How to make a small fortune in aviation

[Yellowstone]

….start with a big one. Or so the saying goes I’ve heard.

I’m a low hours private fixed wing pilot that has had some success in business. I’ve had an opportunity come my way to invest in a 133, 135, 137 helicopter operation focused mainly on wildfire services up the the Rocky Mountain region.

Let’s assume the business is managed well and efficiently. Generally speaking, is aviation a good, decent, or horrible idea?

The goal would be to spin off enough profit to pay my mortgage, a good salary for a hired pilot, and maybe set something aside to slowly grow the fleet to two, three, or even four aircraft.

My current business is highly regulated, capital intensive, high barrier to entry, and technical which seems similar to that of a helicopter business. So it seems like a good fit for my management background.

Aviation; guaranteed money pit or good opportunity?

 

[Jim Carpenter]

Sounds like you're looking at an already existing operation, yes? Probably much easier than starting a 135, etc. from scratch. If not already qualified for USFS/OAS duty, that's a whole other level of hoop-jumping, inspections, checkrides, installation of USFS radios, etc. Do-able, but lots of setup effort. You mention hired pilot, don't forget ground crew/mechanic/service truck that pretty much accompanies every mission save the small few that may operate directly from your home base.
There does seem to be a relative scarcity of operators for wildfire services. One issue, of course, you don't make any revenue on slow seasons, if you don't fly, though there are (standby) duty contracts, and such. Though, there will probably be no lack of busy wildfire seasons in our lifetimes.
I'd say, investment not for the faint of heart; sowbelly futures, or "plastics" might be less stressful, but, it is possible to make a living in that sector of aviation.

 

[MBDiagMan]

It’s easy to make a small fortune in aviation. The way you do it, is to start out with a large fortune.

 

[Yellowstone]

Jim, it is an existing operation with all the relevant certifications and authorizations. I think it just needs new blood and fresh effort. With all the infrastructure there, those fixed costs already there to support one airframe, I’ve got to figure out if adding another aircraft to the fleet has a disproportionate increase on profit vs expense.

 

[Doc Holliday]

Those certificates and authorizations may or may not flow smoothly to a new owner, especially one with zero experience in wildfire control.

Plus, the few operators in that field are very territorial.

What would your investment be if you lost your major contract? Have enough capital to survive a bad year or two?

Then there is always the what if of the company surviving a fatal crash of your one ship operation.

If you have the capital to jump in, IMO you should seek out some other investments.

Last thought. If this company was viable, one of the other in that business would be buying them out. Perhaps they are waiting for it to fold to step in.

Food for thought.

 

[A Martin]

I would much rather be the well paid helicopter pilot who makes almost a years salary during the busy forest fire season .... lay on the beach the rest of the year .... while the company owner frets about keeping the bills paid.

 

[LevelWing]

Those certificates and authorizations may or may not flow smoothly to a new owner, especially one with zero experience in wildfire control.

Plus, the few operators in that field are very territorial.

What would your investment be if you lost your major contract? Have enough capital to survive a bad year or two?

Then there is always the what if of the company surviving a fatal crash of your one ship operation.

If you have the capital to jump in, IMO you should seek out some other investments.

Last thought. If this company was viable, one of the other in that business would be buying them out. Perhaps they are waiting for it to fold to step in.

Food for thought.

I see this sentiment a lot, especially with regards to aviation. While your other points are valid and should be taken into consideration for business risks, the bolded parts puzzle me. He said he already operates a business that has similar characteristics: high barrier to entry, capital intensive, and highly regulated. At the very least he is doing an assessment to look at the viability. But if no one tries to make it in aviation because it's too risky, or if it's not viable according to some - otherwise someone else would've bought it up or is waiting for the right moment - then smaller aviation outfits will never progress forward. No doubt it's already a challenge and extremely risky to try and start an aviation business, but I'm not sure that discouraging people from trying is helpful to advancing general aviation.

 

[Doc Holliday]

I see this sentiment a lot, especially with regards to aviation. While your other points are valid and should be taken into consideration for business risks, the bolded parts puzzle me. He said he already operates a business that has similar characteristics: high barrier to entry, capital intensive, and highly regulated. At the very least he is doing an assessment to look at the viability. But if no one tries to make it in aviation because it's too risky, or if it's not viable according to some - otherwise someone else would've bought it up or is waiting for the right moment - then smaller aviation outfits will never progress forward. No doubt it's already a challenge and extremely risky to try and start an aviation business, but I'm not sure that discouraging people from trying is helpful to advancing general aviation.

His money, he can use it as he sees fit.

No one is discouraging, he asked for opinions and I gave one. Read the OP’s last sentence.

Would you be willing to invest in this?

 

[LevelWing]

His money, he can use it as he sees fit.

No one is discouraging, he asked for opinions and I gave one. Read the OP’s last sentence.

If you have the capital to jump in, IMO you should seek out some other investments.

This could be seen as discouraging him from investing in this business.

Would you be willing to invest in this?

Non-sequitur. Not only am I not interested in the business that he is, even if I was, I don't have the same information to form a risk assessment or have any idea of the value of pursuing this.

 

[Doc Holliday]

This could be seen as discouraging him from investing in this business.

Oh give it a break. The OP asked for both sides, good or bad. Helicopters are capital intensive with narrow profit margins, and the operations (133, 137 and aerial firefighting) are risky, which equals high risk.

One of the larger players recently was testing a new bucket system with a Firehawk helicopter. They lost the helicopter and 4 crew members. And they’ve been doing this for decades.

Non-sequitur. Not only am I not interested in the business that he is, even if I was, I don't have the same information to form a risk assessment or have any idea of the value of pursuing this.

That’s apparent.

 

[TCABM]

One thought that crossed my mind is where to pivot the operation in the fire off-season. That may be where the growth opportunity lay.

You also mentioned invest in vs buy the operation outright. If it’s not an outright purchase, are you getting a controlling interest so that you can make the changes you desire? What happens if the other investors bail over disagreements?

The numbers are what the numbers are what they are. That should give you an idea if it’ll be profitable to the level you want.

 

[weilke]

About how big of an existing business is it (how many employees beyond the owner) ?
Would your key personnel (that is on the certificates) stay or are they current owners who will leave the moment they have their beer money ?
Are you already in the federal contracting business ?

 

[Yellowstone]

Thank you all for the comments so far. Good feedback and perspectives. I’ve been doing my research and calling folks I know in the heli services business. There seems to be two prevailing perspectives. The small guys tend to struggle a little while those that landed more frequent or bigger contracts and grew their fleets are killing it. It’s about economies of scale, I guess is true of nearly everything. But overall from what I hear from the guys that are doing it that I know it is positive.

Risky flight operations and safety. That seems like the real kicker and it’s come up every time. These types of ops are dangerous, even when done right. So that is a gut check for sure.

I’ve got enough business chops to discern well run companies from bad. And I appreciate the feedback. A public post on an Internet forum is only one of the many perspectives I gage. Opportunity, risk, reward, time, and effort. There are a lot of factors at play. But when they all come together perfectly, some pretty awesome stuff happens!

I would much rather be the well paid helicopter pilot who makes almost a years salary during the busy forest fire season .... lay on the beach the rest of the year ....

But this perspectives right here above…well unfortunately doesn’t go far to advancing the state of art, helping others and your communities, creating jobs and real wealth, or the ability to retire early. Everyone has priorities and goals in life and to each their own. But I wouldn’t hire anyone with that attitude in my organization.

 

[Geosync]

Yes, aviation is difficult industry to make money. Government contracts help however. Territorial incumbents can conspire to keep you out unless you’re connected. A bad accident can set you back quite a bit, so review insurance rates and limits before jumping in. But during the off season you can pivot to utility work, but with the ever growing fire problem out west there probably won’t be any off season soon.

Aviation insurance is it’s own animal, especially helos due to the losses they incur. I don’t know if an aviation endeavor is ever a GOOD idea in terms of profitable business, especially to pay off a mortgage, but the ones that can weather the rough times seem to be people who have made(still are making) money in another industry first.

 

[A Martin]

But this perspectives right here above…well unfortunately doesn’t go far to advancing the state of art, helping others and your communities, creating jobs and real wealth, or the ability to retire early. Everyone has priorities and goals in life and to each their own. But I wouldn’t hire anyone with that attitude in my organization.

That works both ways ... I could not work for a technocratic bean counter like you .... I am the opposite of you .... I walked in off the street and trained to fly helicopters .... simply because I love helicopters , it is a passion .... when job opportunities went soft in the early 1980's I started an automotive tech shop .... sold it in the 1990's and retired at age 53 .

I also wanted to ask you why the helicopter business you are looking at is for sale ..... got to be a reason.

 

[Yellowstone]

I also wanted to ask you why the helicopter business you are looking at is for sale ..... got to be a reason.

Combination of right offering coming along and prospect of retirement I suppose.