Latest / VREF | The Truth About the Aviation Market / The Flight School Closed. The Loan Didn't. | EP 59
Transcript
- Addison: If you're a parent who just took out a home equity line to put your kid through a flight school, this one's for you. Don't skip it. In June of 2021, AOPA, the biggest pilot organization in the country, the magazine on every FBO coffee table. They ran a feature on a flight school in Peachtree City, Georgia. One leased 172 to eight airplanes in 16 months. Airline captains for instructors, a Cessna pilot center sign on the door, a Delta partnership, and then the owner quoted, I put our instructor talent at the top of Metro Atlanta, the Southeast, and possibly even the country. End quote. This article ran because the owner asked AOPA to write it. AOPA said so five years later, in the piece it published the week he was arrested. September 4th of this year, the Georgia Bureau of Investigation charges the owner and his father with 20 counts each of theft by conversion, and one count each of racketeering. 70 plus students, more than a half a million dollars gone from prepaid accounts, scholarship money, loan money. One kid was out $80,000. Every one of those families did the careful thing. They picked the school with the airline captains and the Cessna sign and the Delta partnership and the glowing write-up in AOPA. And then they wired the money. And see, that's the pattern. You promoted on the way up, you reported on the way down, and you never mention that the families in between read the promotion as a recommendation. That's a pump. And then the dump. And here's why you should listen to me and not the brochure. I'm the guy who values the airplanes. And you know when a school fails, I'm also the one who the bank calls to find out what the fleet is actually worth. And I'll tell you now, it's less than they borrowed against it. I've seen where the money goes, and today I'm going to show you. Welcome back to the truth about the aviation market. I'm Jason Zilberbrand. If you're new here, and if you're a parent, you probably are. Here's who's talking. I run VREf or the independent valuation firm for aviation. I'm not a broker. I'm not a dealer. I'm certainly not a lender, and I'm absolutely not a flight school. But when a bank needs to know what an airplane is worth before it lends against it, or When a court needs a number or when a flight school fails and somebody has to figure out what the fleet will bring, well, that's us. And I'm an accredited senior appraiser, and I've been doing this for over 30 years, and I'm in the middle of appraising a nine airplane fleet as we speak. So I'm not going to tell you which school has the nicest lobby. I'm going to tell you what happens to your money after you wire it, why four flight schools have failed in the last 12 months. Why the airplanes your kid is training in are 50 years old, and what I'd do if it were my kid. And here's the standing statement V ref doesn't run a flight school, and we don't refer students to one either. And we don't take any fees from a flight school because there's no sponsorships and there's no lender or program mentioned today, because nobody pays for that mention here. And one thing up front, because it matters, the people charged in the first case have not been convicted. Everything I say about it comes from the GBI's own statements and from published reporting, and I'll attribute as I go. The structure I'm describing fails whether anyone is guilty or not. That's the point. So, as I say, bring a pencil, there's a red flag and a checklist, and it's at the end, and I'll close by telling you which schools I'd actually trust with my kid and why. So Let's strip the marketing off and let's look at what a flight school deposit actually is. A school quotes you a program, private through commercial and instrument. Call it $100,000 give or take. They offer you a discount to pay in a block, 10%, sometimes more. You wire it, or you borrow it, and the lender wires it. It goes into an account. As you fly, they draw it down. Instructor time, airplane time, and the fuel. That, my friends, is Is a loan. It's unsecured and it's interest free. And it's to a private company governed by a contract the company wrote. Drawn down at a rate the company controls. On a schedule, the company controls. Tracked in a system the company controls. If that sounds familiar, it's because it's the Jet Card episode with the numbers moved one decimal to the left and the customers moved from people who can absorb a loss to 19 year olds whose parents took out a home equity line. Now here's what should bother you. The FAA regulates the airplane. The FAA regulates the certificate on the wall and the instructor's ticket and the check ride and the maintenance. The FAA does not regulate the money. Not one word of part 141 or part 61 addresses what a school does when a student's prepaid balance. And this spring, the FA put out a modernization proposal for part 141, if you didn't know. And it's centralized oversight, and it's got safety management systems and more simulator credit, chief instructors with more autonomy. I read it. There is not one mention of a student funds anywhere in it. The regulator is modernizing everything about the flight school except the part that actually fails. So who does regulate the money? Good question. In most states, nobody. Some states run a private post-secondary school regime with bonding requirements or tuition recovery funds. California, for example, has one. Arizona also does. Flight schools are frequently exempt from those regimes, or simply not enrolled in them, because they're licensed by the FAA. And everybody assumes the FAA's got it covered, and the FAA doesn't. And the state assumes the FAA does. Your deposit sits in the gap between two agencies, each of which thinks the other one is watching. So here's the case. Everything from the GBI statements and published reporting, Flight Aviation, F L Y T. They were based at Falcon Field in Peachtree City, Georgia, under the southern edge of Atlanta's airspace, founded in May 2020 by Alex Hamlin, his father Harlan Hamlin, involved in the business. They started with one leased 172. They grew it to eight aircraft in 16 months. The 172s, including G1000 airplanes, they also had a warrior, they had a seminal, they had an archer with air conditioning, Textron Cessna pilot center designation, Delta Propel Partner, instructors who flown MD 80s and F 16s and even 767s. That growth got written up, as I said, in June 2021, and we'll come back to who wrote it. In October of 2024, flight was sold to a larger operator. And within weeks, November 2024, students started finding discrepancies in their accounts. The balances they they paid in weren't the balances that had transferred. So then in February of 2025, Peachtree City Police asked for the GBI's financial investigation unit to come in, and the GBI, they ran a forensic audit. We fast forward now to September fourth of 2026. The GBI arrested Alex Hamlin, who's thirty-four, and Harlan Hamlin, who's fifty-nine. They each got twenty counts of theft by conversion, one count each under Georgia's RICO statute, and the bond was set at $125,250 each. A third arrest followed. The school's former financial accountant director, The GBI's language, and I'm quoting the release is reported, several students' accounts, including those of students participating in aviation scholarship and financing programs, were misappropriated. And I think it was 69 at the time. Read that last part again. Scholarship money, loan money, money a bank that had lent a 22-year-old for a career wired to the school, and per the allegation it was stolen. Gone. By mid-September, the count was over 70 students. And over $500,000. With 22 more students coming forward in a two-week window alone. One student lost, as I said, $80,000. Now the discipline. These are charges. Steft by conversion over $1,500 carries one to five years per count in Georgia. The RICO statute carries $5 to $20. That's exposure, not outcome. The Hamlins are entitled to their defense, and I'm not going to try the case here, but I want you to sit with the timeline. Because it's the entire episode. May 2020, one airplane. June 2021, a glowing national profile by AOPA. October 24, sold. November 24, money missing. That's a four-year arc from founding to the point where the students found out. And for most of those four years, if you'd ask anyone in Atlanta, General Aviation about flight, you have heard the one with the airline captains. The name was fine. The credentials were real. The structure actually was the problem. All right, let's take a quick pause because this is the time when I ask you to follow, like, subscribe, and leave us a rating. Comment if you are interested. Remember, there's no schools, there's no lenders, there's no training programs paying for any of this stuff, which is the only reason the next segment can be honest about who did. So I ask 10 seconds of your time. Please go ahead, hit that like button, hit the subscribe button, and I'm gonna thank you now as I get back to. Talking about flight. So, if flight were an isolated case, I'd have done a segment, not an episode. But the truth is it isn't, and it's systemic. November 1st, 2025, VTAA Flight School in West Houston and a second location in New Brunswick closed. Students reporting that more than $30,000 each sitting in training accounts. One was told refunds would come in the next couple of months. Nothing since. The school carried an F rating from the BBB and had already been sued over student funds before it closed. The information was public, but nobody bothered to look. In March of 2026, Piston Aviation with three locations around St. Louis. Well, they tried to consolidate to one airport, then shut down entirely. One family had taken a $90,000 home equity line to prepay the or to prepay their 19 year olds flight training. Thirty-five hours in, another student found out the school had closed from Facebook. His contract had a refund clause, the refunds limited to payments made within 180 days of the closure announcement. Every hour he'd bought was purchased the previous year. The clause was written to make his money unrecoverable, and he signed it. April 2026, Aviator College of Aeronautical Science and Technology in Fort Pierce, Florida. It's a real college. It wasn't a hangar operation. And on April 9th, students got an email that they were closing on the 18th, in nine days. The war notice cited a student lawsuit, failed attempts to sell the company, and a potential bankruptcy. One student out of 40,000. Another family had borrowed over a hundred thousand for tuition and dorm rooms. A parent's words, quote. Next day I went there and there was no one to talk to us. End quote. Four schools twelve months. Houston, St. Louis, Fort Pierce, Peachtree City, a hangar operation, a three location chain, a college, a Cessna pilot center with a Delta partnership. See the point is, they're all different sizes, they're all different states, all different stories about the why. Identical mechanism. Money in, promise out, nothing in between. And when the doors close, the students are unsecured creditors at the back of the line. And these are the four that made the news. When a two-airplane school with 15 students quietly stops answering the phone, guess what? No one writes that up. Okay, I said we'd come back to the article, and I named AOPA in the open. So let me be precise about what I am saying and what I am not. The June 2021 profile of flight aviation ran on AOPA's website. With an AOPA byline, it read like journalism, it listed the Cessna Pilot Center designation, it listed the Delta Propel Partnership, the airline captain instructors, and it even quoted the owner on the excellences of his own school. And then in September 26, they reported the arrests. And here's what AOPA wrote, and I'm quoting: that it had, quote, previously reported favorably on flight aviation at Harlan Hamlin's request, end quote. At his request. Notice they didn't disclose that in the 2021 article. They waited till 2026 during the arrest story. Here's what I'm not saying. I'm not saying AOPA knew. They couldn't have. From the outside in June of 2021, nobody could. And I'll give them this. They put the acknowledgement in print, which is far more than most outlets would have done. Here's what I'm saying. Put yourself in a kitchen in Atlanta in 2022. Your kid comes home, he says, I want to fly. You've got $80,000 to play somewhere, and you don't know the first thing about flight schools. So what do you do? You open up your phone and you open up Safari and you search, and the first credible thing you find isn't Yelp. It's a feature on AOPA's website, and it has a byline from the organization that every pilot you know belongs to. You don't know the owner asks for it. You'll read it as what it looks like. The pilot organization vouching for the school and you send the wire. That's the mechanism. Requested promotion, published without a label, becomes a due diligent substitute for exactly the people least equipped to know the difference. Then, when it goes wrong, the same outlet reports it as news. Promote on the way up, report on the way down. That's the pattern. And the families in between are the ones who paid for it. And I've talked about this before, and I'll be talking about it again in November. This is one more data point. And in April of this year, after Piston Aviation closed, AOPA ran a piece on the risks of paying up front. Good piece. And it was accurate. It named the regulatory gap clearly. The FAA does not regulate prepaid tuition. Students become unsecured creditors. And then it listed the protections available. Guess what? There weren't any. The article doesn't mention escrow. It doesn't mention bonding or recovery fund. Because for most flight schools, none of those things exist. What it offers is a phone number and a guide to choosing the school. That's the honest state of the market written by the organization with more levers than anyone to change it. Five years after it helps sell a school that's now a criminal case. Man, I'm in a segue and it's a natural one. The other half of this episode is about the airplanes and what a fifty-year-old trainer with fifteen thousand hours on it is actually worth. Which is a number that gets made up a lot. That's my business. A VREF online membership gives you current values, historical trends, operating costs, and fleet data on virtually everything flying, including every trainer in this segment with a proven methodology. I'll explain and I'm a human who's actually going to answer the phone when you call and when the money is real and there's a fleet purchase, a school acquisition, a loan against the airplanes. You want an accredited appraisal from someone whose number survives a courtroom? Get your values at VREF.com, VREF it, know where your name number comes from. Okay. Here's a part of this story nobody's telling, and it's the part I actually know from the inside, because I'm in the middle of appraising a trainer fleet right now. Nine aircraft, I won't say where. Two are Sesta 150s, seven are 172s. Model years range from 67 to 97. Airframe times from 11,700 hours up to 18,000. The 18,000 hour airplane is a 67,150, which means it's averaged over 300 hours a year for 59 years. Six in the nine engines are or at TBO. Two of those are still flying on condition, which is legal and which tells you what it tells you. That fleet is not unusual, that fleet is normal. That is what the American flight training fleet looks like in the in this country, and here's why. A new 172 with new avionics is over $700,000. And a school just can't make that math work because that $700,000 airplane still rents at the same $180 an hour. So schools buy old ones and the market knows it. And that's why prices have been run up 30, 50, 100% over historical norms. And It really started getting crazy in 2020 through 2022 with the post-COVID boom. And the prices have never come back down. Because every school in the country is competing with every private buyer for the same finite supply of airframes that were built when Jimmy Carter was still president. So the demand side is not the pilot shortage. Airlines are hiring, schools are full, and every school wants more airplanes. The supply side is fixed and aging. Nobody's building $50,000 trainers anymore. And the ones that exist are wearing out at 300 hours a year, which produces exactly what you'd expect. Inflated prices for high time, over TBO, 50-year-old aircraft that have been bought by schools that need airplanes to enroll the students whose deposits pay for the aircraft. And if you read that last sentence again, the deposits pay for the airplanes. A school with 200 students and $40,000 each on account is sitting on $8 million of other people's money. That's not a training account. That's the capital base. It buys the next $172. It funds the engine overhaul. It makes payroll in the slow month. And when enrollment slows or a lender gets nervous or the owner sells the money that was supposed to be sitting in your account waiting for your next lesson, it turns out to have been an airplane the whole time. And that's the float. It's the same float as the jet card broker covering peak day losses with next week's deposits. The only difference is that the jet card customer usually finds out on a peak day. And the flight student finds out, well, from Facebook. And it matters. And it makes the trainer values themselves suspect. And when I look at a school's balance sheet and the fleet is the asset, and it's an asset that's 50 years old, 15,000 hours in, six engines past TBO. bought at a price inflated by the same shortage to fill the school, I've watched lenders lend against that fleet at the inflated number. And when the school fails, the lender finds out that the airplanes are actually worth, and sometimes it's less, and sometimes there's another school waiting just to take them up. But the students, they find out that they're the ones that are actually behind the lender. So here's what you do. And it's time, get your pencil out. Because this is the part I want you to write down. And if you have a kid who's heading into training, this is the part to send them. And these are the red flags first. And it's the same rule as always. One is a signal and three is a pattern. So the first one, a meaningful discount for paying the whole program upfront. 10% off $100,000 is $10,000 of your money the school needs today, more than it needs your business next year. That's a red flag. Two. A refund a refund clause with a time limit. See, Piston Aviations said 180 days. That clause exists for one reason. It's to keep your money if they go out of business. Three, a change of ownership. Flights money went missing within weeks of the sale. New owners inherit the accounts, but not necessarily the cash behind them. If your school sells, re-underwrite it from scratch. Four, the Better Business Bureau, the BBB. If the rating is below A, or there's any history of lawsuits over student funds like VT, they had an F with prior lawsuits in public before it closed. Guys, you need to look. Check out the the Better Business Bureau rating before you send money to a flight school. Five, aggressive expansion is a big red flag. If you see new locations going up and new airplanes and new partnerships announced all the time, faster than the student count would explain, the growth costs money. And the money is probably yours. That's a big red flag. Six, this big prestige halo, an airline partnership, a manufacturer designation, a national feature offered as the reason to trust them. See, those are real. They're also about the training, not about the money. Flight had all three. Seven, the answer to where does my deposit sit is a paragraph instead of a word. Eight. An accounting system for your hours that only the school can see. If you can't reconcile your balance sheet guys against your logbook every month, you can't tell when it's wrong. Now, unlike everybody else, I'm going to tell you what to actually do. First, and it's the easiest. Just don't pre-pay. Pay as you go. If you are using a regional flight school and not a major university or an emory riddle, it's going to cost you more per hour and you just got to accept. You are buying the right to walk away with your money still in your pocket. And that's the cheapest insurance in aviation. If you're gonna prepay one of these smaller flight schools, cap it at what you can afford to walk away from. And you gotta buy the smallest block that they'll sell you. Number two, and I've heard you've heard me say this before: pay by credit card wherever they'll take it. See, when you send a lawyer, it's gone. A credit card gives you chargeback rights. Many schools won't, and the ones that will will charge you a fee. Guys, I'm telling you right now, pay the fee gleefully. Offer to pay the fee if they won't take the credit card. Third, ask where the money is sitting. Get it in writing and do it before you send them any money. Escrow, segregated, or is it operating? Almost every school will say operating because that's what it is. And it's fine. Now you know what you're lending into. And then you have to size it accordingly. And do it at the dinner table with the family. Four, read the refund clause before anything else in the contract. Guys, and I'm talking to the students now. If you're doing this without the help of any adults, you need to put it through Chat GPT, get a lawyer, find an adult friend or a mentor, ask somebody to read the contract before you send them all your money. You got to find the time limit, you got to find the conditions. If it's written to make your money unrecoverable, that's the school telling you what it thinks of you. All right. Fifth, check the entity, not the brand. Secretary of State. How old is the company? Who owns it? Is the entity on the contract that the entity is asking you to sign? Better Business Bureau. PACER and the state courts for lawsuits. Then check the FAA. Is there part 140 141 certificate current? Whose name is on it? Then ask for some student referrals, not the ones the school introduces you to. Get on Facebook, make some posts, ask people to tell you what their experiences have been. Sixth, if there's federal money involved. Guys, listen to me. You gotta understand what protects it. Title IV eligibility means the school's accredited and answers to the Department of Education, and there are borrower defense paths if it closes. A private loan to an unaccredited school has none of that. Aviator College's students are finding out the difference right now. Seven. Guys, favor the institution over the operator, which brings me to the last question. Who would I trust with my son or my daughter? Well, the old ones. It's a short list, guys. Emory Riddle, University of North Dakota, Purdue, University of of Nebraska. And a handful of programs just like them. You know why? Because they're accredited universities and they have been training pilots for 50, 60, or 70 years. They have endowments. They have boards. They're state and federally oversights. And a reputation that's worth more to them than any one semester's tuition. Guess what? They're also not cheap. Flight training is never cheap, and anyone who tells you otherwise is the red flag. But they're not going to close on nine days' notice. And if they did, You'd be a creditor of an institution, not of an LLC. Below that tier, the large chains have scale on their side. ATP runs a fixed price zero to airline program at around $117,000. They'll finance it. And it's been doing it for decades. See, scale isn't a guarantee, but it's a track record. And a track record is most of what you're buying. And below that, The local school at your home field run by someone you can look in the eye when you pay them for a lesson after you fly it, that's not a lesser choice. Structurally, it's the safest one on this list. For the same reason, the local Part 135 operator was the safest choice in the jet card episode. The loan lasts one flight. So here's where I land it. Flight training is a good product wrapped in a bad structure. And the product is really good. It really is, and the product is real. This country needs pilots. We need schools to produce them. And most schools are run by really good people doing hard work on super thin margins. The structure is prepaid, unsecured, on a regulated loan, from the people least able to lose it to the business most dependent on it. In a market where the airplanes are 50 years old and the capital to replace them is on the students' own money. Four schools have failed in the past 12 months, 70 plus students at one of them. Are watching a criminal case instead of flying. And the organization with the most power to fix this ran a feature on that school at the owner's request and five years later ran a piece explaining that no protections exist. So, remember, don't prepay. If you do, cap it. Pay by a credit card, ask where the money is sitting, read the refund clause first, check the entity, not the brand, and if you can. Pick the school that was there before you were born. That's the show for today. It's the loan disguised as tuition. The four schools in 12 months, the arrest at the school with the airline captains, the feature that ran at the owner's request, the 50-year-old fleet that's been bought with the student's own money, eight red flags, seven things to do, and the schools that will still be there in 50 years. If this one reaches somebody's kid before the wire goes out, it did the job. Follow me, like me, subscribe, leave me a review, and send this episode to anyone you know who's about to start training or whose child is. I'm Jason Zilberbrand. This has been the truth about the aviation market. The market doesn't care what the brochure promised, it only cares where the money is. We'll see you next week. Until then, fly safe and stay smart.