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I'm thinking about a starting a helicopter tour business

tour tours helicoptor

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#1 Jfineman

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Posted 10 March 2018 - 03:51

My name is James I've been thinking about the prospect of starting a helicopter tour business. I am in the infant stages however I have been doing some research and I am starting to get an idea what all is involved. I am personally not a pilot. Most of the forum threads I have been reading are tiered towards the pilots discussing the wages they get from the tour companies and which from the sounds of it, they are not always that great. What I want to do is discuss this business side of things with someone who has either owned a helicopter tour business or has worked within one to know the inner workings of the business. As I said, I am in the beginning stages so I just want helpful information at this point.

My initial idea would is to partner with an experienced pilot and to take care of 100% of the financing and back end work. I would possibly get my license at some point but I am more interested in the business then flying. I would want to do it professionally and right with regard to properly maintaining the aircraft so the pilot/partner would need to have the experience necessary to facilitate proper maintenance and repairs one way or another.

I've done helicopter tours in Vegas before and I absolutely loved it. The price per head back then was $180 and up to 5 passengers were in the air at one time for 15 minutes each. Time is lost between flights so even if you consider only flying 1-2 tours per hour, an average of 5 hours or more per day, it should gross $4,500 per day. I realize there are seasons and weather to consider so I would calculate for downtime. The specific market that I have in mind would be non stop and I'm great at marketing so I have no doubts about filling tours. To my knowledge, it does not exist In the market to the capacity I would be interested in doing it. I have read that some cities limit the amount of flights per day. I'm not sure but there may be cities that do it allow tours at all and/or have tighter restrictions. I want to know exactly where to start to find this information out.

My email is jfineman1@yahoo.com if you would like to DM me or we can communicate publicly in this thread.
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#2 chris pochari

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Posted 10 March 2018 - 17:18

This is my goal as well, I never asked business questions on this forum for fear of being made fun of for being naive. I'd love to talk about this, I have access to capital, what financing plan do you have in mind?



#3 r22butters

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Posted 10 March 2018 - 18:11

I remember once, years ago, driving around Tahoe, I passed an empty lot accross from Caesars and thought, that'd be a good spot to park a trailer and a 44, and give people a nice $20 ride over the lake. :)
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Side boob is just so awesome,...yes it is!

#4 klas

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Posted 10 March 2018 - 20:00

I remember once, years ago, driving around Tahoe, I passed an empty lot accross from Caesars and thought, that'd be a good spot to park a trailer and a 44, and give people a nice $20 ride over the lake. :)


Too late; someone already does this.

#5 Jfineman

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Posted 11 March 2018 - 07:46

This is my goal as well, I never asked business questions on this forum for fear of being made fun of for being naive. I'd love to talk about this, I have access to capital, what financing plan do you have in mind?


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#6 Jfineman

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Posted 11 March 2018 - 07:48

I have access to capital both my own as well as investors. I'm more interested in knowing if it's profitable from a business stand point. I can see that some cities charge a lot and stay busy. I can't see how you could lose if that's the case. I'd be happy to pay the pilot very well also. Feel free to email me and we can connect to talk about it more. My email is in the main thread

#7 MLH

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Posted 11 March 2018 - 11:32

I did this indirectly in the form of a leaseback with an existing tour/training business years ago with an R44 Astro. My aircraft was used exclusively on the tour side. It was a profitable venture with a major side benefit being that I was able to use the aircraft for personal use.  

 

Mike


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#8 chris pochari

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Posted 11 March 2018 - 19:58

I have access to capital both my own as well as investors. I'm more interested in knowing if it's profitable from a business stand point. I can see that some cities charge a lot and stay busy. I can't see how you could lose if that's the case. I'd be happy to pay the pilot very well also. Feel free to email me and we can connect to talk about it more. My email is in the main thread

Are you looking at starting with a turbine helicopter? you would need at least $600k-1 mil. It can be profitable, the more people you can carry per hour the more profit you will make. If you have a turbine helicopter, like an AS350 with a double front seat your cost per hour might be $1000 without debt payments and maybe $1700 if you have debt, so per person cost for one hour if you carry 6 people is $160, with debt payments your cost is $280 per hour, as you long as you charge more than that you can cover costs and add profit to make a reasonable return on capital. The barrier to entry is very high, which is a good thing from an investment standpoint. The biggest risk is if cities or national parks restrict helicopter tours like New York did. Also remember if you buy a used turbine helicopter your overhaul cost is much more per hour than a freshly overhauled or new aircraft with 3500 hours left. Lets say you buy a used AS350 for 600k, looks cheap right? but it has only 900 hours left, you have 300,000k to spend on your engine and maybe another 300,000 on the airframe, if you fly 400 hours a year you have to amortize that cost over the 900 hour period of operation. your overhaul cost per hour is $660, although still cheaper than buying a new helicopter and having debt payments. Insurance also has to be taken into consideration, helicopter insurance is usually around 2-4% of the new aircraft value, I learned this from Mischa Gelb, so I'm not pulling these number out of thin air. I was able to talk to him at Heli Expo and learn as much as I could. Liability insurance is a requirement for part 135 operation, Hull insurance is your decision. Minimum Insurance requirements are as follows.

(2) U.S. air taxi operators carrying passengers in air transportation shall, in addition to the coverage required in paragraph ©(1) of this section, maintain aircraft accident liability insurance coverage for bodily injury to or death of aircraft passengers, with minimum limits of $75,000 for any one passenger, and a total per involved aircraft for each occurrence of $75,000 times 75 percent of the number of passenger seats installed in the aircraft. (d) Canadian charter air taxi operators registered under part 294 of this chapter shall maintain the following coverage: (1) Third-party aircraft accident liability coverage for bodily injury to or death of persons, including nonemployee cargo attendants, other than passengers, and for damage to property, with a minimum coverage of $75,000 for any one person in any one occurrence, and a total of $2,000,000 per involved aircraft for each occurrence, except that Canadian charter air taxi operators operating aircraft of more than 30 seats or 7,500 pounds maximum cargo payload capacity, and a maximum authorized takeoff weight on wheels not greater than 35,000 pounds shall maintain coverage for those aircraft of $20,000,000 per involved aircraft for each occurrence.

From what I've read hull insurance accounts for 75% of total insurance cost. The lower the hull value the lower the premium is. Self insurance is also an attractive option for lower value aircraft, Insurance companies are well known to come with with various reasons not to pay up anyway. You cannot self insure liability.

As far as getting a Part 135 cert, it is not impossible but will take lots of paper work, Mischa told me you have to like paper work! There are five different types of part 135s.

Single Pilot:

This is the simplest type of certification. This allows an operator to have only one pilot available for revenue flights. No additional PICs or SICs may be used. This certificate only requires a Letter of Compliance, no General Operations Manual or Training Manual are required. Depending on the aircraft, an MEL or AAIP may be required, along with other documents depending on the authorizations needed. This certification also does not require any key management personnel (Director of Operations, Chief Pilot, or Director of Maintenance).

For some operators, this is all they need. If you only plan to operate one aircraft and use just one pilot, this may be a good starting point.

Other operators will use this certification to gain the required experience operating under 135 in order to become qualified to be a Director of Operations or Chief Pilot.

Single Pilot in Command

This certification is similar to the Single Pilot, except it is typically used for aircraft requiring more than one crewmember. This certification permits one PIC and up to three SICs. The requirements for key management may be reduced by the FAA depending on the nature of the operation. A Letter of Compliance is required. However, in many cases the FAA will remove the requirement for a General Operations Manual and Training Manual. However, an MEL and AAIP may be required, along with any required documents for other authorizations.

Basic

This is the minimum certificate for any operator that needs to use more than one PIC. The Basic certification permits up to five total aircraft (with certain other restrictions), and up to five pilots. The pilots may be PICs or SICs. This certification requires all three key management personnel, however the FAA may permit two of these positions to be held by one individual, provided they are qualified to hold both positions.

This certification requires a General Operations Manual, a Training Program, and Letter of Compliance at a minimum. As is the case with the other certifications, additional documents and manuals may be required depending on the authorizations needed for that operator. Aircraft having more than 9 passenger seats will require additional maintenance documentation and procedures, along with a General Maintenance Manual.

Standard 135 Certification

Sometimes referred to as an unlimited certification, this authorization does not restrict the number of pilots or aircraft. Because this certification does not restrict the size of the operator, all three key management personnel are required – no management positions can be combined. Required manuals and documents are otherwise similar to the Basic certification. Aircraft having more than 9 passenger seats will require additional maintenance documentation and procedures, along with a General Maintenance Manual.

Commuter

This certification is the least common of the available authorizations. This certification is used when an operator wants to conduct regularly scheduled service between city pairs, much like an airline does. Aircraft may not be equipped with more than nine passenger seats for commuter operations. The maintenance, operational, and training requirements for this certificate are much more specific than the other certifications.


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#9 Jfineman

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Posted 12 March 2018 - 07:26

Could you email me? I'd like to have a phone convo with you if possible.
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#10 chris pochari

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Posted 12 March 2018 - 07:30

Could you email me? I'd like to have a phone convo with you if possible.

Sure, you have skype? I'm actually looking for a business partner so If you're interested that's awesome



#11 Nearly Retired

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Posted 12 March 2018 - 09:20

Friends of mine have often come to me with their cockamamie plans on putting a sightseeing helicopter operation together.  They blue-sky the revenue, underestimate the costs, and think they can make a small fortune while doing something we all love to do!

 

But there are SO many obstacles in starting a tour company that it's not even funny.  I'll run down just a few of them for you.

 

LOCATION:  Here is your biggest concern.  You have to be where the people are.  And if you're where a lot of people are, expect "push-back" from city councils and various groups who perceive you as a safety threat and don't want you around.  This ain't the 1950's - people know how dangerous helicopters can be now.  A seemingly minor crash makes national news.  Not to mention that crowded areas usually make for small LZ's and don't always offer good take-off and landing profiles.  Either you won't always be able to get into the wind, or there'll be real obstacles like trees or wires or buildings or parking lots full of cars...ugh.

 

REVENUE:  People often confusingly use "clock-hour" when figuring revenue.  Very simply, just use "flight hour."  How many flights you can do in a given clock-hour has little to do with it.  If your rides are .1 (six minutes) then you can do 10 rides in an aircraft flight-hour (skids-up to skids-down, which is how maintenance is calculated).  Yes, it will take longer than a clock-hour to do this.  If you get, say, $60 per-person, and you carry four people every time (dream on!), then your potential revenue per ride is $240 and the ship then can generate $2400 per hour...not bad for a beat-up old 206B.  SIGHTSEEING TOURS MAKE MONEY....*if* you can keep the ship full every time. 

 

For the sake of realism, maybe you don't keep the ship full every time, so let's conservatively assume that you average only $1,200/hour of revenue.  If you fly 40 revenue hours per week, that's potentially $48,000 per week, or $192,000 per month.  Maybe.  Sounds good, right?

 

UNKNOWNS:  Maybe you get a stretch of bad weather that keeps you grounded for a week.  Maybe you get some serious gusty winds that make for no-fly days.  Maybe your "season" is not year-round.  All of these things must be factored-in.  

 

COSTS:  Ah, the greatest unknown!  Sure, you can go to Bell's website and they'll give you the DOC of a JetRanger.  But the real-world costs of operating a helicopter...*any* helicopter are astronomical.  One hot-start...one little blade-strike...can put you out of business.  A broken bubble can put a SERIOUS dent in your profits due to replacements costs and loss-of-revenue while the ship is down.  Engine or main transmission starts chipping before TBO?  Hello, overhaul!  Everybody says, "Put money away for overhaul!"  Nobody I know does it.  (And we're talking about little single- or two-ship operators here.)  

 

But for argument's sake, let's say that we peg the DOC at "four times the fuel" or $625/hour for a 206B.  So that same 40 hours per week are going to COST you a minimum of $25,000 or $100,000 per month.  But we've still got that "extra" $92,000 to play with, right? 

 

Now you need insurance - not just for the ship but for your business.  Now you need a pilot...or two if you plan on running seven-days-a-week.  Now you need a place to keep the helicopter...a ground guy or two to sell tickets and load passengers...an operations shack or building (with associated continuing costs).  Sheesh, it all adds up.  How much of that $92,000 do you have left?

 

Look, you can run the numbers any way you want.  You can make them seem as good...or bad...as you want.  If you really want to get into this business, skew them in your favor.  Use best-case scenarios, not worst-case.  But I'm telling you - as someone who's done it - unexpected expenses can eat you alive.  You never get as many people as you predict, and you never fly as much as you predict.  And the costs are always more than you project.

 

My advice?  Start with a large fortune.  Then go have fun until the bank repo's the machine.


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#12 500E

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Posted 12 March 2018 - 09:47

A good overview NR 

 

My advice?  Start with a large fortune.  Then go have fun until the bank repo's the machine.

As you say the unexpected costs will spoil your day  Year, even the simple things cost a fortune both in time & money !! even small parts

Attached Files


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Fly the dream fly 500

#13 TomPPL

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Posted 12 March 2018 - 11:25

A good overview NR 

 

My advice?  Start with a large fortune.  Then go have fun until the bank repo's the machine.

As you say the unexpected costs will spoil your day  Year, even the simple things cost a fortune both in time & money !! even small parts

WOWZA..! What was that pin used for?



#14 chris pochari

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Posted 12 March 2018 - 16:11

 

My advice?  Start with a large fortune.  Then go have fun until the bank repo's the machine.

I would never borrow money to start a business with uncertain revenue, nor would I recommend anyone do that. I would ONLY do it if you had a situation where a couple of guys pool some equity together, buy a helicopter, and see if they can make it work, if it doesn't you sell it and unless the value of the aircraft suddenly drops, you recoup most of your cost.


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#15 helonorth

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Posted 12 March 2018 - 16:21

I would never borrow money to start a business with uncertain revenue, nor would I recommend anyone do that. I would ONLY do it if you had a situation where a couple of guys pool some equity together, buy a helicopter, and see if they can make it work, if it doesn't you sell it and unless the value of the aircraft suddenly drops, you recoup most of your cost.

 

I would always borrow money in that situation. Revenue is never guaranteed. 



#16 chris pochari

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Posted 12 March 2018 - 17:06

 

I would always borrow money in that situation. Revenue is never guaranteed. 

Borrowing can be safe once you have a business with steady revenue, but borrowing for a startup would very risky, plus I don't think any bank or specialty lender would take the risk. 


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#17 500E

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Posted 12 March 2018 - 17:36

WOWZA..! What was that pin used for?

They are locating pins for bottom of the clam shell-doors on a 500 there is no way you can justify the price, they just have their hands in your wallet & gouge the owner


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Fly the dream fly 500

#18 Fred0311

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Posted 12 March 2018 - 19:19

I love flying a 500 but could never justify buying one with their support...

Edited by Fred0311, 12 March 2018 - 19:20.

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#19 helonorth

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Posted 13 March 2018 - 16:24

Borrowing can be safe once you have a business with steady revenue, but borrowing for a startup would very risky, plus I don't think any bank or specialty lender would take the risk. 

 

Risky for who? Either way you're on the hook for a big nut. Might as well be somebody else's money. 



#20 Scarab

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Posted 14 March 2018 - 19:44

Start out with a billion dollars and you'll be a millionaire in no time.


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Flying a helicopter is the most fun I've ever had with my clothes ON!





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