane equals more money, but there are many more smaller planes. More opportunities equals more money. Find a niche.
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Don’t assume you will always work a full time schedule. There will be times when your schedule will fluctuate greatly.
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Your ability to find work is highly influenced by your ability to network.
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The average rate of pay for a contract pilot is $250 to $1500 per day.
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As an independent contractor you will be responsible for your own self-employment tax and benefits. 8
Chapter 2
How to Get Started as a Contract Pilot “I had always wanted an adventurous life. It took a long time to realize that I was the only one who was going to make an adventurous life happen to me.” Richard Bach
Now that you’ve decided that you have a definite interest in being a contract pilot, it’s time to get into the nuts and bolts of your new career. Prepare to deal with some growing pains and learn to be flexible as you begin. As long as you follow a good business plan, you should be on your way to plenty of success. Oh, and plan on working hard.
Where Do Contract Pilots Come From? Contract pilots come from a relatively wide variety of situations, but most have extensive training and experience as pilots. They may have worked for an airline for a long period of time and decided to retire and pick up some work as a contract pilot on the side, or they may be furloughed or laid-off pilots. They may come from corporate flight departments that have closed or downsized. Some come from the ranks of flight instructors. These pilots are usually specialists in glass cockpit or other type of technically advanced aircraft. Of course, some pilots have an entrepreneurial streak and want to own their own businesses. Others are just looking to pick up a few bucks on the side while keeping their full-time flying job. Very few pilots start out their careers wanting to be a contract pilot. They are drawn into it because they lost a job, their bosses sold their airplanes, or their airlines went bankrupt. Some find a home, while others can’t wait to land another “real” job. It takes a unique individual to be a contract pilot. It is not for everyone, but if you embrace the challenges, it can be a rewarding career – regardless of if you do it full time or part time.
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Low Time Pilots While it is possible to become a contract pilot directly after completing flight training and without experience, it is highly unlikely. In truth, you are likely to have a great deal of difficulty finding work since few insurance companies will cover you. I cannot encourage low time pilots to pursue a career as a contract pilot.
Former Airline Pilots Recently retired airline pilots probably have the most difficult time breaking in to contract flying. Two factors are working against you. The first one is a commonly held view by most contract pilots that airline pilots are lazy prima donnas. Because you didn’t have to file flight plans or clean the airplane or make hotel reservations, many corporate pilots think ex-airline pilots aren’t cut out for contract work. The easiest way to overcome this obstacle is hard work. Always be willing to lend a hand to put the airplane away or restock the supplies. Actually, flying the airplane is only a small part of a contract pilot’s job. Just by showing a willingness to do more than fly will go a long way to gaining acceptance by the people in a position to hire you. The second obstacle is your ego.
Former Military Pilots Like former airline pilots, military pilots have a difficult time breaking into contract work. Of course, former VIP military pilots are a natural for this line of work. For the average military pilot, I’d recommend reviewing civilian FARs and procedures. A good text is the FAR and Airman’s Information Manual. That will give you the gouge on civilian rules. Also, keep the yanking and banking to a minimum.
Former Corporate Pilots It’s easy to move from the ranks of corporate pilot to contract pilot. It requires a slightly different mindset since you are now self-employed. The job is basically the same, however. 10
How to Get Started as a Contract Pilot Your customer will either be the actual aircraft owner or a middleman. I define a “middleman” as someone who is dealing directly with the aircraft owner. This will be the chief pilot or an aircraft management firm. Customers are the lifeblood of any business and contract flying is no different. So who will hire you? The key to acquiring customers is to network. It’s virtually impossible to make a cold call and pitch your contract flying business to the airplane owner or manager without having a prior connection. With the old saying “it’s not what you know, but who you know” still ringing true today, it is important to network and make strong connections in order to secure a contract pilot position. To be successful as a contract pilot, you have to be a master at networking. Don’t be intimidated because you have not established a large network yet. I can guarantee that you already network in your everyday activities. Networking isn’t self-promotion, glad-handing, or using people. Networking is getting to know people and building relationships based on those interactions and first impressions. Think of the line guy you chat with as he fuels your plane, the girl behind the FBO counter, or the other pilots in the crew lounge. These people are in your network and you have already begun to build relationships with them. Of course, it doesn’t hurt to let them know that you are a contract pilot. If they hear about a contract pilot opening, they should immediately think of you and recommend you for the job. If they contact you about the job first and foremost, then it is safe to say that you have a strong network connection with them. If they tell another pilot about the job instead, then it is apparent that the connection you have developed with them needs work. Determining whether you have a weak or strong connection with other aviation enthusiasts depends on several things. The primary one is how you interact with them. Are you rude, bossy, or inconsiderate? Do you ignore them? If you are a prima donna pilot, the jobs will go elsewhere. Another way to build 11
strong connections, especially with other pilots, is to keep the “war stories” to yourself. Many a contract pilot has shot himself in the foot without even realizing it. How many times have you heard stories about some guy who “popped out” of a Level 5 thunderstorm to the rave reviews of the passengers, or “snuck below minimums because I know the airport”? Or, my personal favorite: “I had to take the controls away from the captain and save the airplane.” If I were a chief pilot or aircraft manger listening to these stories, I would cross that pilot off my contract list permanently. Be sure never to relay stories that are disparaging about others. Especially clients. Strong connections are also built by scaling down the scope of your business. Create a niche and become an expert in that field. Rather than tell your network connections that you are a contract pilot and can fly any airplane, refer to yourself as a King Air contract pilot or a Citation contract pilot. It’s OK to fly two or three airplanes, but any more than that and most chief pilots get wary. Finally, realize everyone you meet at any airport is a potential member of your network. Take the time to get to know them and for them to get to know you. It will prove to be the best advertising for your business.
Aircraft Management Firms Most pilots think of Netjets or other fractional aircraft operators when they think of airplane management firms. The reality is much different. Most corporate aircraft that are managed today are managed by contract pilots! The new business model of airplane ownership now involves several individuals or companies sharing an airplane. All the scheduling, maintenance, and staffing have to be managed. Usually contract pilots step up and start performing these functions for monthly fees. The former contract pilots are now airplane management firms. If these pilots are any good, they add airplanes to their stables. Soon they have more airplanes than they can fly and they have a need to hire contract pilots. Since a management firm will typically hire numerous contract pilots, it is easier to get flying work from them than from individual owners. Flying for a management company is more like a regular flying job than independent contract pilot. However, you will have a bit more control over your schedule and hours. You can always turn a trip down. Just don’t do it too often if you want to be on the list of pilots who are called first! You will 12
still face the tax burdens of being self-employed as well as being responsible for you own training expenses. One tip about management firms, they are very productive of their owners. The fastest way to get shown the door is to make any attempt to “steal” the owner. With constant access to the airplane owner, it is not unusual for a contract pilot to try to pitch a better deal to the owner. Essentially, they are trying to create their own management firm by stealing someone else’s client. Remember, this business is built on trust. If you go this route, be prepared to be blackballed by the rest of the management firms.
Get Training You’ll have to decide at some point to pursue the necessary training. What’s necessary? This business is driven by the airplane insurance companies. So whatever they say is necessary is required. For most pilots flying a cabin class twin, a turboprop, or a jet, simulator-based initial or recurrent will be required. How much you pay for it is up to you. It’s a fallacy that you have to go to FlightSafety or Simuflite to get insurance approval. There are numerous small simulator schools that are insurance approved and charge quite a bit less than the big box schools. Remember, you have to recover the cost of training. If you want to fly six or more extra days to pay back FlightSafety, have at it! That is the beauty of owning your own business. You get to make all the decisions and reap all the consequences of your actions. If that seems harsh, consider this: most management firms just want an insurance-approved school. They couldn’t care less where you went to get it. Most airplanes owners are clueless. If their insurance agents say you are approved, that is good enough for them. If you think that this is unsafe or that the owner should pay for your training at the most expensive, most well-known school, you probably aren’t contract pilot material. While on that subject, trying to break into the contract pilot business by getting trained or buying a type rating without experience on the airplane is a waste of your money. The insurance company isn’t going to approve you without time in type. Sad but true. An exception to this rule is training on similar airplanes. If you have substantial 13
King Air 90 time, it makes sense to get trained on the King Air 200. You market has just expanded exponentially. The same is true if you are flying a Citation II; it might be a good idea to get a type rating in the CJ. Occasionally, some operators will pay for your training expenses. This can be a great setup if you are able to find it, but they usually will make you sign a contract that includes training payback. That essentially means that if you leave before a certain amount of time, you will have to pay them back for the cost of your training. It also makes you beholden to them. It is harder to turn down a trip from someone who prepaid for your training. That’s not necessarily a bad deal. However, you need to make sure that you are aware of the situation that you are getting yourself into so that you know how much of a commitment you need to make.
Payback contract lengths of 12 months are not unusual.
If
independence is important to you, pay for your own training.
FAA Requirements Of course, you have to hold the appropriate pilot certificate and medical. But what I’m talking about is legalities. Contract flying is not a charter business. Do not try to skirt the issue by telling your client to rent the airplane and then hire you to fly him somewhere. If you suggest it to the client, the FAA views it as “holding out” and it becomes a charter. That is illegal, or at least, the FAA thinks it is. Basically don’t rent the airplane to your client and you will be fine.
TIP If you have a legitimate charter customer call up a 135 company and request a finder’s fee for turning over the customer, most legitimate charter companies will be happy to pay it.
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Part-Time Contract Pilots Many part-time contract pilots have full-time jobs with airlines or a corporate flight department. They get into contract flying to earn extra money, add a little variety to their flying, or test the waters after retirement. A word to the wise: many full-time contract pilots consider part timers a bane on the industry. They are concerned that you don’t have to pay for training and can undercut their fees. You may find some who think you are taking flying opportunities from them. Don’t listen to them. There is plenty of business for everyone, but don’t undercut their fees.
Update Your Resume Resumes are old school and not very effective at landing you a contract gig. It is a rare pilot who gets a job from mailing out a resume in this business. Unless you have unusual skills or are the only pilot who can fly a particular type of airplane, most of your work is going to be from local airports (within two hours driving time). Sorry, but you won’t be flown first class to Hong Kong to pick up the CEO of a Fortune 500 company and fly him back to the States. As stated earlier, networking is the most common and effective way to expand your client base. However, it is critical that you have an up-to-date resume that can be handed out to potential customers you meet while flying. Here are a few helpful tips when writing a pilot’s resume: •
The first few lines of your resume are absolutely essential. Most people only look at a resume for a few seconds, so the first couple of lines of your resume will need to be attention grabbers. Once you have that attention, try to funnel it toward your qualifications through the design of your resume.
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Leave an appropriate amount of white space and make sure that the font is large enough to be easily legible.
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Proofread. Make sure that you proofread your resume well, and consider having someone else proofread it too. Two sets of eyes are better than one and the last thing that you want to do is 15
have a typo or grammatical error on your resume. Make sure that everything is in good order before you hand it out. •
Tailor your resume to the job. You are a pilot. Craft it to the type of airplane you are current and qualified to fly right now. No one cares where you went to high school or what you made on the ATP Knowledge Test. Remember, you are selling yourself as a contract pilot, not an employee. Keep it short, sweet, and to the point.
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Choose your words carefully. Make sure that you avoid any words that will have a negative connotation and focus in on the words that will resonate in a positive way. Words like “safely,” “economically,” and “efficiently” are always welcome.
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Network for your resume. Make sure that you get your resume into the right hands. Save your resume for those who need it. If the person you are handing it to doesn’t do the hiring, giving him or her your resume is a waste of time. And paper.
In addition to your resume, make sure to have business cards. These are cheap advertising. Hand them out to everyone. Make sure they have your name, airplane, and contact information. It is a great idea to have your website link on your card. That way the potential client can look at your website and see your resume!
Get Online It is increasingly important to be active online these days, but that’s especially true for a contract pilot. You’ve got to think of yourself as a business, which means that you need to brand yourself. You are the Learjet Contract Pilot or the Cessna 421 Guru. You have to put yourself out there online. Use the Internet to enhance your resume. Try to become a brand and capitalize on the Internet for free marketing. Position yourself as “The Citation Contract Pilot” (or whatever you are flying) and add your resume and training certificates in a PDF file to your website. This makes it easy for insurance 16
agents and clients to download. Add several professional pictures of you and the airplane you fly to your site. This shows how busy you are and that you are not just a flash in the pan. Don’t think of your website as a direct hiring portal. Instead, use it to supply pertinent information to potential clients about your services. Just remember that the easier you make it for clients to learn about you, the more flying jobs you will get. Facebook, LinkedIn, Twitter, and other social networking websites are all important to have a presence on. Just keep it professional. Pictures of you drunk at your sister’s wedding will not help land a gig!
Establish Your Rate and Method of Payment First, you’ve got to decide whether you would rather charge an hourly rate or a daily fee. Either way, you’ll be working as an independent contractor. That means that there are a few things you need to account for in calculating your rate. You will be responsible for additional taxes, as you’ll have to pay self-employment tax. That includes your share of Social Security, as well as well as the employer’s share. This sum is approximately 15%, so add that onto your local, state and federal tax rate and plan accordingly. Second, keep in mind that you’re going to have additional expenses. You will need to pay for your own health insurance, and you’ll have to handle the training expenses that come with being a pilot. These numbers all need to be factored in when you calculate your rate, because you’ll want to build them into it so that your take-home pay doesn’t suffer as a result. Most pilots elect to charge a flat fee for their services, whether it is per day or per trip. Occasionally, working on a flat fee basis will lead to some confusion or disagreements with clients, as they may think that you’re charging too much for a short flight. Or you may think you are being abused if the client thinks a day rate is for 24 hours. It’s not!
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You may disagree in terms of what constitutes work when you’re waiting on them or have down time in between trips. As such, the flat rate is a lot simpler for both sides and everyone will know what they are getting into up front. Here is a sample pilot services agreement. I have used this for several years with no problems. I always give it to the client before I start flying for him or her.
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PILOT SERVICES AGREEMENT THIS PILOT SERVICES AGREEMENT (this "Agreement") is entered into as of the 1st day of September, 20__, between John L. Doe, a South Carolina resident (herein called the "Customer") and Joe L. Smith, a South Carolina corporation (the "Pilot"). WHEREAS, Customer owns a 1983 Beechcraft King Air C90 aircraft bearing manufacturer's serial number LJ410 and registration number N1234 (the "Aircraft"); and WHEREAS, Pilot is engaged in the business, among other things, of providing pilot services for the operation of corporate aircraft, and Customer desires to obtain Pilot’s pilot services for the Aircraft; NOW, THEREFORE, the parties, in consideration of the foregoing and the mutual promises hereinafter set forth, do hereby agree as follows: 1. Term of Agreement. The original term of this Agreement shall commence on September 1, ____ and shall continue for one year unless earlier terminated in accordance with the provisions hereof. Such term shall be automatically renewed for up to three (3) one-year renewal terms, each commencing on the day following the expiration of the prior one-year term; provided, however, that either party may terminate this Agreement by notice to the other not less than ninety (90) days prior to the expiration date of the original term or any renewal term hereof, effective on such expiration date; and provided, however, that the original term or any renewal term hereof shall be terminated automatically upon the sale of the Aircraft by Owner. 2. Pilot. Upon the request of Customer from time to time, in accordance with the provisions of this Agreement, Pilot shall cause the Aircraft to be operated by and under the control of a duly qualified and type-rated pilot, who shall be properly qualified for the operation of the Aircraft in accordance with the provisions of the Federal Aviation Regulations, Title 14, Code of Federal Regulations (“FAR”), in effect from time to time. In addition, all pilots for the Aircraft shall meet the qualifications set forth in this Agreement, in the Pilot’s Operating Manual (if any) relating to flight crew qualifications as amended from time to time, and in the provisions of all insurance policies covering the Aircraft. 3. Aircraft Operation. At all times while the Aircraft is operated pursuant to this Agreement, the Aircraft shall be operated as a normal transport category aircraft as defined by the FAR and shall be and remain under the full authority and operational control of Pilot. 4. Flight Crew Availability. Pilot shall use all reasonable efforts to keep a pilot available and ready to operate the Aircraft seven (7) days per week, twenty-four (24) hours per day) upon four (4) hours' prior notice from Customer, excepting only those periods when the Aircraft is undergoing maintenance or when Pilot reasonably determines that sufficient crew rest is not available. In those instances where Pilot determines sufficient crew rest is not available, Pilot shall use its reasonable best efforts to supply additional crew, qualified in accordance with this Agreement, as soon as practicable. 5. Specific Services. Pilot will provide the following services to Customer hereunder: 19
a. Pilot shall arrange for any required pilot training. b. Pilot shall provide flight crew consisting of one (1) airline transport pilot (ATP) captain qualified and rated for aircraft of the same type as the Aircraft. All pilots shall meet all Federal Aviation Administration (" FAA") and insurance underwriter requirements for the position held, as defined in Pilot's Flight Training Manual (if any) and the FARs. Customer shall have the right to interview and approve the flight crew assigned to the Aircraft and shall have the right, at its discretion, to reject any crew member from service on the Aircraft. c. All flight crew members will be trained at the expense of Pilot. The captain shall be the final authority in all matters regarding safety of each flight of the Aircraft. All reasonable and necessary crew expenses incurred while traveling on behalf of Customer will be invoiced to Customer at actual cost, plus a 3% handling fee. d. Pilot shall be responsible for testing and selection of crewmembers of the Aircraft. Pilot shall, on a continuing basis, review crewmember status during the term of this Agreement so as to assure that crewmembers shall at all times be appropriately certificated, rated and trained as required by the FAA and Pilot. e. The crewmembers shall be employed by Pilot. Except as otherwise provided herein, Pilot shall have the sole liability and responsibility, and Customer shall have no liability, with respect to any pension, employment or other benefits for the Aircraft crewmembers and, if requested by Customer, Pilot shall have each crewmember execute a document, in form reasonably satisfactory to Customer, to such effect. f. Pilot shall advise the Customer on the advisability of continued crewmember assignment based on the crewmember's qualifications and performance. g. Pilot shall employ Pilot's best efforts to cause the Aircraft to be stored in a hangar while away from its base location more than seven (7) days. h. In addition to the foregoing, Pilot shall perform with respect to the Aircraft the other services described in Schedule A annexed hereto and make a part hereof. 6. Compensation. Fees payable to Pilot hereunder for the flight crew and the other services and products to be provided by Pilot are listed in Schedule B. 7. Independent Contractor. Pilot is an independent contractor hereunder for all purposes of this Agreement, and neither Pilot nor Pilot's agents or employees shall be agents or employees of Customer. All payroll taxes, fringe benefits and worker's compensation for Pilot's employees and agents shall be the sole responsibility of Pilot. 8. No Assignment. Pilot may not assign or delegate any rights or responsibilities hereunder, or any part thereof, without the prior written consent of Customer. Any purported assignment not in accordance with the foregoing shall be void and without force or effect. 20
9. Claims and Indemnification; Insurance. a. Pilot shall indemnify, defend and hold harmless Customer, their respective agents, passengers and affiliates (collectively the "Customer indemnities") from and against any and all liabilities, obligations, losses, damages, costs, penalties, claims, actions and expenses, including reasonable attorneys' fees, of whatever kind and nature (collectively herein "Claims"), to the extent Claims are imposed on, incurred by or asserted against the Customer Indemnities or any of them as a result of Pilot's operation or use of the Aircraft. Customer shall indemnify, defend and hold harmless Pilot, its directors, officers, agents and employees (collectively the "Pilot Indemnities") from and against any and all Claims of whatever kind and nature, imposed on, incurred by or asserted against the Pilot Indemnities or any of them to the extent resulting from any breach by Customer of Customer's obligations set forth in this Agreement. b. Pilot shall immediately notify Customer of any accident or damage involving the Aircraft, which notification shall specify the time, place and nature of the accident or damage, the names and addresses of all parties involved, persons injured, witnesses and owners of properties damaged and such other information as may be known or available to Pilot. The Pilot shall immediately advise Customer of all correspondence, papers, notices and documents whatsoever received by Pilot in connection with any claim or damage involving or related to the Aircraft or its operation and shall aid in any investigation instituted by Customer and in the recovery of damages from third persons who may be liable therefor. If in Customer's sole opinion the Aircraft is damaged to the extent that it would not be prudent or desirable to repair it, Customer may immediately terminate this Agreement. 10. Representations and Warranties. Pilot hereby represents and warrants to, and agrees with Customer that on the date hereof, and at all times during the term of this Agreement: a. Pilot is an individual of full age resident in the State of South Carolina. b. The business and operations of Pilot are being conducted, and Pilot will perform its obligations hereunder, in accordance with all applicable laws, ordinances, orders, rules and regulations of the FAA and all Federal, state and/or local and foreign governments, including, without limitation, the provisions thereof relating to wages, hours, collective bargaining and employment practices, provided that failure by Pilot to comply with the foregoing shall not constitute an Event of Default hereunder if such failure does not materially adversely affect the operation, safety or maintenance of the Aircraft or subject Customer or Owner to any liability, claim or violation (other than a technical or de minimis liability, claim or violation). c. Pilot has all permits, licenses, orders and approvals of all United States Federal, state and local and all foreign governmental regulatory bodies (including without limitation under the FARs) required for Pilot to carry on Pilot’s business and operations as currently conducted and to maintain and manage aircraft as contemplated by this Agreement. All such permits, licenses, orders, registrations and approvals are in full force and effect and no suspension or cancellation of any of them is threatened. None of such permits, licenses, orders, registrations and approvals will be materially adversely affected by the consummation of this Agreement. d. Pilot will advise Customer as to any and all permits, licenses, orders, and approvals of all United 21
States Federal, state and local and all foreign regulatory bodies (including without limitation under the FARs) required for Customer to use the Aircraft as contemplated in this Agreement, and assist Customer in obtaining each of them. e. There are no actions or proceedings pending or threatened before any court or commission, board or other administrative agency against or affecting the Pilot, which, if adversely determined, would have a material, adverse effect on the ability of Pilot to fulfill its obligations under this Agreement. f. No regulatory actions and no investigations by the FAA are in progress, pending or threatened against or with respect to Pilot or any of its owners, employees or affiliates. Pilot shall promptly inform Customer about, and promptly provide Customer copies of, all communications received by Pilot from the FAA regarding the Aircraft which relate to safety, and of any final decision or order which relates to safety issued by the FAA imposing a penalty or fine on Pilot or requiring it to take any remedial action. g. Each pilot provided by Pilot hereunder shall be rated for Beechcraft King Air C90-1 aircraft and shall be properly qualified, tested and trained pursuant to FAR Part 61, Subparts A and Band current under FAR Section 61.57. 11. Governing Law. The terms of this Agreement shall be governed by, and construed in accordance with, the laws of the State of South Carolina. 12. Notices. All notices required or permitted under this Agreement shall be in writing and shall be deemed delivered upon receipt of a facsimile transmission, or three (3) days after being mailed postpaid- by registered or certified mail, return receipt requested, addressed as indicated below: If to Customer: John L. Doe 123 Street Anywhere, ST 12345
If to Pilot: John I. Smith 456 Lane Everywhere, ST 67891 13. Miscellaneous. This Agreement shall inure to the benefit of and be binding upon the parties hereto, their heirs, legal representatives and permitted assigns. This Agreement constitutes the entire agreement and understanding between the parties with respect to the subject matter hereof and may not be amended, waived or modified, except in a writing signed by the party to be charged. This Agreement supersedes all prior agreements or assertions with respect to the subject matter hereof, whether oral or written, and all other communications between the parties with respect to the subject matter hereof. 22
IN WITNESS WHEREOF, Customer and Pilot have caused this Pilot Services Agreement to be executed by their respective duly authorized representatives as of the day and year first above written.
JOHN I. SMITH, Pilot
JOHN L. DOE, Customer
John I. Smith
John L. Doe
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SCHEDULE "A" TO PILOT SERVICES AGREEMENT ADDITIONAL SERVICES TO BE PROVIDED BY PILOT
I. FLIGHT OPERATION 1. Interviewing, testing and presenting to Customer, for Customer's approval, qualified candidates for the Aircraft crew. 2. Establishing safe operational capabilities for the crew of the Aircraft, including duty time, crew training and other safety considerations and reviewing these operational capabilities with Customer. 3. Performing all flight operations of the Aircraft in accordance with all applicable FAR provisions, and other applicable federal, state, local and foreign laws and regulations, and exercising good judgment in undertaking such operations. II. FLIGHT SCHEDULING 1. Maintaining records and administrative procedures sufficient to manage the differing levels of priority for use of the Aircraft accorded to the Customer, under the agreements between them. 2. Establishing and executing procedures to assure that the flight crew is positioned for departure reasonably in advance of departure time. 3. Providing space and personnel to achieve: a. Scheduling of flight personnel (Crew Scheduler). b. International planning and documentation for crew as required. III. CREW SUPERVISION AND TRAINING 1. Planning and implementing a system of periodic training, proficiency checks and in-flight monitoring to ensure that the crew meets or exceeds the FAA standards for flight proficiency, safety of flight and general operating knowledge. Such system would include, but would not be limited to, contracting for appropriate outside training, arranging for appropriate in-house training personnel, space and materials. 2. Establishing, implementing and monitoring a plan for annual flight crew medical examinations and keeping the Customer advised of any health problem with crew members. 3. Providing Customer with a proposed schedule of necessary and desirable training for Customer's approval as far in advance of such training as is reasonably practicable. 24
IV. GENERAL ADMINISTRATIVE RESPONSIBILITIES Providing such office space, furniture, fixtures, equipment and supplies as may be required by the flight crew for the performance of their duties.
Schedule B I. PILOT SERVICES FEE: A) Pilot pay is the higher of the following amounts not to exceed the maximum daily rate. i) Actual flight pay rate: The hourly flight pay rate for the King Air C90 is $100 per hour. ii) Duty rig rate: equals 1 hour of flight pay for every 2.00 hours ($100.00 per hour) on duty. B) Maximum daily rate: $500.00 per calendar day. C) A flight duty period that ends away from base will be calculated to end at midnight, regardless of when the last flight of the day terminates. D) A flight that ends on a day preceded with an overnight stay away from base will be calculated with a duty day start of 6:00am regardless of actual duty start. E) A calendar day away from base rate of $275.00 applies to all days away from base in which no duties are performed, i.e. layovers. F) Ground transportation, meals, and lodging expenses will be paid in addition to pilot pay.
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Definitions Cycle: An engine start plus one take off and one landing. For use in aircraft maintenance. Block time, aka "out and in time": Begins with closure of aircraft door with the intent of flight; ends with engine shutdown. For use in calculating pilot flight hour pay. Flight time, aka "off and on time": Time between wheels off the ground until touchdown. For use in navigational planning. Duty period: 30 minutes prior to first scheduled departure until 30 minutes after final engine shutdown for a given calendar day. For use in pilot duty rig pay and rest requirements. No pilot will be scheduled for more than 12 hours on duty. Duty rig: the ratio of hours on duty divided by one hour of flight time. The duty rig of this agreement is 2 to 1. For use in calculating daily pilot pay. Calendar day: 12:00 am until l :59 pm on a given day. For use in calculating pilot pay.
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Ancillary Income Here is the way I make extra income. I) Aircraft Management A) Administrative hourly rate: $75/hour. i) These costs include but are not limited to: • Invoicing and bill payment for aircraft owners • Airworthiness, registration, and U.S. Customs compliance • Maintenance supervision and scheduling • Escrow account management • Aircraft trip scheduling II) Aviation Consulting A) An away from base daily rate of $275.00 plus travel, lodging, and meal expenses applies. B) The administrative rate of $75.00 per hour applies to any direct services provided. i) These costs include but are not limited to: • Aircraft pre-purchase inspection • Maintenance supervision and review • AD compliance • Registration and title search • Tests and pre-buy flights III) Invoicing and Recordkeeping A) Pilot, LLC will send an invoice of services provided for the managed aircraft to the designated responsible party representing the aircraft owner. B) Pilot, LLC will be issued a designated credit card or cards, and accounts provided by the aircraft owner to pay for the day to day needs required for aircraft operation and management. C) Pilot, LLC will maintain records of services provided. D) Pilot, LLC will provide to the aircraft owner, from time to time, any financial reports, receipts, invoices and work orders which may be related to the operation and management of the aircraft. 27
IV) Terms of Agreement A) The terms of this agreement are binding. B) Any term stated in this agreement may be amended with the mutual consent of Pilot, LLC and Customer as owners in the managed aircraft. C) This agreement may be terminated, by Pilot, LLC or Customer by means of written notice 90 days prior to termination.
Examples of calculating management fees and pilot services I) Aircraft management A) Time dedicated to administration of the aircraft will be billed at $75 per hour calculated to the tenth of an hour: 1.3 hours of administration would be $97.50 invoiced.
II) Aviation Consulting A) The aircraft is in Stevens Aviation having an avionics upgrade installed. A ground trip to Greeneville to oversee the installation of avionics would be billed as follows: Rental car: $75.00, meal: $7.53, Consulting daily fee: $275.00, 1.7 hours with aircraft mechanics in Greeneville: $127.50. A total of $475.03 would be billed in this example.
III) Pilot Services A) i) An 8:00am scheduled departure to Washington DC with passenger drop off and immediate return with landing at base at 1:00pm. Duty time begins at 7:30am and ends at 1:30pm for a total duty period of 6 hours.
MYR to IAD block time: out 8:06am, in 9:45am for a total of 1.8 hours. IAD to MYR block time: out 10:53am, in 12:38pm for a total of 1.7 hours. Total duty rig = 6 hours divided by 2.0, times $100.00 for a duty time rate of $300.00. 28
Total flight time pay would be 3.5 hours times $100.00 for a flight time rate of $350.00. In this example, the flight time rate ($350) is higher than the duty time rate ($300.00).
The amount billed will be $354.00; the higher of flight time and duty rig.
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B) A scheduled 9:00am departure to Columbia, SC for a meeting and lunch, with afternoon return landing at base at 3:00pm. Duty time begins at 8:30am and ends at 3:30pm for a total duty period of 7 hours MYR to CUB block time: out 9: 18am, in 10:00am for a total of .7 hours CUB to MYR block time: out 2:06pm, in 2:45pm for a total of .7 hours Total duty rig = 7 hours divided by 2.0, times $100.00 for a duty time rate of $350.00. Total flight time pay would be 1.4 hours times $100.00 for a flight time rate of $140.00. In this example the duty time rate ($350.00) is higher than flight time rate ($140.00). The amount billed will be $350.00; the higher of flight time and duty rig. C) A scheduled 7:00am departure to Nassau with drop off and same day return landing at base at 5:00pm. Duty time begins at 6:30am and ends at 5:30pm for a total duty period of 11 hours. MYR to MYNN block time: out 7:02am, in 10:30am for a total of 2.5 hours. MYNN to MYR block time: out 7:40pm, in 9:30pm, for a total of 2.8 hours. Total duty rig = 15 hours divided by 2.0, times $100.00, for a duty time rate of $750.00. Total flight time pay would be 5.3 hours times $100.00, for a flight time pay rate of $530.00. In this example, the duty time pay rate ($750.00) is higher than the flight time rate ($530.00), but is in excess of the maximum daily rate of $500.00. The amount billed will be $500.00, the maximum daily rate.
IV) Pilot Training A) Five day, Monday through Friday, initial ground school and simulator training scheduled at Executive Flight Training in Beaufort, SC. For the purpose of meeting insurance requirements for coverage, some forms of formal training are required depending on the underwriter. If the required training is completed in the aircraft, then the pay rates described above will apply. If formal training is to be completed at a simulator facility, then a flat rate of $275.00 per day away in addition to meals, lodging and transportation will apply.
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Contract with an Aircraft Management Company One option that can both eliminate some of your overhead expenses and make it easier to find work is to contract with an aircraft management company. Aircraft management companies maintain rosters of pilots and assign them to trips with various clients. This system can eliminate some of your work too, as you won’t need to focus as much on finding clients and selling yourself to them. From that perspective, it really comes down to which aspects of being a contract pilot appeal to you. If you have always wanted to run your own business and have some interest in that side of things, then contracting with a management company will not make much sense. However, if you are simply interested in working as a pilot and doing so on more of your own terms, this can be a great option for you. Some companies will pay for your training, and you may even be able to buy into a health insurance plan. Though you’ll need to foot more of the expense of the plan, if not all of it, on your own, it may give you the chance to get some group buying power rather than being out on the individual market all by yourself.
The tradeoff for all of those benefits is that you won’t have quite as much freedom in terms of when you schedule trips. Though independent contractors always have the right to turn down work, management companies are going to be less and less inclined to keep using you if you say no too often.
Why Do Companies Use Contract Pilots? Management companies and airplane owners use contract pilots because it saves them money. They simply do not want the expense of a full-time employee. To the majority of owners, a pilot is a pilot, and as long as you meet the open pilot clause on the insurance policy, they will hire you. As a
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contract pilot, your duties will include everything that it takes to get an airplane ready to fly and to organize a trip. Some of your responsibilities include: •
Filing flight plans
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Computing weight and balance for the flight
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Checking weather conditions and preparing accordingly
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Loading bags for clients
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Cleaning the airplane and stocking it up with supplies
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Updating charts
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Running through all pre-flight functions
The aircraft owner or management company is normally responsible for: •
Scheduling necessary training
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Writing and using operations manuals
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Monitoring maintenance and insurance and making sure it is all taken care of
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Making other travel arrangements for clients, including hotels and ground transportation
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Performing dispatch functions and employer interface
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Applying for LOAs for RVSM/MNPS/MEL operations
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Maintaining safety standards.
Occasionally, you may find yourself be asked to perform duties that are not part of your normal responsibilities. My recommendation is to be a team player. If you can help the operation and have the skillset to contribute – by all means, do so! Just don’t do it for free. Remember, you goal is to make $100,000 or more as a contract pilot. The old cliché that time is money is especially true in this business. All you have to sell is your time. Don’t give it away. It’s important to get a feel for the corporate culture of the company you are signing on with. For example, some FAR Part 91 operators do not set any time limits for contract pilots. It’s not completely unheard of to fly 20-plus-hour days. I’ve heard of a single pilot flying a round trip in a 32
King Air 350 from KORF to KLAS in one day. His boss slept in the back on the way home. While this may happen from time to time even in a well-run operation, it should never be the norm. If you frequently find yourself on duty more than 12 to 14 hours a day, you should make sure that your company knows it is an unsafe situation. Fatigue degrades your performance almost as much as drinking alcohol! To avoid conflicts and misunderstandings, it is always an excellent idea to give each client a copy of your contract spelling out your rates, duty times, and responsibilities. If your client repeatedly violates your agreed-upon terms, it is time to fire that client. That is one of the perks of being a contract pilot. You set the rules.
How Much Experience Do You Need? This is more about relevant flight experience than flight experience in general. There are pilots with more than 20 years of airline experience and more than 20,000 hours in the skies who are not qualified to be contract pilots. It all comes down to recent corporate experience. Many pilots think that their military or airline experience will enable them to step into a lucrative contract piloting gig. Unfortunately, that rarely happens. There isn’t much demand for corporate fighter pilots or contract 787 pilots. Those doing the hiring tend only to care about recent corporate experience. You need to be in the right place, at the right time, with the right credentials. That means a current training certificate (within 12 months) and recent flight time in the same type airplane.
Now, of course, when starting out as a contract pilot it will certainly help to have a military or airline track record and flight experience outside of contract work. It just won’t get you to the top level when you start out. You’ll still have to build experience and work your way up. Don’t be a prima donna. Pilots with only airline and/or military experience are their own worst enemies. Don’t believe your own resume. No one cares that you can fly a 747 across the pond. More important in this business is: can you make sure the rental car will be available for your passenger when you land?
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Building Experience Without experience you can’t get the job, but without the job you can’t get experience. Sound familiar? That conundrum has plagued pilots since the Wright brothers. The easiest way to build time and experience in the type of airplane you want to add to your roster is to let it be known through your network that you are looking to fly as a co-pilot. Most jets and many turboprops are operated with two pilots. The insurance companies do not normally require a formal school or experience in type to act as second-in-command. This is a good way to build enough time to feel comfortable in the plane before heading to simulator school. This is also an excellent way for retiring airline, corporate or military pilots to break into the market. The pay is usually less than the regular day rate. Do not do it for free or for “the experience.” You’ll just ruin the career for the rest of us.
Money vs. Job Satisfaction It is important to determine whether you are interested in contract pilot work for the money alone, for the job satisfaction, or for a combination of the two. Many people are interested in becoming contract pilots for one or the other, but it can be tough to balance both. While there is certainly plenty of money to be made, doing so can require working long, hard hours. It can force you to go on a lot of trips and take work whenever it is available, especially early on. That’s all well and good if money is your goal. In that case, you could be well served working for both an aircraft management firm and on your own. The more flying, the better. However, if your goal is to make your own schedule and have a lot of freedom and plenty of time off, you’ll probably need to be your own boss. You’ll have to be willing to pass on flights and may have difficulty retaining clients if you get a reputation for turning down trips too often. It can be tougher than you realize to achieve maximum job satisfaction. However, it is possible create a balance between work and time off. It takes the ability to say no and have confidence that another trip is just around the corner.
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Chapter 2 – Practical Pointers & Tips •
Don’t rely on training alone. Without actual in type experience, you will find it hard to obtain work.
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Don’t buy into the training school hype. No one is going to hire you because you went to Flight Safety.
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Make it known that you are willing to fly as co-pilot for pay. This is the easiest way to build time in a plane before heading to simulator school.
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Sharpen your networking skills.
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Create a niche and become an expert in your field. Brand yourself as the Learjet Contract expert, for example.
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Your resume and business cards serve as marketing tools. Make sure to keep them current and professional.
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Use the internet to not only provide information to prospective employers, but to brand yourself.
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Taking into account expenses, establish your rate and method of payment. Do not offer credit.
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As a contract pilot, you will be responsible for everything it takes to get an airplane ready to fly. Make sure your daily rate covers this.
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Provide clients with a copy of your contract in order to avoid potential misunderstandings.
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The money does not always equate with job satisfaction.
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Chapter 3
What Makes a Good Contract Pilot? “Being an airline pilot would be great if you didn't have to go on all those trips.” Anonymous
The Ability to Fly It sounds obvious, but contract flying requires good flying skills. Many flights are done as a single pilot and you have to hop into an airplane you know little about. You may not know the maintenance history or the little idiosyncrasies that airplanes developed over time. The FMS may be unfamiliar or the GPS out of date. On the human side, you never know who you are going to get in the other seat. Maybe a captain past his prime or an owner pilot who has more airplane than skill. Sometimes, you get a crewmember who resents you being there because you are a threat to his or her job. So: you have to be able to fly an airplane you are unfamiliar with in all kinds of weather, keep an eye on the other pilot, please the boss in the back…and do it all with grace and style. In other words, you have to be confident in your skills. Remember telling your non-flying buddies that “if it has wings, you can fly it”? Well, here’s your chance to prove it.
The Ability to Handle Money If you are going to run your own business or work as a contract pilot, it is important that you be good at handling money. Cash flow is going to be vital to your livelihood, and, with today’s technology, it is unreasonable to wait 30 days for your client to cut you a check. I use Square, a credit card processing app, to get paid at the completion of the trip. Of course, there are many other credit card processing applications that work on your iPad or smart phone. Find the best one for you. Inform your client that you prefer to be paid by credit card. It’s rare to fly a client who doesn’t prefer to pay this way. Of course, you will pay a small percentage to accept credit cards, but all it takes is 36
one deadbeat client to convince you of their value! It’s a normal practice for the airplane to have a credit card on board for fuel and other flight expenses. Occasionally, you will have a client who wants you to buy the fuel or front money in some other fashion and then bill them the total amount. In my experience, this is the beginning of the end of a flying gig. If they need the pilot to buy fuel, run don’t walk away from the whole thing. Normal expenses such as airline tickets, rental cars etc. are fine to carry on your credit card until you present your final bill. You will earn substantial frequent flyer points and hotel upgrades. Be sure to add a small handling fee to your bill for this service. I normally add 3% to cover the cost of credit card fees, etc. It is important to put a percentage of your pay into a savings account. You will have great months and lean months. The way to stay in business is try to level those peaks and valleys out. The only way to do that is by building a cushion of money to see you through the lean times. You can go broke making money if it doesn’t come in fast enough.
The Ability to Handle Uncertainty If you crave stability and consistency, this is not the career for you. It is not unusual to be called for a flight at the last minute or to have a flight cancel after you arrive at the airport. That’s the nature of this business.
Remember, the people who own and operate private airplanes have them for
convenience. They want to go when and where they like without any impediments. If it wasn’t for them, you would not be a contract pilot. Do not become a constant obstacle to their plans. Your kids’ birthdays, holidays, and vacations do not mean anything to them. That does not mean you always have to be at their beck and call. Good communication can go a long way in getting what you want in terms of schedule. But there is a hierarchy and you are not the top dog. Uncertainty can pop up even while you are on a trip. I’ve frequently had to scramble to cover a future trip when the client decided to add a few days to the one I was on. It can be very frustrating trying to juggle clients, family, and your schedule. I now build a day off into my schedule after every trip. This accommodates the occasional extended trip and adds days off into my schedule. So far, it’s been a win-win situation.
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The Ability to Sell Yourself As an independent contract pilot, it will be your job to convince potential clients that they should hire you and keep hiring you. As a result, you need to be a salesperson. You need to be friendly and outgoing and create enough of an impact that people want to fly with you. The days of being the steely eyed, taciturn loner are over. Today’s pilot is all about communication. The selling doesn’t stop when you strap into the cockpit. The way you handle the airplane speaks volumes to your passengers. True or not, passengers equate smooth flights with safe flights. Smooth and safe keeps them calling you for future flights.
A Reputation for Excellence Once you are in the business for a while, you will start to build a reputation. Obviously, this reputation is going to have a major impact on those who are considering hiring you in the future. Numerous things can affect your reputation. Do you talk too much? As a general rule, I brief my passengers before the flight on the safety items, any weather that might concern them, and the time en route. I avoid politics, religion, or anything controversial. I don’t ask them about their business. I’m friendly, but not their friend. Are you rough on the equipment? Believe me, the owner notices if you are slamming cabinets shut or riding the brakes. Treat the airplane like it was yours. Do you clean the airplane between legs? I know of one pilot who wasn’t called anymore because he never emptied the trash between flights. A small thing, but he got the reputation of being lazy. Clean and stock the plane for each leg before the passengers arrive. Make sure you always show up on time. That is probably the single most important detail of your reputation. You may get a flight based on luck, but it is your reputation that will bring you repeat business.
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The Ability to Handle Change You’ll need to be able to handle change, which has a lot to do with being able to identify change ahead of time and plan accordingly. If you have a good combination of insight and adaptability, then change will be more of an opportunity for you to shine as a contract pilot. However, it also takes a special kind of mindset. For many people, dealing with change creates an uneasy feeling that can be paralyzing. If that sounds like you, then you’re going to want to rethink being a contract pilot.
The Ability to Learn Quickly This factors into dealing with change as well. Since new aviation technologies are always popping up, you need to be able to learn quickly in order to be able to adapt to whatever new GPS or gadget you find installed in the plane. Almost all avionics manufactures offer free online classes or operating handbooks that you can download. Take the time to learn all you can about new technology. It will put you ahead of your competition. Most passengers are technology savvy. They have iPhones, iPads, and laptops. They are used to dealing with other people with the same technology. Make it easy for them to get in touch with you. You should be able to communicate at all times. “But what about while I am flying?” you ask. I have an answering service that I forward my cell phone to while I’m actually flying. They answer in my company name and tell the client that Captain Carmody is flying and will return their call as soon as he lands. It adds a touch of professionalism and only costs about $30 a month.
The Ability to Get Along With People While you probably won’t have coworkers, it is critical that you get along with your clients. Not only will this make your work more enjoyable, but it will also make them more likely to give you future business. Nobody enjoys working with someone that he or she does not like, so if you want to be hired repeatedly by clients, be the type of person they enjoy spending time with. Don’t forget 39
your passengers. They are usually friends, relatives, or employees of the aircraft owner. Treat them like you treat the owner. I heard about a pilot arguing with the wife of the aircraft owner about bringing a dog aboard. Who do you think won? This will be an important skill as you network and build up your list of contacts in hopes of getting future referrals for business.
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Chapter 3 – Practical Pointers & Tips •
Be sure your flying skills are sharp.
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Be friendly, but not their friend. Always be mindful of the impression you are making.
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Be available when they need you. You are there for their convenience, not the other way around.
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Beware of aircraft owners who request that you pay for fuel and bill them at the end. You aren’t their bank.
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Be prepared to pay upfront for items such as airline flights and rental cars.
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If you crave stability and consistency, this is not the career for you.
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Build a savings account that you can dip into during lean times.
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Show up on time.
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Be ready and willing to learn and adapt as necessary.
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Establish a good rapport with not only the owner but the passengers as well.
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Chapter 4
The Advantages of Being a Contract Pilot “The way I see it, you can either work for a living or you can fly airplanes. Me, I'd rather fly.” Len Morgan
There are many advantages to being a contract pilot and business owner.
Variety You normally get a wide variety of flying as a contract pilot, as you’ll fly for different clients. You may be moving from one client to another frequently, which means that you’ll be mixing up when, where, and what you fly. For those who dislike monotony and like new challenges and seeing new places, this is a big advantage to being a contract pilot.
Money You’ll have the opportunity to make more money as a contract pilot than as an employee. Since you set your prices and grow your income as demand increases, you’ll reap all of the rewards of higher revenue.
Get Paid for More Than the Hours You Actually Fly It is up to you whether you select an hourly pay structure or opt for a daily rate. Truthfully, the hourly rate is a losing proposition. Take, for an example, an out-and-back flight from KPDK to
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KHXD. In a Cirrus, it’s a three-hour job, but you can get paid for a full day. At an hourly rate of $50 per hour, you made $150. At the average daily rate for Cirrus pilots, you charged $350. You may be able to pick up another trip that day and double up on daily pay. Unfair to the client? Not really. You are running a business and should charge whatever fee you need to stay in business. There is nothing wrong with giving a good customer a discount. In fact, it’s a great way to be on the top of their lists when they need a contract pilot. But don’t do it very often. The easiest thing in business is to lower your prices. It’s very difficult to raise them. Use discounts for special customers as a loyalty bonus and only on short out-and-back trips.
Time Off and More Control Over It As a contract pilot, you may have long stretches between flights. Those are the perfect times to take vacations or spend more time at home with your friends and family. This is a double-edged sword and one of the most misunderstood things about being in business for yourself. The simple fact is that as a self-employed contract pilot, you will work longer and harder than a pilot employed by a company. Why? Contract flying is a customer service business. Say you had the day off to go to the beach with your family. A good client calls up and needs you to fly him to an important business meeting. Saying no to your customer not only cost you your daily fee but it will also cost you goodwill. Goodwill is an intangible asset that all businesses need to survive. Spend it carefully. You don’t want your customers looking for other pilots because you were too busy taking time off. Again, the key to balancing your career and time off is communication. Give you clients as much notice as you can that you are going on vacation. Try to give them at least a month’s notice. Help them find a suitable replacement pilot while you are gone. Like a doctor, contract pilots are on call 24/7. One way to get more time off is to team up with another contract pilot and share clients. That way, you aren’t on the hook for every flight. Since you have control over when you work and when you are off, you can get more balance in your life by working less and enjoying your time more. This is great for those who have families and want to spend more time with their spouses and children. 43
Easy to Leave a Bad Client If you fly for a client that you don’t like, it’s easy to stop accepting their business and move on to better clients. Unlike some corporate jobs, you don’t have to be stuck with unpleasant clients for long periods of time. This is also true for rude or inconsiderate crewmembers. Plus, in this age of FAA background checks, dumping a client is not the same as quitting a job.
There are few
repercussions for cutting ties with a bad client.
Easier to Find New Clients It is always easier to find new clients when you already have clients. However, having plenty of clients is no reason to stop marketing your services. You never know when the fortunes of an owner will change and he has to sell the airplane. But the upside is that instead of being at the mercy of a mercurial boss, you are your own boss looking for new clients while having the luxury of having established clients.
A Wide Range of Experience Another benefit of working as a contract pilot is the wide variety of experiences you will accrue – and not just inflight.
It is not uncommon for contract pilots to meet celebrities, successful
businesspeople, and the very wealthy. These people travel first class and stay at five-star resorts. I’ve been deep-sea fishing, elk hunting, and golfing at some of the best courses in the country . . . all paid for by the client. Of course, I’ve also waited till two in the morning in the cabin of a freezing King Air because the FBO closed in Billings, Montana while my passenger lingered over dinner. So the pendulum swings both ways, but the perks far outweigh the drawbacks.
Location, Location, Location When you run the show, you can live wherever you want. You don’t have to worry about reporting to a particular airport or being based out of an airline’s hub. As a result, you can literally move to 44
your dream location and build your dream home. Just make sure that it is located within two hours’ drive of three busy general aviation airports. So how do you find the busiest airports? The FAA publishes this data every few years and it can easily be accessed on the web at http://www.faa.gov/airports. Living where you want is a luxury that most people never have, and it can be yours as a contract pilot. You’ll need to plan realistically, however. Living in remote locations far from airports is not a career-enhancing move for a contract pilot. No matter how cool it sounds.
A Stepping Stone Working as a full or part time contract pilot will do wonders for your resume by giving you a much wider variety of experience and making you a more qualified applicant for future flying jobs. It allows you to accrue valuable flight experience on your own terms before stepping into the job you want. In addition, it can be a stepping stone into other endeavors. For example, working as a contract pilot can be tantamount to running your own business. As such, it gives you experience that you can use in a managerial role in another business. You could also use your entrepreneurial experience to start a new company, whether it is inside the flight industry or not.
More Job Security As long as you don’t plan on firing yourself, you will have a lot more job security as a contract pilot than you do working for someone else. Of course, that does rely on you continuing to find new clients and growing your business. While that’s not a lock, you do have the assurance of having all of the information at your disposal at all times. In other words, you always have the big picture.
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No Office Politics Since you run the show and won’t have any staff, you won’t have any office politics to deal with. If you do not like a particular client, you can stop working with them. While there may be some politics involved in wooing a potential client, they won’t be nearly as significant as the politics in normal working environments.
No Background Checks Since you are running your own show, you won’t have to worry about any company background checks or other obtrusive policies that impact your privacy in any way. You are the boss, so you are already hired.
Tax Deductions Owning and running your own business entitles you to many more legitimate tax deductions than as an employee.
Best Office View Without a doubt, one of the biggest perks is your office. There is nothing like an early morning departure out of a Caribbean island. The sun is coming up, the plane is running well, and the coffee is hot. Who could ask for more?
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Chapter 4 – Practical Pointers & Tips •
Variety- in what, where, and when you fly- is one of the main advantages to being a contract pilot.
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As a contract pilot you will get paid for more than just the actual hours that you fly.
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You have the flexibility of choosing your location- just be sure it is within a 2 hour drive from at least 3 major airports.
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Working as a contract pilot makes you a more qualified applicant for future flying jobs.
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Job security rests in your hands - work on building your clientele and growing your business so you will never be out of a job.
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As a contract pilot, you may have the opportunity to experience leisure activities paid for by the client.
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As a self-employed contract pilot, you will work longer hours than if you were a pilot employed by a company.
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It is easy to terminate your relationship with a bad client.
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Say good-bye to office politics and cubicles.
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Don’t stop marketing your services because your client pool is plentiful. Always be on the lookout for new prospects.
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Chapter 5
The Disadvantages of Being a Contract Pilot “Never fly anything that doesn't have the paint worn off the rudder pedals.” Harry Bill
There are certainly disadvantages to being a contract pilot, and it will be up to you to determine which way the scales tip.
No Benefits As a contract pilot, you will not have any benefits as part of your compensation package. It will be up to you to handle your own retirement savings and purchase your own health insurance. These are major expenses that need to be factored into your compensation. It takes discipline to put part of every dollar you make aside for retirement. It is much easier to spend it now, especially as you are building the business. This is one of those disadvantages that people sometimes ignore during the startup phase, but that comes back to bite them later.
No Sick Time or Paid Vacation. Unlike the airlines or big corporation aviation departments, you don’t have backup pilots to cover you if you call in sick. If you are sick, you don’t get paid and you have the burden of trying to cover it with another pilot. Paid vacations are also problematic. Not only will you not get paid while taking time off, you will be paying for your vacation as well. When you work for a company, your vacation is entirely your time. You won’t have to field any calls or do any work. You’ll be paid during your vacation. As a contract pilot, you will be tied to your phone. Even on vacation!
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When working as a contract pilot, there is nobody else to answer the phones when you’re away and your clients may not appreciate leaving a voicemail that doesn’t get returned for a week or two. As such, you are still stuck doing a little bit of work even during your vacations. In addition, you are not being paid while you’re on vacation since nothing is being done. That means that you need to plan accordingly and factor that into how much money to sock away for your vacation.
You Need More Cash on Hand for Business Capital Since you’re going to have to fund your own aircraft training, charts, and computers, and make additional outlays for various business expenses, it is up to you to maintain the adequate amount of business capital to continue to grow your business. This means that some of your revenue has to be retained in the business rather than taken as income. Make sure that your fee structure supports sufficient business capital while still letting you take home an acceptable income.
You Have Nobody to Advise You It is lonely at the top. You are the leader of your contract pilot business, but that leaves you without anyone to advise you or bounce ideas off of. You won’t have anybody to advise you on how to run your business or what to do when you face unforeseen challenges. The upside is that you get to make all the decisions and overcome problems. The downside is that you will have more uncertainty in how to proceed and will not have the comfort of knowing that there is someone else to lean on. Of course, a business mentor is always an option.
One can be found at your local chamber of
commerce. But the chance of finding an aviation mentor is slim.
You Must Be a Salesperson Working as a contract pilot requires adding an important skill to your list of requirements. You have to be able to sell yourself, or you’ll struggle to find clients and build your business. That means that being able to function well as a salesperson is a critical part of the equation.
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That is typically something that is either loved or hated. It should not be feared, though. If you are a good salesperson, you’ll be able to reap the rewards of the sales you make without having to split the take with company salespeople or employees. It will all be yours as an independent contractor. On the other hand, if you are not already a good salesperson, know that salesmanship it is not automatically a natural skill. You can definitely turn your weakness into strength with a little bit of reading and practice. There are many tried and true sales techniques that work really well, as long as you’re willing to put in the time and effort that it takes to improve. Ultimately customers are the lifeblood of any business. That’s the same for contract flying, and you have to keep in mind who could potentially hire you. It will likely either be an aircraft owner or a middleman, such as the chief pilot of a management company. It’s very difficult to contact these people by cold calling them, so you need to establish prior connections. So, it’s critical that you build up a strong network.
You Must Network Relentlessly This factors into your sales strategy. You should always be looking out for opportunities to build relationships. Those can be in the form of potential clients or people in the position to know the people who need to hire contract pilots. These are line boys, pilots, maintenance shops, and aircraft sales companies. Don’t be afraid to approach them and ask for referrals. As you build your network and add connections, you may want to consider digital avenues. Try to be active through social media, including LinkedIn, as you build your network. You never know when a recommendation will come in handy to help you land the client you’ve been working on for a little while. If you’re uneasy about your ability to network, keep in mind that it is something you do every day without even thinking about it.
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No Established Pension Plan Since you do not have benefits, you will not have an established pension plan. That means that you’ll have to shoulder all of the responsibility for funding your own retirement. Of course, this isn’t as big a disadvantage as it once was, as most airlines and other companies are shifting the burden of retirement planning onto their employees. Many brokerage houses and financial advisors can set up a Simplified Employee Pension plan (SEP) or an IRA. It’s a simple process with minimum or no IRS reporting burden. In essence, a pension, just like any benefit of employment, is another form of compensation. Your compensation will be part of your gross income. That leaves it up to you to allocate it accordingly and plan for your future.
Feelings of Uncertainty and Insecurity Since you shoulder more of the responsibility for finding new clients and ensuring that revenue keeps coming in, you’ll be exposed to more of the uncertainty and insecurity that goes with owning a business. That can be stressful and is one of the top reason some people are better employees than business owners. Not everyone is cut out for that level of stress, so if you are not the type who handles uncertainty well, you may want to continue your flying career as an employee rather than a contract pilot.
More Time Spent Job Hunting Since you are the one lining up all of your clients, a large percentage of your time will be used to look for new clients and hunt for business. It is important that you factor this in when calculating how much you make per hour and adjust your rates accordingly.
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While your clients only think that they are paying for your flying time, they’re also paying for the time you have to spend organizing your business, planning your business, and finding clients. That’s time you spend working, so don’t forget about it. Consider whether or not you strictly enjoy the flying or will you also enjoy the challenges that come from running a business and making strategic decisions.
Nobody Will Pay for your Training As a solo practitioner, you will have to fund your own training. That means that you’ll have to spend some of your hard-earned business capital to maintain your currency and insurance approvals. Training has another downside: it takes time away from revenue flights. Training is a cost of doing business, so talk with a tax accountant to find out how much is deductible so that you can at least enjoy some tax benefits.
You Have to Be the Boss Heavy is the head that wears the crown, but being the boss is sometimes worse. Many people don’t realize how hard it is to make significant strategic decisions until they are the ones making all of the calls. Pick the wrong airplane to specialize in and you may sink your business. I’m pretty sure the guy specializing in the Hansa jet isn’t too busy these days. As the boss, you’ll be the one facing the tough calls when business is slow. You’ll have to deal with unhappy clients as the first (and only) line of defense. You have to pay the bills, schedule training, collect money, and do all the myriad other duties of a business owner.
You Won’t Get Unemployment Pay Independent contractors do not pay into the unemployment insurance tax fund, so they are unable to collect from it when they struggle to find work. In addition, if your business fails completely, you 52
still won’t qualify for unemployment pay.
You will not be able to join the millions on the
government dole. On the plus side, this is a very low overhead business to start and operate.
You May Not Be Covered by Worker’s Compensation Since you are the business owner, you may not qualify for worker’s compensation if you are injured in an accident at work.
You May Not Get Paid There are two ways that you may not get paid. One you’re probably thinking of, while the other one may not have even crossed your mind. If you are unable to continue lining up flights, obviously you’ll stop making money. In that case, you’ll need to network harder, move to a location with more airplanes, or rethink your contract pilot career. Setting aside money for the slow times is a prudent business strategy that should see you through most downturns. The other issue, though, is that your clients may simply refuse to pay you or underpay you. Having a good contract is important. Make sure all your clients sign it and send them an update once a year. However, when things get nasty and it comes down to it, court is often not a viable option for what is a relatively small amount of money. In many cases, the legal fees and risk associated with going to court mean that it is a losing proposition even if you have a very strong chance of winning. There is, however, a very effective tool you have in your arsenal. It’s the mechanic’s lien. A mechanic’s lien gives you a secured interest in the title to the airplane. If the owner doesn’t pay you for your services, he won’t be able to sell the airplane until you are paid in full. It may take a few years to get paid, but eventually you will get your money.
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Chapter 5 – Practical Pointers & Tips •
Maintain an adequate amount of capital in reserve.
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Constantly sell yourself to find new clients.
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Sick time, benefits, and vacation will not be paid by someone else.
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Network, network, network. Enough said.
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Your pension plan is self-funded.
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As a contract pilot, you are responsible for paying for your own training.
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As the boss, you will have to wear many hats and take responsibility for your decisions.
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A large percentage of your time will be spent looking for new clients.
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Because you are self-employed, you will not be eligible for unemployment benefits or workers compensation.
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You may not get paid by a client.
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Chapter 6
Finding Clients “You know they invented wheelbarrows to teach FAA inspectors to walk on their hind legs.” Marty Caidin
Go Where the Airplanes Are One of the most import aspects of being a contract pilot is finding clients. Without them, you are just an unemployed pilot. The most important factor in finding clients is location. Sure you can live anywhere you want, but if there aren’t any corporate airplanes there, your business will suffer.
If Business Is Bad, Try Harder Business is cyclical. If business is good, it will go bad. If it is bad, it will improve. As regular employee, when business is bad you typically don’t have to do more work. You simply have to keep your head down and hope that things improve. As a contract pilot, that’s not the case. You need to work hard in both good and bad times to keep the clients coming in and the coffers full. One of the easiest ways to do that is to work for an aircraft management firm. becoming the de facto way for owners to crew their airplanes.
Aircraft management is
And the burgeoning aircraft
management movement is custom made for contract pilots. This is a business that only uses contract pilots. All you have to do is find them and get your foot in the door. Finding them is easy. Aircraft management companies are located at almost every airport. This is one time that using your network is not essential. Just stopping at aircraft management companies’ offices and dropping off a resume goes a long way toward getting you on their roster.
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Specialize: The More Aircraft You are Qualified in, the More You Fly If you are insurance qualified in multiple airplanes, you will have more opportunity to pick up work. The key here is to be insurance qualified. That means time in type. Don’t go to FlightSafety (or any school) and drop twenty thousand dollars on a Cessna Citation type rating. It won’t get you any more work unless you have several hundred hours in type as well. Building a business takes time and there aren’t any shortcuts. The best way to get experience in a particular airplane is to fly as a copilot or as a mentor for an owner pilot. Once you build up some hours, then it is time to go to school. Don’t put the cart before the horse.
More Offers Mean More Confidence In addition to earning more money, getting more offers will increase your confidence in your business. This will make you more appealing to potential clients and management companies. Nothing succeeds like success. The more other airplane owners hear about you, the more likely they are to hire you. Being seen at the airport and flying trips is good advertising. Plus, it’s free!
Know Your Market One other big advantage to getting additional offers is that they can help you learn your market. As you fly more trips, you gain additional pieces of data on what is happening in your market. You will know who is buying a plane and who is selling. You will learn which pilots are leaving for other jobs and who is coming into the business. You will know which management companies are adding aircraft and more importantly, hiring pilots. You will come to a better understanding of what compensation your market will bear and how to get your fair share. That will make it tougher for other contract pilots to take advantage of you by trying to undercut the market.
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Build a List with Other Pilots In addition to asking other pilots for advice, you may want to pool efforts while you look for contract opportunities. Since a lot of the work is by word of mouth, it may be worthwhile to agree to work together to compile a list and then work on your own to try to land a flying gig. You’ll have to decide whether this is advantageous or disadvantageous to you given your strengths and weaknesses and those of the other pilots who you would be working with. Just make sure that you aren’t finding all the jobs and then sharing all of the information.
Make Email Work For You Configure your email and text messaging to display your website or tagline every time you text or send an email. All my emails include the tagline, “The King Air Contract Pilot” and my website address. It is amazing how many comments I get on this simple idea.
Use the Internet Try to use the Internet to your advantage when looking for management companies.
Since
management companies will be looking for clients, they should be easy enough to find online. You can search by type of flying they do, as well as by their location. Try to build relationships with as many as possible. This can not only be helpful in the short term, it can be helpful in the long term if you find yourself looking for extra work. If you don’t already have one, create a website for your business. Keep it simple, but list what airplanes you are current in and approved by the insurance company to fly. Put up a few pictures of you flying the airplane or standing next to it in an interesting (to the client) location. Have your resume on the site. Remember your website is a brochure. Everything on it should make the client want to contact you. Do not put your hobbies or other businesses on the site. Keep it clean and uncluttered. Most of all, make it easy to contact you!
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Chapter 6 – Practical Pointers & Tips •
Work hard regardless of how the economy is doing.
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Go where the airplanes are.
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Finding an aircraft management company is as easy as stopping by your local airport.
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Being insurance-qualified in multiple airplanes is the best way to find work.
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Create a positive buzz. The more airplane owners hear about you, the more likely you are to be hired.
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Become ultra-focused on what is happening in your market. Your market is the top three airports near you.
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As a time-saver, work in tandem with other pilots when gathering information on aircraft management companies.
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Utilize the internet to your advantage when trying to locate and gain information about management companies.
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Focus on building a relationship with the aircraft management companies you come in contact with.
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Create a webpage.
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Building a successful business takes time. There are no shortcuts.
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Chapter 7
Networking “Chicks dig us and guys think we’re cool.” Tom Krizek, airline captain
We have already established that networking is going to play a vital role in your ability to build a list of potential customers and then close deals when things are going your way. Now let’s break down some of the strategies that you can use to power your networking.
Building a Network Networking is something that you should be doing at all times, which is particularly helpful, as some of that will not feel like work at all. Any time that you are meeting people, whether your end goal is networking or not, you are growing your network. You’ll be in a position as a contract pilot in which you may need to ask pilots to help you get in touch with someone who may hire you. It’s always nice to be able to count someone as in your network before you have to ask them to help you out.
Make a List You should make a list of networking targets. These are the people that you think could help you in your career, but who are not currently within your network. Your hope is that by reaching out to them once or twice from there, you’ll be able to add them to your network.
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Keep a Card File You should keep a filing of all of the business cards you pick up from various people. Given the technology that we have access to today, you might be able to utilize your smart phone or tablet in order to keep all of those cards organized. Many phones offer apps that enable the user to photograph a business card and then upload the information. The app can convert the contact information from a photo to text, which can save quite a bit of time and effort on your end. Rather than having to flip through a rolodex or transcribe all of the information yourself, your business cards are at your fingertips. Regardless of whether your contact info is saved in the old-fashioned way or not at this point, you should work toward getting all of your information out of hard copy and onto a computer. Once you have all that information in your computer, make an effort to contact the people in your network on a regular basis. The more they hear from you, the more they remember you.
Keep in Contact With Other Pilots This is a critical portion of networking. Pilots hear information about contract pilot openings, and it is important that the information gets back to you. Now, of course, no pilot is going to share information about a position that he or she wants to go after. However, a lot of people hear about openings that don’t necessarily suit their availabilities or interests. You want to be close enough with your fellow pilots that they think of you when they hear of these new openings. You can then search your network and try to figure out who can recommend you to the operator or individual hiring a contract pilot. That’s the best way to land more contracts, as you’ll come with an inherent recommendation.
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Keep in Contact With Key People In addition to staying in contact with other pilots while networking, it is important that you talk to people who can help you land a contract job. Far too often, people in this business know just about every pilot at their own airport, but they hardly maintain contact with those in other positions who could actually help them find a flying job. It is important that your network cover not only multiple locations and multiple types of contract pilot work, but also multiple levels of organizational hierarchy. That is what will give you the best chance of lining up work. So be nice to the people behind the counter, the line guys and mechanics.
Join Professional Contract Pilot Associations Another way to get yourself into a position to hear more and more about potential job openings and needs for contract pilots is to join an online professional association. This is particularly useful for those who struggle with networking. Usually, a professional association will have a system of passing around information about job openings or potential openings.
Most are online and list numerous jobs for contract pilots.
Unfortunately, the jobs are usually not in your location but it is worth a shot.
Help People One important thing to remember in networking is that it’s not all about you. You need to help others. This is important from a selfish standpoint as well as an unselfish one, as helping people will build up goodwill for you. People you help directly who are not in a position to help you at the moment can tell their friends that you helped them out, which will make others look upon you favorably. Build relationships with people whom you can help who can return the favor in the short term. Those are some of the best networking relationships to have, because they are win-win right off the 61
bat. Most networking relationships are not win-win for a while; they involve some giving and receiving in one direction. Enabling both parties to be on the receiving end of favors is going to foster a stronger relationship that can be more and more useful in the long term.
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Chapter 7 – Practical Pointers & Tips •
There will be times when you need to call on someone for a favor. This is where networking is very beneficial.
•
Set up an organized list of your network contacts.
•
Keep the business cards you receive in an electronic file. There are even apps for this purpose.
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Maintain contact with fellow pilots.
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Network across multiple levels of an organization- not just those who would be directly responsible for giving you the job.
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Make it known to others that you are willing to help. They may return the favor some day.
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Joining a professional organization can assist in your search to locate job openings.
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When building your network, target individuals that live in a geographic area in which you may be interested in living.
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Consider buying software that can assist with your networking efforts. It can help remind you when you have been out of the loop for too long.
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Remember- networking isn’t about you, it’s about building relationships.
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Chapter 8
Looking for Work “The only thing worse than a captain who never flew as copilot is a copilot who once was a captain.” Anonymous
As we have already established, a large part of what you will be doing is looking for contracts and looking for work. It’s not the glamorous part of being a contract pilot, but it’s what brings in the money. Thanks to technology, there are a lot of ways to enhance your job search. Social media can play a role, both expanding your opportunities and putting your name in front of people who may need a contract pilot. There are plenty of other methods and strategies that you can use, and I’ll highlight a few so that you have a game plan when you begin searching for contract work.
Not-so-Cold Calling “Not-so-cold calling” is a method in which you use social media to find potential clients or those who might hire you and reach out to them. Through LinkedIn, Twitter, Facebook, or the social media network of your choice, you try to start conversations with potential clients. That puts you on their radars as someone with whom they are at least familiar. When you call you potential clients, you can introduce yourself and reference your connection. That should buy you a little bit of time to see if they are looking for a contract pilot. You need to capitalize on that time and make the most of it.
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Cold Calling If you are cold calling based on people who own an airplane and have hired a contract pilot in the past, you have a chance to get added to their list of contract pilots.
Calling Based on Referrals This is the best way to set up your calls. Try to get referrals from other contract pilots who can connect you with someone who has a need for a freelance pilot. The fact that someone referred you will be a stamp of approval. That means that you don’t have to spend much time convincing a potential client that you are a good pilot who is trustworthy and professional. You’ll still be selling yourself and your services, but you’ll be able to focus more on the value you can offer and less on trying to build trust. That makes referral-based calls the best way to look for work over the phone. So, how do you go about setting up referral-based calls? The best way to go is to ask your networking contacts from time to time if they know of anyone who might be using Contract Pilot services with whom they could connect you. If they do, your contact will not only be doing you a favor, but also the person he or she put you in touch with. If that individual or operator is happy with your flying and fills a need, then he or she will owe the mutual contact a favor as well. That means that you are giving your friend or contact a chance to earn the goodwill of two people. You shouldn’t feel guilty about asking around for some help. It may feel uncomfortable at first, but it’s going to pay off in the long run and people will be more receptive to it than you may realize.
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Ask Colleagues for Advice When you are trying to find contract flying work, it might be worthwhile to ask your colleagues for advice. In particular, you should try to get the assistance of experienced contract pilots. Pilots who have been working as independent contractors for a long time are more likely to know of a larger number of management companies. As such, they will be more likely to be able to give you information. If they are not working with a company currently, they may be more willing to share information with you, as you will not be taking away their share of the work. Experienced pilots will have more companies that they used to work for, and may be willing to share information. Don’t limit your requests for advice to lists and contact information. Ask your colleagues how they go about looking for management companies and get as much advice as you can on trying to find new clients. Many new contract pilots struggle with this initially, as they are not used to that aspect of the industry. Don’t worry! You’ll get the hang of it eventually.
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Chapter 8 – Practical Pointers & Tips •
As a contract pilot you will constantly be networking. This is a large part of the job.
•
Use social networking sites to introduce yourself to potential clients.
•
Increase your chances at success by targeting owners and pilots of the type of airplanes you fly.
•
Referral-based phone calls are a great way to get your foot in the door with potential clients.
•
Ask other pilots for referrals.
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Working contract pilots are much more likely to provide helpful information.
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Don’t be hesitant to ask your networking contacts if they know of anyone who might be interested in your services. Use this information to set up a referral-based phone call.
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Don’t give up on a potential client just because they may not be interested at that particular moment. Stay in touch.
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Twitter, Facebook, and LinkedIn are great tools to find prospective clients, but it is a process, not a sure thing.
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Place your own profile on social media sites, and you might be surprised who comes to network with you. It’s a great way to market yourself globally with little to no cost.
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Chapter 9
Client Types “What can you conceive more silly and extravagant than to suppose a man racking his brains, and studying day and night how to fly?” William Law
Clients behaving badly Passengers may come in all shapes and sizes but they seem to fit neatly into one of four personality categories. Categorizing your corporate passengers can help you learn how to deal with their peccadilloes and idiocies while providing superior customer service. It also prevents you from beating them to death with the crash axe. Learning how to profile your clients is one of the most important skills a contract pilot can acquire. It may seem politically incorrect, but it is a valuable tool in determining conduct business with your client. It can save you time, money and headaches. So, in no particular order, here are the top four personality types and how to deal with them: 1) The normal guy. Normal is a relative term, but he's the owner than maintains the airplane reasonably well and doesn't skimp on required items. He's not a penny pincher but doesn't throw away money either. He's the type of person that makes sure the crew is taken care of. If he has lunch, so will you. He listens to your advice about weather and treats you as a professional. He doesn't push back when you explain operational concerns. He is all about safety. He doesn't pretend to be an aviation expert and will consider your input. He cleans up the cabin before he deplanes. In short, he is the perfect client to fly for. He always pays you on time and you don't need to be worried about being stiffed. Fortunately, he makes up about 70% of your clients. 2) The narcissist. It is all about him. He doesn't even realize you are there. You are like the wing on the airplane; necessary to fly but nothing to him. He doesn't care if you are tired, hungry, sick or well. You, as a person, never enter his thought process. You are a tool- an easily replaced tool. He is not interested in your professional opinion. He wants to go when he wants to go, and by God, you
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better get him there. He is somewhat of a slob in the cabin and never cleans up anything. His airplane is usually well cared for but has a history of switching shops. He has a habit of firing the shop that was a little late getting his plane ready. Consider any gigs with this type of client as very tenuous. If everything goes right, he will re-hire you for the next flight. Of course, it is inevitable that weather or maintenance problems will cause you to butt heads. You will be replaced. Do not take it personally. He has a history of going through pilots too. Getting paid is normally no problem. Getting paid on time usually is a problem. This type of person does not care that you need money in a timely fashion. Since the world revolves around him, you are lucky to be drawn into his orbit. I'd recommend getting paid by credit card from this type of client at the end of each and every flight. A falling out is inevitable. Be prepared. Also don't hesitate to charge meals and incidentals to this type of customer. About 10% of the owners I have flown are full blown Narcissists. On the other hand, most of your clients are going to have a little narcissism in them. One hard and fast rule about corporate aviation is that no poor people own airplanes. These people did something to make a lot of money to afford this live style. They wouldn't be human if deep down inside they didn't think they were a little bit special. 3) The braggart. This guy isn't one of the owners. He's a friend of the owners. Or a friend of a friend. Anyway, he climbs on board with his family and immediately starts telling you how much money he has. The more he drinks, the richer he gets. He has no respect for the airplane and after landing, the back of the plane looks like a bowery house. Orange cheese crackers are ground into the carpet. Wrappers and beer cans litter the floor. Peanuts are stuck to the seats and sticky residue is on every window surface. He will embarrass you in the FBO. I once flew a guy who teed up his golf ball on the ramp at Hilton Head and try to hit golf balls across the runway. When challenged by security, he loudly proclaimed he could buy all of the airplanes on the ramp. At the completion of the flight, his credit card was declined when I tried to collect my fee. If you are faced with this type of client, be sure to get paid in full on the spot by credit card. The good news is that I have never had this type of client be the actual airplane owner. They are normally a camp follower and have to be put up with rather than catered to. In Texas, they have a saying about these guys, "All hat and no cattle." 4) The pilot. There are two types of these: the owner flown and the private pilot. The owner flown is usually a nice guy that is incompetent in the aircraft. You end up being a babysitter and learning to diplomatically give suggestions to remain safely airborne. The private pilot is more problematic. He 69
usually rides up front and regales you with stories of his exploits. These types aren't too bad but they can be a distraction during critical phases of flight. I normally tell them that they need to sit in the back of the plane for weight and balance purposes. If you have an owner flown client, it is very important to discuss who is actually Pilot in Command. Very frequently, these guys are little more than human autopilots following your suggestions as to weather avoidance and approach procedures. Flying regularly for an owner flown client is not a bad gig. They take good care of the airplane and the pilot. It can be tiresome to have to explain your every move and decision. The only downside to the private pilot client is if he has the owner's ear. Sometimes they become the owner's expert in all things relating to the airplane. Most professional pilots do not last long during amateur hour. Most of your clients are going to be great people to fly for, but occasionally you will get someone that you cannot stand. In that case, cut your losses and move on. Life is too short to fly for obnoxious people.
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Chapter 9 – Practical Pointers & Tips •
Learning how to profile your clients is one of the most beneficial skills you can acquire.
•
The 4 personality types most commonly seen are the “normal” guy, the braggart, the pilot, and the narcissist.
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The “normal” guy is the perfect client to fly for and treats you like a professional.
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The narcissist cares not about your needs and finds you easily replaceable.
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The braggart, though typically not an owner, is loud and boisterous.
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There are two types of pilot- the owner flown and the private pilot.
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The owner flown is typically a nice guy, just may be lacking in his ability.
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If you have an owner flown pilot, decide who will be the Pilot in Command.
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The private pilot can be problematic during critical phases of flight.
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If you have a client who consistently behaves badly, cut your losses and move on.
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Chapter 10
Buying Your Benefits “The most dangerous thing about flying is the risk of starving to death.” Dick Depew
One of the major challenges as an independent contractor is buying your own benefits, as they will not be part of your compensation since you are essentially self-employed. That means that you have to do more planning and look for the best deals. You’ll need to make more difficult decisions about what you’re willing to pay for or not, but there are advantages to that as well. Rather than being at the mercy of your employer for the quality and cost of your plans, you’ll be able to make your own decisions. Disclaimer: I am not a financial planner, tax attorney, or CPA. You should consult a professional before making any financial decisions.
Medical Policies The first place you’ll need to begin planning and shopping the markets is medical policies. These include health insurance, dental insurance, and vision care. Try to plan a budget and then look for the plans that fit in that price range. Make sure that you shop around, so that you can compare several deals. Make note of the quality of the policy and what is included and excluded, so that you can make decisions about the cost effectiveness of the policies.
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Finding Your Own Insurance There are a number of ways to go about finding your own insurance plan. The most important part is to make sure that you do not limit yourself in terms of where you begin searching. You may want to do some preliminary research on your own, but you should exhaust all avenues in looking for the best coverage at the best price. Don’t be afraid to get an insurance broker involved, as he or she can help by walking you through a lot of the options available. Just make sure that your broker does not have an allegiance to only one company, as you want to be able to consider various providers. You should consider the health insurance marketplace that will be set up as a result of the Affordable Care Act, in some states it will be able to offer good deals.
Veteran’s Plans and COBRA If you are a veteran of the United States armed forces, you may have additional options when it comes to health insurance. Those who are leaving full-time jobs for contract pilot work will have access to COBRA for a period of time as they transition. If you are a veteran and you are unsure whether or not you qualify for health care benefits, you can visit the Veterans Affairs website for more information. It points out that you can apply at any time and if you qualify you can receive coverage with no enrollment fees, zero premiums, and no deductibles. Meanwhile, COBRA coverage provides you with health insurance through difficult career transitions. COBRA stands for The Consolidated Omnibus Budget Reconciliation Act of 1985. COBRA forces many employers with group health plans to allow employees to keep participating for up to 18 months at their own expense when they are laid off or terminated. As such, it will not qualify for those who are leaving on their own. However, those who do qualify cannot be turned down based upon preexisting conditions. 73
Your Spouse’s Policy Another option is your spouse’s policy. If you are married to someone who has a full-time job that offers benefits, he or she may be able to include you in the coverage. In this case, you may have a great method of picking up health insurance without encountering any extra expenditure. At least the extra cost will be minimal. You’ll need to check on open enrollment periods and go through your spouse’s company’s human resources department. Don’t wait too long to seek information, though, as it can take time to enroll and get everything processed.
Individual Policies If you are unable to come up with any other alternative, you may need to purchase an individual policy for yourself. This is generally one of the more expensive ways to go, as it removes you from the mix to get discounted coverage based upon the group that you belong to. That takes away your biggest opportunity for cost savings, but it’s not the end of the world. It’s definitely important to do some research into how the Affordable Care Act is impacting your state’s health insurance marketplace. Some states are seeing big savings on the horizon, while others are predicting that coverage will become more expensive. Since looking for an individual policy keeps you from buying through a group, the best thing that you can do is get as many different quotes as possible so that you at least bring a lot of choice into the equation.
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Group Insurance As mentioned above, getting a group insurance policy can be a big benefit in terms of cost savings. There are organizations out there, such as the Freelancers Union, which offer opportunities to form groups and buy insurance that way. The key is that when a health insurance company is providing insurance to a group of people, the risk is being pooled across the whole group. That can save everyone some money, but especially those who have preexisting conditions. This is the reason that companies are able to get cheaper health insurance than individuals.
Reducing the Cost of a Policy There are a number of ways that you can attempt to reduce the cost of a particular policy. Most of them involve attempting to tweak the policy so that your coverage is a little bit less comprehensive with the tradeoff being at a lower price. You may consider increasing your deductible so that you cover more of your routine costs and the insurance policy covers you for more serious, unexpected expenses. This can provide you with the insurance in case you are in a serious accident or need an expensive surgery, but lower the month-tomonth costs if you are more or less healthy. If, on the other hand, you make a lot of visits to the doctor’s office, the cost may actually come out quite a bit higher when you factor in your total healthcare costs.
Disability Insurance Disability insurance is sometimes referred to as DI, and covers people in case a disability prevents them from carrying out their job.
According to DisabilityInsurance.org, more than 18% of
Americans have a disability and one out of every four Americans will suffer a disabling injury before retiring from the workforce. Unfortunately, disability insurance is prohibitively expensive or not available for contract pilots. One source that is worth looking is Harvey Watt and Company.
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Term Life Insurance Term life insurance offers you coverage for a limited period of time at a fixed rate. It is the cheapest form of life insurance available, given that it expires at a certain age and is thus usually only used to cover young, healthy individuals who are highly unlikely to die. Once again, your best course of action is to get as many quotes as possible and find the best deal if this is a benefit that you wish to purchase for your family. Keep in mind that it will be valueless when it expires. Make sure your policy covers aviation activity. One source for pilots is Pilot Insurance Center – www.piclife.com.
Tax-Free Savings Plans There are a number of ways to try to shelter your savings or retirement accounts from taxes, and the best thing that you can do is sit down with a tax attorney or accountant who can provide you with sound advice on the matter. Since the more money you can get into savings accounts earlier, the longer opportunity it has to grow, it’s important to maximize your input right away. In addition to tax deductions directly related to savings, there are a number of tax deductions that independent contractors can benefit from that may free up more money for savings. For example, deducting job-related expenses is perfectly legal and a great way to save yourself some money on taxes right away. You may be able to write off your training, your home office, even travel to and from the airport. Be sure to check with your tax advisor.
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Individual Retirement Accounts There are a couple of types of individual retirement accounts, both of which offer tax shelter for those investing in their retirements. There are a number of requirements to meet in order to qualify to save and withdraw from individual retirement accounts. In most basic terms, there are two types of individual retirement accounts. A Roth IRA takes contributions after taxes, so that when it is time to pull your money out and spend it in your retirement, you will not have any taxes to worry about. A Roth IRA typically makes sense for those people who are currently in a lower tax bracket than they expect to be in when they retire. Obviously, it makes more sense to pay taxes at the current rate than a higher rate. A traditional IRA basically works in the opposite manner. A traditional IRA offers you the option of paying no taxes up front and handling them later, when you make your withdrawal. This makes sense for people who are currently in a higher tax bracket than they expect to be in when they retire. Traditional IRA contributions can generally be deducted from your taxes the year of contribution. In this scenario, paying no taxes up front is a big savings, as it will not make the expenditure fall during a point in time at which the tax burden is already high. It is a good idea to consult with a financial expert before you decide exactly what to do with individual retirement accounts, as the math can be tricky. There are annual contribution limits, which you’ll want to research. Working as an independent contractor can open up the opportunity for you to invest a lot more into your individual retirement accounts. You may wish to take advantage of that perk.
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Simplified Employee Pension Plans A simplified employee pension plan gives employers the opportunity to contribute to traditional individual retirement accounts, which are set up for their employees. Any business is eligible to set up an SEP, according to IRS.gov. There are both benefits and drawbacks of working with a Simplified Employee Pension plan (SEP), and they are laid out before you. First of all, it is easy to set up and operate a simplified employee retirement plan, according to the IRS. In addition, there are lower administrative costs, more flexible annual contributions, and a requirement for the employee to match. Also, a SEP allows for the maximum annual contribution of any retirement plans.
Business Insurance You may wish to take out business insurance to protect your company against any problems that may arise. You’ll have to decide how much security is necessary and take a look at the policies that are available that offer the appropriate amount of coverage. This will obviously impact the cost, but the biggest way to cut costs for business insurance is to limit the amount of coverage that you seek. There are a number of different types of business insurance that could be available to you, and it is worth looking down the list to see if any are of interest. •
Property and liability insurance
•
Commercial auto pay insurance
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•
Workers’ compensation insurance
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Professional and specialty liability insurance
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Chapter 10 – Practical Pointers & Tips •
Since, as a contract pilot you are self-employed, be aware that you are responsible for your own benefits.
•
Do your homework when it comes to medical plans- compare the cost and coverage of health, dental, and vision insurance.
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Don’t be afraid to utilize the services of an insurance broker. They can sometimes find you the best deal.
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If you are married to someone who has benefits through their employer, check to see if you might be eligible under their plan.
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The cost of an insurance plan can be reduced by opting for a larger deductible.
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Several different types of business insurance are available. Check around and see if any suits your needs.
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The use of a tax-free savings plan can help protect your savings and retirement accounts from taxes.
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If you are in a higher tax bracket now than you expect to be when you retire, explore an IRA. They offer the ability to defer payment of taxes until the time of withdrawal.
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Suffering from a disability may end your career as a contract pilot.
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Chapter 11
Work Habits “Rule one: No matter what else happens, fly the airplane.” Anonymous As an independent contractor, it is absolutely vital for you to develop good work habits. Many people struggle once they have the added freedom that comes from being a contract pilot. While you certainly want to enjoy the freedom that comes from being your own boss, it’s extremely important to maintain enough discipline to get the job done.
Be Prompt This should go without saying, but some contract pilots arrive late and have to deal with unhappy customers. In addition, much of the flying that you will be doing on a day-to-day basis is absolutely vital to the success of your company. So it is vital to always be on time.
Make Sure Your Appearance is Acceptable to the Client You have to remember that you are a customer service representative to your clients, as well as a pilot, a negotiator and a salesperson. As such, your appearance is very important. You’ll want to make sure that you have a professional look. That means upgrading your wardrobe a little bit if it is no longer stylish. Groom yourself to be clean cut, while getting your hair cut a bit more often than usual. Find out what your client’s dress code is for pilots. Don’t show up in a uniform with epaulets if the other pilot is dressed in business causal. Remember, you are a guest of the client.
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Here are some key points that hopefully will seem rudimentary: •
Always iron your clothes. If you fly in on Monday, the first thing you should do Monday evening in your hotel is iron your clothes for the next day. Never show up at the airplane looking like you slept inside your luggage.
•
Always wear clean clothes. Don’t wear last week’s lunch or coffee stains. Make sure your clothes are properly washed after you wear them. You will be in close proximity with your client; don’t embarrass yourself because your clothes stink.
•
A little cologne or perfume can go a long way. Do not put on a lot of your favorite cologne or perfume. People are very different when it comes to smells. Just because you love it doesn’t mean others will. Some people are very sensitive to smells and can get nauseated.
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Hair. Wash it.
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Facial hair. If you have a beard or mustache, make sure it is properly trimmed. At any rate, a proper shave is needed each morning.
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Shoes. Don’t go to the airplane with your shoes looking like you’ve run through the dirt. Polish your shoes if they need it.
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Sleep. Get enough sleep before flying. This isn’t always possible with early flights but be sure to get adequate rest.
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Find out the client’s dress attire. One of the first things you must do is find out what the client’s dress code is. Once this is understood, up the ante a bit on your side. Be one of the sharpest looking contract pilots they have ever hired.
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Don’t be on time, be early. Along with proper professional dress, you need to be early.
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Be an Ethical Pilot You are in business to maximize profit, but at what cost? Contract flying presents a pilot with many opportunities for bad behavior. It is common to schedule an easy out-and-back trip only to have a well-paying four-day trip pop up during the same time period. What to do? Creating a set of rules to follow can protect you as well as your clients. In times of doubt, these rules will help you determine right from wrong. I hope the following rules will serve you as well as they have me. Here are the Ten Commandments for contract pilots: I.
Keep your commitments. Although it’s easy to make an excuse to the first customer and then take the higher paying job, you will pay for it in the end. As a general rule, in this business, two cancellations mean loss of trust. Your client will not trust you to fly him when and where he wants to go. He knows you will cancel and leave him high and dry. He will start looking around to find your replacement. It may happen slowly, but over time, you will get less and less work from the client.
II.
Obey the FARs. This should be obvious, but there will be times when clients push you to do things you know are questionable. Clients hire you for your flying skills, your experience, and your knowledge. They are not the aviation experts; you are. Operating in violation of the FARs exposes you to fines and loss of your license to earn a living. Your client may push you hard to fly fatigued, overweight, or into unsafe weather. Learn to say no and stick to it. A disagreement might even lead to losing your client, but if you bend the rules once, your client will come to expect it.
III.
Be honest. It would be easy to lie about your experience, schools you have attended, airports you have flown into, and even the hours you have in a particular airplane. It might be tempting to tell the client what he or she wants to hear. But if you lie to an insurance company about your experience, that’s fraud. And fraud might be a reason to void the insurance policy, leaving you on the hook for any damage done to the airplane while you are flying it. 83
IV.
Don’t steal. I’m not talking about obvious theft but rather the creeping abuse of trust that comes from flying for a client long term. Don’t pad the cleaning supplies expense account with a few items you need at home. Don’t turn in trip expenses that didn’t happen. When you fly for a client long term, you start to feel that you own part of the airplane. After all, you clean it and take care of it. Sometimes this leads to a feeling of entitlement. All you are entitled to is being paid per your agreement. And while we are on the subject, don’t steal another contract pilot’s clients. That’s about as low as you can go.
V.
Maintain confidentiality.
I’ve been privileged to fly some of the most successful
businesspeople in the country. I’ve overheard business plans and tactics. I’ve flown mistresses and movie stars. Through it all, I’ve maintained client confidentiality. Don’t talk about what you heard or saw. It’s no one else’s business. VI.
Be flexible. In this business, everything is subject to change. Schedules, destinations, and numbers of passengers are always in flux. Embrace it! It’s one of the reasons you got into this business. Remember, flexibility is the answer to indecision or uncertainty.
VII.
Report unsafe practices. Many contract pilot gigs involve flying in the right seat. You will experience a myriad of procedures and techniques. If you see a blatantly unsafe procedure, immediately bring it to the other pilot’s attention. If it persists, you are ethically bound to bring it to the management’s attention. Don’t expect kudos or repeat business for doing the right thing. You will sleep better at night, however.
VIII. Seek continuous improvement. Don’t rest on your laurels. Just because you finally got your ATP or a type rating doesn’t mean your training is finished. Read aviation journals, take an aviation or business course. Maintain a level of competency by continuing education opportunities and being selective in choosing your clients. In other words, do not take on clients and airplanes that you are not qualified to fly. Instead, work with a qualified pilot who can mentor you. Continue to give people a reason to hire you.
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IX.
Give back. Flying for a living is hard. It’s even harder when no one gives you a break. Take time to mentor pilots less experienced than you. Pass on information about jobs you can’t take to other contract pilots. Karma’s a funny thing: not only will you be punished for bad deeds, but you’ll be rewarded for good deeds.
X.
The golden rule. This is the most important one. Treat other pilots and clients the way you want to be treated.
Don’t Drag Your Feet When an opportunity presents itself to complete a sale or book a trip, you should take it and move on it immediately. If you delay at all, you add to the risk of the deal going to another pilot.
Remember That While You Are Working For the Client, You Are Still Selling Yourself It’s important to remember that when you are a contract pilot, you have to be able to wear a lot of different hats. Not only are you the pilot taking care of your clients, you’re also a salesperson. You need to sell yourself to clients so that they will be keeping an eye out to hire you again.
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Chapter 11 – Practical Pointers & Tips •
Working for yourself requires self-discipline.
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Be on time, every time.
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Always convey a professional image.
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Have an established dress code policy.
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Act fast when a job opportunity presents itself.
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Always remember to sell yourself to your clients.
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Give back – remember networking is a two way street.
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Develop good work habits.
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Maintain client confidentiality at all times.
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Chapter 12
Taxes for the Contract Pilot “There’s no such thing as a natural-born pilot.” Chuck Yeager Let’s get this out of the way up front. I am not an accountant or tax attorney. Consult one before using any information provided here. As a contract pilot, your taxes are going to be significantly more complicated than those of an ordinary employee. It is important that you focus and find all of the available deductions so that you can reduce your tax burden as much as possible. This will not only give you a boost in your take-home pay, it will allow you to reinvest into your business. That could free up extra money for marketing, equipment, training, or any other expenses that you need to cover. In some cases, those expenses could pay off as investments into your business that increase profits. As you can see, overpaying on your taxes due to ignorance is a huge mistake for a contract pilot. It is a good idea to work with a tax attorney or accountant so that you make sure that you are filing everything properly and avoiding any taxes that you don’t owe. This is especially true in your first year as a contract pilot.
Per Diems and Business Travel Expenses When you travel for business, you have a number of options related to how you deduct your expenses. For all of the portions of your travel that are business-related, you can deduct expenses – like hotel costs and transportation costs.
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You can claim a per diem, or daily meal allowance if you travel overnight. The IRS lists the daily allowances for each city that are based upon the local cost of living. Going with the per diem rate also enables you to avoid saving every receipt from every meal, since you are taking the flat daily rate deduction.
That can make your travel deductions a bit less
complicated.
The Home Office. How Much Can You Deduct? As an independent contractor, you are entitled to deductions based upon business expenses that you incur while setting up or maintaining your home office. If you rent office space, you are allowed to deduct that amount from your taxes. If you have a home office, you can make deductions based upon the percentage of your expenditure that is being used for business purposes. For example, if you have a room that is used only for business, you can deduct a percentage of your rent, mortgage interest, utility bills, repair costs, insurance premiums, and depreciation from your taxes. You must find the percentage of your square footage that is taken up by your home office and then apply the percentage to the total numbers above.
Filing Your Taxes As an independent contractor, you will need to make quarterly payments of your taxes to the IRS. This is because you do not have an employer withholding your taxes so that they are being paid throughout the year. It is your responsibility to estimate your annual income and pay federal taxes directly to the IRS on that estimated total. You must include a number of different taxes in the total amount. That includes Medicare, Social Security, and normal income taxes.
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The Freelance Contractor If you are working for an operator on a freelance basis as an independent contractor, then your taxes are filed as an independent contractor. You will not have anything withheld from your pay. It will be your responsibility to make your estimated payments and account for other tax expenses. You should keep this in mind when negotiating a rate as a freelance contractor, as your take-home pay will be less as a percentage than it would be from a normal paycheck. In general, you should estimate that you will owe approximately 15% more in taxes as a freelance contractor than you would as a regular employee. You need to account for your separate health insurance or retirement savings costs, as you will not have benefits, but that is not a tax matter. You may be wondering what is the difference of being a freelance contractor if you are essentially serving as a regular employee and paying more taxes. Here are a few ways to tell the difference. As an employee, your employer provides you with company equipment for your work, and you will need permission to take a day off. You only work for one company, at least primarily, and anything else is on the side and outside your normal hours. You also receive training from your employer, and they give you a place to perform your work in their office. They reimburse you for any expenses that you incur. On the other hand, a freelance contractor can take a day off without gaining the permission of a client. The independent contractor generally provides some of his or her own equipment to be used, and will work for numerous companies. The time during the normal workday may be split between these various companies. Independent contractors are usually not reimbursed for travel expenses, and will have to handle them on their own. Therefore, these expenses are tax deductible.
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If you are working as an independent contractor, but the situation sounds a lot more like the general employee listed above, your company may be taking advantage of you and forcing you to pay more taxes unfairly.
The Independent Contract Pilot As an independent contract pilot working for various clients, you will basically be running a small business. It may not have official business status for tax purposes, but you will be paying for all of the expenses and, rather than being reimbursed by a company, you will be taking whatever tax deductions are available to defer the cost. You’ll be responsible for handling all of your taxes, which is why your rate is about 15% higher. As an employee, your company pays for certain taxes, or a percentage of them, such as Social Security and Medicare. These account for approximately 15% of your income.
Schedule C As an independent contractor, you will need to fill out the IRS Schedule C form, which will enable you to list your business expenses and how much money you actually made from your business dealings, according to TurboTax. The full name of the form is “Profit or Loss From Business (Sole Proprietorship).” You’ll very likely also need to fill out a Schedule SE, which is “Self-Employment Tax.” These forms will list all of your tax responsibilities and your specific profits and losses broken down into various categories of business expenses. For example, you’ll list your office costs, travel costs, advertising costs and so on. There are five different parts of the Schedule C form, according to TurboTax. It includes all of your income from business in Part I and all of your expenses in Part II. If you had to purchase inventory, claim deductions for car expenses, or miscellaneous expenses, you may need to fill out Part III, Part IV, or Part V.
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Deducting Insurance and Medical Costs Insurance costs are often tax deductible as a self-employed taxpayer. At least one of the following conditions must apply in order to make health insurance premiums tax deductible: •
The individual paying the taxes was self-employed and had a net profit for the year.
•
The individual paying the taxes used one of the optional methods in order to figure net earnings from self-employment on a Schedule SE form.
•
The taxpayer received wages from an S corporation and owned more than 2% of the outstanding stock of the corporation with wages reported on a Form W-2.
If you find that confusing and have any questions, make sure that you talk to a tax accountant or tax attorney who can help you to understand the laws and regulations that apply to you as you file your taxes.
Get Outside Advice If Warranted Too many contract pilots try to file their own taxes without getting any assistance. Especially the first time around, it makes a lot of sense to get as much help as possible so that you do not overlook any possible tax deductions. On the flip side, you could accidentally underpay your taxes, which would again be a grave error, and could cost you dearly in tax penalties and legal action. While there is a cost associated with bringing in accountants or tax attorneys, they often pay for themselves by finding you extra tax deductions. They may be able to help you to structure your business so that you can cut down on your future tax burden.
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For example, some contract pilots benefit by filing as a corporation, which shields them from certain types of liability or taxes. If you have not yet considered that as a possible strategy to cover yourself from legal action and save some money at tax time, it’s worth pondering. Again, these are the types of decisions that you should not make on your own if you do not have any experience in those types of matters. Make sure that you consult with an expert before shaping your course of action. If nothing else, hiring an accountant will give you the peace of mind of knowing that you made the right call and have good prospects going forward in terms of your legal structure and tax liability.
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Chapter 12 – Practical Pointers & Tips •
Overcome a common pitfall of overpaying on your taxes by informing yourself of tax laws and deductions.
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Educate yourself regarding the different ways to calculate business expenses.
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Filing your taxes is done on a quarterly basis when you are self-employed.
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You will owe approximately 15% more in taxes being a freelance contractor than you would as an employee of a company.
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Schedule C is one of the main tax forms that you will be completing as a self-employed individual.
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Insurance costs are often, but not always, a tax-deductible expense.
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Don’t guess on your taxes. If you aren’t sure, seek the advice of a tax accountant or attorney.
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The cost of hiring a tax accountant is often times offset by the deductions they find you.
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Having a dedicated home office is also a great way to deduct certain related business expenses.
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Independent contractors are not normally reimbursed for travel expenses, though these are deductible as business expenses on your taxes.
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Chapter 13
Training “One day, long, long ago, there was this pilot who, surprisingly, was not full of shit, But it was a long time ago...And just for one day.” Anonymous As a contract pilot, you will normally be responsible for your own training expenses. Some owners will pay for your training but this usually means they have the first right of refusal on your schedule. Unless they fly a lot, this is a money losing proposition. Training is expensive and has to be budgeted. As a contract pilot, the four most important factors in choosing a training facility are: 1) Duration of training. 2) Price of training. 3) Insurance approval. 4) Distance required to travel. Notice, I didn't mention any thing about quality. Any school you consider has to be insurance approved for the type of airplane you are flying. So as far as the insurance company is concerned, one school is the same as the other. More about quality later. So, which school to choose?
Duration Of course, the large schools immediately pop to mind- FlightSafety, Simuflite, and SimCom. All are good schools. I recommend you stay away from them. Here's why: All of those schools are FAR Part 142 approved. That means they have an FAA approved syllabus which specifies how much time will be devoted to each subject area. If their approved training course outline calls for 2 hours of ground training on the wheel brakes, you will spend 2 hours studying the wheel brakes 94
(minus any approved breaks and time wasted by the one guy in the back of the class telling hangar stories). As a contract pilot, time is money. So if you are a King Air driver and have a daily rate of $500 a day, a 4 day recurrent course will cost you $2000 in lost revenue before you even pay for the training! FlightSafety offers a 21 day initial type rating in the King Air 350. So, you would be down $10,500 before you paid FlightSafety the $25,000 course fee. The shorter the course, the better for your bottom line.
Price Finding the best price for training is simple. Just go on the web and type in King Air training or Citation Training and you will find dozens of providers. There are prices for just about any budget as well.
Insurance Approval This is probably the most important aspect in choosing a training provider. Of course, the big three are approved with no questions asked- however, you will pay for that convenience. Here's how the insurance approval game works. You call up the owner’s insurance agent and tell him/her that you want to go to XYZ Citation school. The agent looks on his list of approved schools and if it is on there, you are good to go. If not, things get a bit more complicated. Most agents will do a little digging and find out how to get the school approved. Some are lazy and just say no, the school is not approved, and you have to go to one of the big name schools. Remember, the agent is working for the owner of the airplane, not you. He doesn't have much incentive to try to save you money. As a contract pilot, you may be able to get the owner to call on your behalf. Or get the school to get involved. Sometimes it works, sometimes not. If the owner has insurance with a very large liability limit you may have to go to a simulator school.
Distance to Travel
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The standard rule is to add about 20% to the estimated cost of travel, hotel and rental car when traveling. It holds true for training as well. The further away the training facility is, the more you will be out of pocket. Try to pick a training provider that is within driving distance.
Quality The quality of flight training is not in direct proportion to the amount paid for it. Searching the NTSB accident data base shows FlightSafety, SimCom, and Simuflite pilots are involved in accidents at the same rate as other training facilities. What makes a good initial or recurrent training experience is the instructor. You want someone with great teaching skills and a lot of experience in the type of airplane you are flying. If you find that person, keep going back to them! All the expensive graphics, computer based training and multimillion dollar simulator won't matter if your instructor hasn't flown the airplane. All you will get is regurgitated information out of a training manual and I sure do not want to pay top dollar for that. The best way to research flight schools is on the internet. Type in the type of airplane you need training on and see what pops up. Use keywords such as King Air Training or Pilatus PC12 Training.
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Chapter 13 – Practical Pointers & Tips •
Although occasionally an owner may pay for your training expenses, typically you will be responsible for these costs.
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Make sure your training provider is insurance approved.
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An FAA Part 142 approved school isn’t always the best route to take. The courses may be longer, which will affect your ability to earn income.
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Don’t hesitate to ask the owner’s insurance agent if they are able to do some research and find out how to get a school approved.
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A basic internet search can help you easily compare training costs.
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The cost of the training school is not directly proportionate to the quality of the training.
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The instructor makes or breaks the training experience.
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Find an insurance-approved instructor who has a lot of experience in the airplane you are flying.
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If possible, select a training facility that is within driving distance.
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The big 3 training schools may seem like a convenient option, but they are expensive.
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Chapter 14
Frequently Asked Questions “When asked by someone how much money flying takes: Why, all of it!” Gordon Baxter Q: Can I really make $100K as a contract pilot? A: The short answer is yes, but with caveats. You have to be in the right location, preferably within 2 hours driving time of 3 major airports. You have to be willing to talk to other pilots and solicit business. If you can't or are unwilling to do this, your income will suffer. Q: Does the type of airplane I fly affect my income? A: Yes and no. I don't mean to waffle but a Gulfstream contract pilot can earn up to $1500 a day. But there aren't that many Gulfstreams so your opportunity costs are much higher. The Cirrus, on the other hand, pays about $350 a day. But you have to fly 4 days to make the same money as a Gulfstream pilot makes in one day. If your network includes a lot of Gulfstream contacts and you have the flight experience, by all means pursue that path. If you are just breaking into contract flying, the Cirrus might be a better choice. Q: I'm not very good at talking to other people. Can I still fly as a contract pilot? A: Probably not. This is a word of mouth business. If you can't talk to other pilots and offer your services, it will take an inordinate amount of time to build up a client list, that is time that you will not be paid for. Q: I have 20,000 hours and just retired from Delta. Should I get a type in a corporate jet to enhance my marketability? A: No. Nein, Nyet, Non, Ochi. I think you get the point. This is the biggest mistake made by pilots trying to break into contract work. Without significant time in type, the insurance companies will not cover you. This is aviation's version of "what have you done for me lately?" Unless you have a firm offer from a legitimate company, in writing, saying that if you pay for your own training, they will use you. And that is not likely. Sorry, Captain, but it is back to the right seat to build time in type before you even consider paying for training. Q: Should I have a written contract? A: Yes, it spells out your pay and working conditions. There is a sample contract in Chapter 2.
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Q: Would I be more likely to get contract work in the right seat of a King Air if I attend a school? A: Conceivably. If two contract pilots are vying for the same gig and one has King Air school and one doesn't, I would pick the pilot that is easy and fun to fly with. King Air's (and most other turboprops) do not require a copilot. Usually you are there because the owners feel safer with two pilots. Q: I don't empty toilets. Will this affect my ability to get a contract gig? A: Not unless you tell the owner that emptying the loo is a deal breaker. Just tip the line guy to do it. Tip him well. Just make sure it gets done and don't tell the owner that you don't do toilets. Q: Some of my clients have the bad manners to call me at the last minute for a multi-day trip. I know they knew about the trip in advance. How do I break them of this habit? A: You don't. The reason they have a private airplane is convenience. Otherwise, they could take the airlines. Look at last minute flights as job security. Q: The owner of the plane always wants to include me as part of his entourage when we get to the destination. I just want to go to the hotel. Any suggestions? A: What I do is tell the owner politely that I have to get the airplane ready for the next flight and it will take several hours. They have never offered to wait for me.
Q: How early should I plan on arriving before departure time? A: A minimum of one hour before scheduled wheels up.
Q: I have too many clients. Should I cut the ones that don't use me very often? A: No, this business is feast or famine. I would farm them out to an "associate" until things slowed down. But keep them as your clients. You never know when you may need them.
Q: I sometimes have an out and back trip booked when a better paying 3 day trip opens up. Is it ok to farm out the short trip? A: That is a judgment call. Is the out and back a regular client? A one time thing? My rule of thumb is my most important client has priority regardless of trip length. But only if I can cover the trip I committed to in the first place. Q: Frequently, I have two short trips booked on the same day. Should I split my daily rate? 99
A: No, your daily rate covers much more than just flying the airplane. It covers all you do to get to the airport, get the plane ready, fly it and put it away. Plus you have ongoing training, taxes, and business expenses.
Q: I refer some of my trips I can't cover to another contract pilot. He doesn't reciprocate. What should I do? A: Ask him why he doesn't send business your way. Maybe he hasn't had enough business to have the opportunity to send some your way. Or he could be a jerk, but I would talk to him and find out.
Q: How much money should I keep in reserve? A: You need to have at least 3 months of money set aside to continue the business in the event no income is coming in.
Q: I’m not very good at selling myself to people. Is this really necessary? A: Yes, selling yourself isn’t bragging or boasting. It is telling a client how you can help him fill a need.
Q: Do the insurance companies frown on being insured in more than one airplane? A: No, as long as you successfully complete an initial or recurrent program and have time in type, they will be happy to insure you.
Q: Do I need a website? A: Yes, but a one or two page site will suffice. Just list your credentials and the type of aircraft you are qualified to fly. A few photos wouldn’t hurt either.
Q: How can I get information about what is happening in the Cessna Citation market? A: The easiest way is to set up a Google Alert. Just type in the airplane you are interested in knowing about and you will get updated information every day. Q: I’m not comfortable talking about myself. Is it really necessary? A: Conversations are a two way exchange of information. It really isn’t all about you. 100
Q: How do I build up my network? A: Your network is your relationship with other people. The best way to get them to know about you is to talk to them. Q: Every time I tell people I'm a contract pilot, they seem to lose interest in talking to me. Any suggestions? A: I'm pretty sure it is how you talk to them. Remember, relationships and networking is a two way street. It cannot be all about what someone can do for you. See what you can do to help someone out before you ask for a favor. Q: I don't get a chance to talk to the owner of the airplane one on one very often. He is always surrounded with people! How can I get more flights if I can't talk to him? A: you already answered your own question. Talk to the people around him. Bring them into your network. I guarantee they talk to the boss. Q: Should I join one of those web based pilot referral sites? A: if it's free, go ahead. If you have to pay, I would skip it. I have never landed a gig from one of those sites. But the whole idea is to get your name out in front of those who need contract pilots.
Q: I’ve contacted several owners and they have been non-committal. Any ideas? A: Just because they don’t need you today doesn’t mean they won’t need you tomorrow. Stay in touch. A good rule of thumb is to contact them about once a month to keep your name at the top of the list. Q: I’m not on twitter, Facebook or any other social site. Do I need to be? A: The short answer is yes. Social sites are not about posting pictures of your cat. They are networking sites. They put your name and skills in front of people who may need your skills. It is like fishing, the more lines you have in the water, the more bites you are going to get. Q: What do I post on Facebook or Twitter? A: The best posts are about what you do. A picture of the plane you are flying on Facebook gets a lot of attention. Always put a subtle sales pitch in the text box, i.e. great contract gig flying this Cessna 421, etc… Q: I overheard the boss discussing selling the airplane. Should I tell his full time pilot? A: No, anything you hear is confidential. 101
Q: What should I wear showing up at a new gig for the first time? A: I always ask what the dress code is for the flight crew. If in doubt, a shirt and tie will always suffice. Oh, and pants. Always wear pants. Q: An owner called me to take a trip. I know he regularly uses another contract pilot. Should I take the trip? A: Yes, but call the other contract pilot to give him a head’s up.
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About the Author A little about me and what I do. For over twenty years, I worked for a large airline. I started as a Flight Engineer, moved to First Officer, was promoted to Captain and then became a 737 Instructor. That's where I gained most of my experience. But, even while flying for Piedmont Airlines, I flew as a contract pilot on my days off. For two decades I balanced flying for the airlines with contract flying. In 2005, I took an early retirement from US Airways and plunged into contract world full time. In addition to flying, I'm the author of several aviation training books including "The Contract Pilot's Handbook" and the King Air Training Workbooks series. Here is my experience: I recently retired as the Chief Pilot of a contract management company flying King Airs. Whitney maintenance courses.
As an A&P mechanic I have attended numerous Pratt &
My experience includes 20,000+ hours as a Captain with US Airways. I am licensed in Single and Multi-engine airplanes as an ATP, CFI, CFII-MEI. My type ratings include Airbus A319/320/321,Beechcraft BE-300, Boeing 767/757/737, DC-9, Fokker F100/F28, EMB-110 and the Cessna Citation CE-500. Also, I hold a Flight Engineer Turbo-jet rating and an A & P mechanic's license. I have 30 years of experience flying turbine aircraft. Additionally, I have authored nine aviation textbooks published by McGraw-Hill and I have written 4 King Air training manuals.
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