Business Plan Paper

Halls of Air Flight Academy Business Plan

Commander Hall, US Navy

Executive Officer, Navy Recruiting District Dallas

TABLE OF CONTENTS

1 Executive Summary...................................................................................4

2 Service Description....................................................................................5

2.1 Vision Statement..................................................................................6

2.2 Mission Statement................................................................................6

2.3 Code of Ethics......................................................................................6

3 Market Description.....................................................................................6

3.1 Customers............................................................................................8

4 Competition...............................................................................................9

4.1 Example of Large Airline Training Company........................................9

4.2 Example of Small Pilot Training Company............................................9

5 Halls of Air Positioning.............................................................................10

6 Pricing Strategy.......................................................................................10

7 Advertising and Promotion.......................................................................11

8 Location...................................................................................................12

9 Service Delivery.......................................................................................13

10 Organization Chart for HAFA.................................................................14

11 Chief Executive Officer..........................................................................14

12 Position and Skillset Summary Table....................................................15

13 Finding and Keeping the Best Employees.............................................16

14 Halls of Air First Year Hiring Plan...........................................................16

15 Compensation Principles.......................................................................17

16 Employees with Disabilities...................................................................17

17 Future Expansion Plans.........................................................................18

18 Investment Opportunities.....................................................................20

19 Income Statement.................................................................................20

20 Appendix: Human Resources Information.............................................24

20.1.1 Chief Executive Officer............................................................................................................ 24

20.1.2 Operations Manager............................................................................................................... 24

20.1.3 Classroom Instructor............................................................................................................... 25

20.1.4 Education Specialist................................................................................................................ 26

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20.1.5 Administrative Assistant......................................................................................................... 26

20.2 Compensation and Benefits............................................................27

20.2.1 Chief Executive Officer............................................................................................................ 27

20.2.2 Operations Manager............................................................................................................... 27

20.2.3 Classroom Instructor............................................................................................................... 27

20.2.4 Education Specialist................................................................................................................ 27

20.2.5 Administrative assistant.......................................................................................................... 28

20.2.6 Benefits Common to All HAFA Employees..............................................................................28

20.3 Privacy Rules...................................................................................28

20.4 Safety Rules....................................................................................29

20.5 Avoiding Discrimination...................................................................29

20.6 Performance Review and Discipline................................................29

20.7 Typical HAFA Payroll Budget...........................................................30

21 References............................................................................................31

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1 EXECUTIVE SUMMARY

Commercial airlines are anticipating a severe shortage of qualified pilots over the next twenty years as its aging workforce retires. A lack of training pipelines to qualify Air Transport Pilot (ATP) rated aviators contributes to this supply problem. Halls of Air Flight Academy (HAFA) seeks to fill this void by providing high-quality pilots to the airline industry while giving our customers focused, personalized instruction at an outstanding value.

The primary customers HAFA is targeting are ex-military pilots and civilian Certified Flight Instructors. Our company will seek to minimize the difficulties for these groups to get the training they need to start an airline career.

The two courses HAFA will offer are an ATP-CTP course that will lead to students passing a written FAA exam and an ATP prep course that will lead to an FAA rating for students. HAFA will seek to bundle these services together for the vast majority of students, providing them a combined three- week course that graduates them into the airline workforce.

HAFA’s main competitors are either large, expensive, and impersonal or too small to offer high-quality instruction. We will fill the market position in- between these extremes by catering our services specifically toward key customer groups. Our pricing will be lower than our large competitors but we will have significantly better margins than smaller aviation training facilities.

Our advertising and promotion strategy will narrowly exploit the networks our customer groups already use for career information. Personal contacts with flight schools and military units will also be used to facilitate communication of HAFA’s benefits.

HAFA’s headquarters will be located at the AllianceTexas office complex located next to the Fort Worth Alliance Airport. Office space requirements will be minimal as they will be used mostly for administrative work and classroom instruction. Simulator time will initially be rented from airline training facilities, significantly reducing initial capital expenses.

Hiring a highly motivated and talented staff will be a top priority for Halls of Air as it grows its business, since human capital will be its most valuable resource. As retained earnings increase, the company will seek to purchase its own simulator and eventually build up a small fleet of aircraft for further live flight training.

Our company is projected to be profitable within its first year with high growth potential for years to come.

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2 SERVICE DESCRIPTION

Halls of Air Flight Academy (HAFA) is a pilot training corporation providing industry leading instruction for commercial and air transport aviation. Our company prioritizes services for military veterans and experienced civilian flight instructors, partnering with leading airlines to assure students graduate with the highest levels of competency.

HAFA will provide FAA compliant ground school training, including classroom instruction and simulator training, for student pilots seeking aviation jobs. The HAFA team will focus on instilling confidence in our students, even if it requires extra time or effort on the part of our staff. We will also have specialists in military educational benefits who will help handle administrative issues for our customers’ funding. HAFA will graduate a yearly average of 300 student pilots with FAA Air Transport Pilot (ATP) ratings.

There are two courses of instruction that HAFA will offer our customers. Prior to taking the ATP written exam, pilots must complete the FAA’s Airline Transport Pilot Certification Training Program (ATP-CTP) that includes 30 hours of ground school instruction and 10 hours of simulator training. For the simulator training, six hours must be completed in a Level C or higher trainer representing a multiengine, turbine aircraft with a maximum takeoff weight of at least 40,000 pounds.1 The second course of instruction HAFA will offer is a prep course for the ATP checkride. Students complete with the ATP-CTP course and written exam will be provided simulator instruction that replicates what they would expect to see from an FAA examiner. The level of instruction will be individually tailored to the abilities of each student pilot, giving them assurance they will pass the checkride. HAFA will arrange a checkride with an independent FAA examiner in the same type of simulator the student has been trained in.

In the initial stage of HAFA’s development simulator time will be rented from local airline training facilities. HAFA will use its own instructors for simulator training and will provide all necessary course materials. Additionally, HAFA will partner with major airlines in the local area to supply them with qualified pilots and keep our students up-to-date on industry standards.

2.1 VISION STATEMENT Over the next five years, Halls of Air will seek to increase the number of students trained by 100%, while building a sustainable base of capital for future expansion into other forms of professional pilot training. 1 Eric Radtke, “New ATP Certification Requirements: A Pilot’s Guide,” Student Pilot News, accessed June 25, 2016, http://studentpilotnews.com/2015/03/04/new-atp-certification- requirements-pilots-guide/.

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2.2 MISSION STATEMENT Halls of Air provides personal flight instruction that insures pilots training for employment in the aviation industry can begin their careers with confidence in their abilities. We seek to provide exceptional customer service and maintain an unparalleled degree of excellence in all our operations.

2.3 CODE OF ETHICS Our company will conduct its operations in accordance with the following guidelines:

 We will show respect to all clients, regardless of their level of experience or ability

 Our staff will prioritize quality of instruction over all else, ensuring we are providing the best qualified pilots to the aviation industry

 Halls of Air will respect the concerns of the local community and seek the good of our neighbors

 Conduct all business with integrity and adherence to sound accounting principles

 Ensure all employees are equitably compensated for their efforts, and that they are valued as full members of the Halls of Air family

3 MARKET DESCRIPTION

Commercial airlines will face a severe pilot shortage in the next two decades. It takes years to acquire the necessary experience to fly for the airlines leading to a relatively inelastic supply of qualified aviators, despite increased demand from the growing industry. There are less than half as many student and private pilots in 2014 than there were in 1980. Further compounding this supply issue, Congress passed laws in 2013 increasing the number of hours required for airline co-pilots from 250 to 1,500.2 This legislation also requires prospective airline pilots to complete a ground school taught by instructors with at least two years of airline experience and to spend at least six hours in a Level C full motion simulator that can cost $2,000 per hour.3

2 Dan Elwell, “A Looming Pilot Shortage Means a Bumpy Ride for Airlines,” Wall Street Journal, last modified July 21, 2015, accessed August 10, 2015, http://www.wsj.com/articles/ a-looming-pilot-shortage-means-a-bumpy-ride-for-airlines-1437522047. 3 Rick Durden, “The New ATP-A Brief Window Before the Sky Falls?” AVWeb, last modified February 16, 2014, accessed August 10, 2015, http://www.avweb.com/news/features/The- New-ATPA-Brief-Window-Before-the-Sky-Falls-221453-1.html.

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Major US domestic airlines typically hire American citizens as pilots due to regulatory issues with hiring foreign nationals. Additionally, FAA standards for pilot safety and competency exceed those of many other countries. Global commercial airline capacity grew more than 6% in 2015 and is forecast to expand 40% over the next 20 years. Domestic airlines are expected to increase their fleets by 7.7% over the next 20 years.4

Besides airline industry growth, the aging of the current workforce will also contribute to the pilot shortage. In 2015, the average age of airline pilots was 50 years old.5 Because of the FAA-mandated retirement age of 65, over 20,000 airline pilots are expected to retire over the next seven years.6 Boeing estimates US airlines will need 95,000 new pilots in the next 20 years. European airlines are forecast to need another 95,000, and Asian carriers 226,000.7 The high standards for US pilots combined with the need to speak fluent American English (the universal language of aviation worldwide) will make them highly sought after by both domestic and international carriers.

Despite the lack of qualified airline pilots, flying for a major domestic air carrier remains a desirable job. An American Airlines Boeing 757 first officer with 5 years’ experience can earn $150,000/year flying the FAA-mandated maximum of 1,000 hours per year, and also receive travel per diem along with a matching 401k program. A 757 captain with 12 years’ experience at American Airlines can earn $249,000/year flying the same number of hours.8 High barriers to entry such as the potential hundreds of thousands of dollars in flight expenses, years of flying experience, and physical/psychological requirements prevent more people from aspiring to this profession.

3.1 CUSTOMERS One of the few groups that still have a relatively smooth path to employment as an airline pilot are military pilots. They can accumulate large numbers of hours at government expense while on active duty and will gain the training necessary to fill the cockpit seats for the major carriers. Almost all of them will be eligible to use their Post 9/11 GI Bill benefits to pay for the expensive

4 Brian Prentice and Philippe Gouel, “Pilot Shortage Threatens to Slow U.S. Airline Growth,” Forbes, last modified January 28, 2016, accessed May 27, 2016, http://www.forbes.com/sites/oliverwyman/2016/01/28/pilot-shortage-threatens-to-slow-u-s- airline-growth/#35dff8c1bb6e. 5 Elwell, “A Looming Pilot Shortage Means a Bumpy Ride for Airlines.” 6 Aviation Week & Space Technology, “The Coming U.S. Pilot Shortage is Real,” Aviation Week & Space Technology, last modified February 16, 2015, accessed May 27, 2016, http://aviationweek.com/commercial-aviation/coming-us-pilot-shortage-real. 7 Prentice and Gouel, “Pilot Shortage Threatens to Slow U.S. Airline Growth.” 8 “American Airlines,” Airline Pilot Central, accessed June 25, 2016, http://www.airlinepilotcentral.com/airlines/legacy/american_airlines.

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ground school and simulator training required for certification. Halls of Air Flight Academy will tailor its services to veterans seeking to make the transition from military to commercial flying.

Another potential group of ATP student pilots are certified flight instructors (CFIs). Teaching aviation basics to beginner pilots as a CFI pays very little, but it allows the instructors to accumulate the necessary hours for airline service. To become eligible for an ATP rating, a CFI needs qualifications as an instrument and multiengine pilot.

Figure 1: North American Pilot Supply and Demand9

4 COMPETITION

There are two primary types of competition in Airline Transport Rating certification courses. Larger aviation career training companies that feed a high volume of student pilots to the airlines and smaller companies using light multiengine aircraft.

4.1 EXAMPLE OF LARGE AIRLINE TRAINING COMPANY ATP Flight School is the national leader in ATP certification, with 40 flight training facilities in 28 major cities across the nation. It has 60 simulators for 9 Prentice and Gouel, “Pilot Shortage Threatens to Slow U.S. Airline Growth.”

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smaller aircraft (below Level C) and rents out simulator time from airline training facilities. The company also has a fleet including 104 Piper PA-44 Seminoles, 59 Piper Archers, 5 Diamond DZ40-180 Diamond Stars, a Cessna CE-525 CitationJet, and 99 Cessna CE-172s. Eleven maintenance facilities are used to maintain its aircraft. ATP Flight School has many course offerings including the ATP-CTP ground school course and an ATP rating program. Its ATP-CTP course costs $4,995 and lasts 7 days and its ATP rating course costs $14,995, lasts 7 days, and includes a type rating in a Boeing 737 or McDonnell Douglas MD-80. Additionally, it has an Airline Career Pilot Program that hires Certified Flight Instructors to work for them in exchange for tuition offsets while building up hours for the airlines.10

4.2 EXAMPLE OF SMALL PILOT TRAINING COMPANY At the other end of the spectrum are smaller training companies such as Skywarrior, Inc., located at the airport in Pensacola, FL. Its primary business is providing introductory level flight training to enthusiasts and orientation flights for Naval Aviators beginning their flight training at nearby Naval Air Station Pensacola. Skywarrior has a small fleet of Cessna C-172s, C-177s, and twin engine Piper Seminoles. The company operates a small ATP rating program in its Piper Seminoles that includes 6 hours of flight instruction, 5 hours of ground instruction, and costs $2,800. It does not offer the ATP-CTP training required as a prerequisite for ATP training.11

5 HALLS OF AIR POSITIONING

Halls of Air Flight Academy is positioned to operate in the market space between its large scale competitors and the smaller pilot training companies. HAFA will be focused on the needs of experienced aviators to complete their qualifications in preparation for an airline career. The company will have less overhead and fewer course offerings than giants such as ATP Flight School. Training will be conducted at a personal level that will be flexible enough to meet each individual’s learning objectives. Relative to small mom-and-pop flight training programs, HAFA will have a more professional curriculum and the full set of courses required to qualify for an ATP rating. Also, HAFA will utilize its location near the corporate headquarters of Southwest Airlines in Dallas (the largest low-cost carrier in the United States) and American Airlines in Fort Worth (the largest airline in the world) to place its students in highly desirable aviation careers.

10 “ATP Flight School,” ATP Flight School, accessed June 25, 2016, https://atpflightschool.com/index.html. 11 “Everything ATP,” Skywarrior Flight Training, accessed June 25, 2016, http://www.skywarriorinc.com/atp.htm.

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6 PRICING STRATEGY

To help capture the market of GI Bill eligible veterans, HAFA will strive to set the rates for its courses in line with current compensation rates. For the academic year from August 2016 to July 2017, the maximum payments the VA will provide for vocational flight schools is $12,554.54 per academic year.12 HAFA will initially price its ATP-CTP course at $3,500 and its ATP rating prep course at $10,000. Students who take both courses from Halls of Air can sign up for a $12,500 package deal. This price is significantly lower than ATP Flight School’s $4,995 for the ATP-CTP course and $14,495 for the ATP/Type Rating prep course.13 HAFA’s price is more expensive than Skywarrior’s $2,800 ATP course,14 but it is much more career enhancing for prospective airline pilots and allows veterans to maximize the use of their GI Bill. For Certified Flight Instructors lacking GI Bill benefits, programs such as those offered by ATP Flight School are more attractive as they are more highly regarded by the airlines. Halls of Air Flight Academy will offer the core elements professional pilots need to take the next step in their career with personalized attention at a competitive price.

7 ADVERTISING AND PROMOTION

Because Halls of Air’s services are aimed at very specific customers, our company will avoid spending its resources on advertising channels targeting the general public such as television, radio, etc. Instead, HAFA will seek to raise awareness of its services among pilots nearing eligibility for ATP ratings. We will distribute brochures to career counseling centers on key military bases and seek to have our company mentioned during career transition classes for Service members entering the civilian workforce. Our staff will also utilize contacts with military squadrons to distribute literature there as well.

Civilian flight schools that do not offer ATP instruction will be contacted to promote our services with their instructors. These partnerships will be mutually beneficial since it will encourage their employees to aggressively seek more flight hours to achieve the minimums required for an ATP rating. In the process, the civilian flight school will earn more revenue from the increased amount of introductory flight training sold to new amateur pilots.

12 “Education and Training,” US Department of Veterans Affairs, accessed June 30, 2016, http://www.benefits.va.gov/GIBILL/resources/benefits_resources/rates/ch33/ ch33rates080116.asp. 13 “ATP Certificate,” ATP Flight School, accessed June 30, 2016, https://atpflightschool.com/atp/index.html. 14 “Everything ATP,” Skywarrior.

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Internet based advertising will be a focus of effort for Halls of Air Flight Academy. We will spend money with online search engines to direct potential customers to our simple, professionally designed website. Additionally, we will seek to purchase banner ads on professional aviation sites such as AirlinePilotCentral.com and social media advertising with LinkedIn and Facebook pages for pilots.

Figure 2: Airline Pilot Central homepage

8 LOCATION

The corporate headquarters for Halls of Air Flight Academy will be in Fort Worth, TX at the AllianceTexas office complex adjacent to Fort Worth Alliance Airport. Our office will include spaces for classroom instruction and administrative offices. Eventually HAFA will stand up a small facility at the Fort Worth Alliance Airport for live flight training where aircraft will be maintained, flight briefs conducted, and a flight duty officer station will be manned. Our firm will also seek to move into a larger office space in Fort Worth, TX as our business expands. This will allow space for setting up a Level C simulator that can be used for HAFA’s classes and rented out to airlines for training as well. AllianceTexas will likely have space for this planned growth as it has more than 4 million square feet of office space and is continuing to grow. The FAA also has a large facility within this office complex.15

15 “Office,” AllianceTexas, accessed June 25, 2016, http://www.alliancetexas.com/Office.aspx.

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HAFA’s office will have two classrooms set up with overhead projectors, larger restrooms for students and a private one for staff, a lounge/lunch area, a conference room, and offices for each of the instructors and management. It is approximately 3,000 sq. ft. large and rents at a cost of $4,750 per month.

Figure 3: One of the buildings on the AllianceTexas campus

9 SERVICE DELIVERY

Students signing up for classes either online, over the phone, or in person will work with our administrative assistants to verify their qualifications and schedule them for a start date. Additionally, our staff will help those students using GI Bill benefits to properly process their financial aid applications. A 20% deposit will be required to reserve a class date, which equates to $700 for the ATP-CTP course, $2,000 for the ATP prep course, and $2,500 for the combined course.

Two classes of 10-12 students will be under instruction at any given time. Each ATP-CTP course will last one week and will precede a two week long ATP prep course. A new ATP-CTP course will start during the third week of each cycle. This will allow the administrative staff to have time to complete the out-processing for graduating classes before checking in the next class.

Simulator scheduling with airline training facilities will be performed by the administrative staff. We will seek to reserve spots as far in advance as possible for our classes. Classroom instructors will also facilitate simulator training for students. Each student will be placed in a two-man crew that they will work with throughout their time in the program. Instructors will seek

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to quickly determine the individual strengths and weaknesses of each crew member so they can be coached to success.

HAFA’s administrative staff will facilitate scheduling of FAA examiners and simulator time to complete check flights for students. Every student will be responsible for paying the independent examiner’s fee personally, since our company is required to remain free of this process.

The instructional curriculum for HAFA will be continuously updated and improved based on student feedback and industry trends. An education specialist will be responsible for keeping presentations, computer-based instruction, and handouts current.

Our Chief Executive Officer and Operations Manager will work with local major airlines such as American and Southwest to provide them with quality new hires. Airline human resources representatives will be invited to present career information during classes and scout out talent for their organizations.

Expending effort to produce quality pilots will be a focus of our company. The graduates of our course will be ambassadors for HAFA within the commercial aviation industry, and should far exceed the expectations of their corporate management and peers.

10 ORGANIZATION CHART FOR HAFA

11 CHIEF EXECUTIVE OFFICER

Founding member and CEO Hall, Commander, US Navy is a student in Regent University’s MBA online degree

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CEO

Operations Manager

Admin Assistant

Admin Assistant

Education Specialist

Head Classroom Instructor

Classroom Instructor

Classroom Instructor

program with a focus in Entrepreneurship. He is a graduate of the US Naval Academy with a Bachelor of Science in Oceanography and has a Master of Arts in National Security and Strategic Studies from the US Naval War College. For most of his career he flew F/A-18 Hornets as a carrier-based Naval Aviator and is a rated Air Transport Pilot. He served two combat tours with VFA-151, supporting Operations Iraqi Freedom and Enduring Freedom. During these tours he earned an individual Air Medal with bronze “V” (combat distinguishing device), 3 strike-flight Air Medals, a Navy and Marine Corps Commendation Medal with bronze “V” (combat distinguishing device), and other various personal, unit, and service awards.

He served as the Navy’s Operational Test Director for the AIM-120 AMRAAM missile and test pilot at VX-9 in China Lake, CA. At the Joint Deployable Analysis Team at Eglin Air Force Base, FL, he set up a major test of the Mode V Identification Friend or Foe system with all US services and multiple international military partners and was the Operations Branch Chief. Following this tour he was the Training Officer for the aircraft carrier USS Abraham Lincoln (CVN-72), responsible for the military readiness of approximately 3,000 Sailors.

Commander Hall currently serves as the Executive Officer of Navy Recruiting District (NRD) Dallas. This organization employs approximately 250 personnel throughout Oklahoma and North Texas to bring in the next generation of Navy Sailors. NRD Dallas operates 42 stations throughout an area encompassing over 125,000 square miles in pursuit of its objectives.

He is also a member of the Defense Acquisition Corps, a workforce which procures new materiel solutions for the Department of Defense. Within the Corps he holds Level 2 certifications in Test & Evaluation and Engineering.

12 POSITION AND SKILLSET SUMMARY TABLE

Type of Employee Functions Knowledge Skills Abilities Experie nce

Chief Executive Officer

Make major strategic decisions

Aviation, training, and financial

Business manage ment

Leadersh ip and public relations

Executi ve-level

Operations Manager

Student and Instructor manage

Aviation, training, and accounting

Workflow planning

Resolve conflicts and find efficienci

Higher- level manage rial

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ment es

Classroom Instructor

Teach ground school classes and simulator instructio n

Aviation and Training

Air Transport Pilot (ATP) qualified

Student engagem ent

Minimu m two years’ with major airline

Education Specialist

Develop curriculu m and assist students with financial aid

FAA Regulation s and GI Bill benefits

Computer -based lesson creation

Creative thinker

Educati on or Aviation

Administrative Assistant

Assist with employee schedulin g, payroll, and customer interactio n

Recordkee ping

English- fluency, basic MS Office proficienc y

Writing and personal interacti on

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13 FINDING AND KEEPING THE BEST EMPLOYEES

Halls of Air will seek out employees who are adaptable team players with a commitment to the success of our company. HAFA will utilize contacts within the military veteran community and aviation industry to solicit referrals for candidates. The most important first hires will be the Operations Manager and Education Specialist positions who will assist in the hiring of the rest of HAFA headquarters employees.

As new employees are brought onboard, they will undergo training for a month in their new position by co-workers and supervisors. The Classroom Instructors will go through a formal training syllabus to prepare them for their duties.

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HAFA will strive to provide a positive work environment for all employees, giving them the maximum amount of flexibility to maintain their work-life balance. Employees who take on additional duties due to other employees taking leave will be compensated for their extra effort. Those taking long- term leave to have a child or to deal with health problems will receive their full salary and only miss out on bonus payments for work performed.

All employees will be on salary, and will only be required to be at work as long as needed to get the job done. Those employees who can perform their job from home or other remote locations will be allowed to telecommute, although they will still have an office space set aside for them. Tasks such as website design and janitorial services will be contracted out to allow HAFA employees to focus on our core mission.

Treating all employees with respect and as responsible adults will help promote the team atmosphere desired at HAFA. As the company serves our employees, we hope they will provide the highest quality service to our customers. As our company expands, employees showing exceptional ability will be considered first for promotion over external hires.

14 HALLS OF AIR FIRST YEAR HIRING PLAN Position Jun-18 Jul-18 Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19

Chief Executive Officer

Operations Manager

Administrative Assistant

Administrative Assistant

Education Specialist

Head Classroom Instructor

Classroom Instructor

Classroom Instructor

15 COMPENSATION PRINCIPLES

Pay for HAFA employees will exceed the industry average for a given position, as the company will seek to build and retain a team of high performers. Our instructors will receive pay that is comparable to what they would receive flying for a major airline. The other headquarters positions will receive generous compensation that rewards their individual efforts with increased pay. HAFA will seek to share the success of the company with its employees according to two guiding biblical principles:

 Superior performance should be rewarded with increased wages. Workers who serve with distinction should not be taken for granted, but rewarded for their efforts.

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“Who then is that faithful and wise steward, whom his master will make ruler over his household, to give them their portion of food in due season? Blessed is that servant whom his master will find so doing when he comes. Truly, I say to you that he will make him ruler over all that he has.” (Luke 12:42-44, NKJV)

 Wages should be determined mercifully, with the wellbeing of workers in mind. The parable of the vineyard (Matt. 20:1-16) illustrates this principle. Although some workers put in a full day’s work, even those who labored only one hour received a denarius. This amount of money represented a full days’ pay for a Roman soldier, and would likely be more than a typical farmworker would receive. The master of the vineyard cared enough for the workers to give them pay fitting for a full day’s living, even those who provided less value to him.16 He demonstrates grace (unmerited favor) to all in paying them above the prevailing rate for their labor and supplying their needs liberally.

16 EMPLOYEES WITH DISABILITIES

All positions at the Fort Worth headquarters will be open to candidates with disabilities. The office space at AllianceTexas meets all government accessibility standards. Restrooms, drinking fountains, and entrances/exits will be wheelchair accessible. Applicants with mental impairments will not be ruled out from employment if their disability does not prevent them from performing tasks associated with the position. Other reasonable accommodations will be made for disabled employees as necessary, including those with visual or hearing impairments.

Qualified disabled veterans will be given special consideration for employment, especially those who have suffered traumatic injuries in combat. Given HAFA’s target market of ex-military pilots, having employees who paid a sacrifice for their country is a potential strategic asset for our firm.

17 FUTURE EXPANSION PLANS

As Halls of Air Flight Academy continues to grow its value for shareholders, it will plan on financing expansion through its retained earnings. The two primary components of this expansion plan are buying a Level C simulator and starting live flight training.

16 Bruce Winston, “Parable of the Vineyard,” Regent University, accessed July 18, 2015, http://www.regent.edu/admin/media/fms/vod/singlePlayerURL.cfm?address=5000373.

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Purchasing a Level C simulator rather than renting time from airline training facilities would give HAFA greater control over its means of production. The simulator could be rented out to airlines or individual pilots as well for their recurring training requirements. Buying a simulator would require a move into a larger space within the AllianceTexas office complex. A venue with a combination of industrial warehouse space for the simulator and office space for instruction would be ideal. Additionally, buying a simulator would necessitate hiring of a maintenance technician. These additional expenses would be more than offset by the reduced simulator rental expenses and additional income from airline customers.

Leasing hangar space at Fort Worth Alliance Airport and purchasing aircraft is a larger scale endeavor that will only be engaged in after the simulator purchase phase is complete. Expanding into live flight training would allow HAFA to help student pilots build the hours needed to be eligible for ATP ratings, allowing our company to vertically integrate backwards into our supply chain. This effort would require the building of aircraft fleet operations including maintenance facilities. It would also require additional effort in operational risk management and FAA compliance. Fort Worth Alliance Airport is an ideal airport for conducting flight training as it is built for industrial aviation and has reduced traffic in comparison with other major airports in the area such as Dallas-Fort Worth International and Love Field. Live flight training will allow HAFA to more fully grow the next generation of airline pilots from beginning to end, while maximizing shareholder value.

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Figure 4: Fort Worth Alliance Airport

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18 INVESTMENT OPPORTUNITIES

Halls of Air Flight Academy is seeking equity partners to launch this high potential venture. The desired amount for initial operations is $500,000 in capital. This amount will cover the setup of office spaces, initial hires, and curriculum development. Angel investors with entrepreneurial experience would be ideal members of the HAFA team.

Following the initial launch round of investment, HAFA will seek additional equity capital when it purchases a simulator and when it enters live flight operations. Investors can expect to harvest a return on their investment by selling their private equity at these turning points or if HAFA is acquired by a larger company.

19 INCOME STATEMENT

Halls of Air Flight Academy is projected to be profitable in its first year of operation. Once its first phase is fully operational, the company should average a monthly profit of over $100,000 and a yearly after-tax profit of approximately $1 million. Because the company is incorporated in the state of Texas it will pay no state income tax, further increasing shareholder profitability.

Employee salaries and simulator rental are the two largest categories of operating expenses for HAFA. Our company does not intend to cut salary expenses but will try to mitigate simulator rental costs by buying our own simulator in several years. The income statements that follow do not reflect the purchase of a simulator. Simulator rental expenses assume a cost of $275 per hour with two students under instruction at a time.

The cash conversion cycle for Halls of Air’s services will be short, as students will be expected to pay the full amount for a course before starting instruction. Initial deposits put down by students for course reservations will be used to rent simulator time in advance of each course.

As a service company rather than a manufacturer of goods, HAFA has no need to maintain a physical inventory. Its instructional material will be primarily electronic and easily updatable with little need for excessive printed materials. The office equipment required to establish operations will include a network of personal computers, software for course instruction and accounting, copiers/printers, telephones, overhead projectors, and office furniture.

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Aug-18 Sep-18 Oct-18 Nov-18 Dec-18 Jan-19 Feb-19 Mar-19 Apr-19 May-19 Jun-19 Jul-19 Total

Sales $0 $0 $30,000 $150,000 $150,000 $180,000 $205,000 $220,000 $235,000 $250,000 $265,000 $280,000 $1,965,000

Operating Expenses

Utilities $500 $400 $300 $200 $150 $150 $150 $200 $300 $400 $500 $500 $3,750

Salaries $25,000 $25,000 $40,833 $40,833 $56,666 $56,666 $80,833 $80,833 $80,833 $80,833 $80,833 $80,833 $729,996

Payroll Taxes & Benefits $7,756 $7,756 $12,669 $12,669 $17,581 $17,581 $25,079 $25,079 $25,079 $25,079 $25,079 $25,079 $226,486

Simulator Rental $0 $0 $0 $33,000 $33,000 $39,600 $45,100 $48,400 $51,700 $55,000 $58,300 $61,600 $425,700

Office Rent $4,750 $4,750 $4,750 $4,750 $4,750 $4,750 $4,750 $4,750 $4,750 $4,750 $4,750 $4,750 $57,000

Advertising $1,500 $1,750 $2,000 $2,250 $2,500 $2,500 $2,500 $2,500 $2,250 $2,250 $2,000 $2,000 $26,000

Office Supplies $20,000 $8,000 $2,000 $200 $200 $200 $200 $200 $200 $200 $200 $200 $31,800

Insurance $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $4,800

Cleaning $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $3,000

Legal & Accounting $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $3,600

Licensing $0 $0 $800 $0 $800 $0 $800 $0 $0 $0 $0 $0 $2,400

Telephone $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $1,800

Miscellaneous $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $12,000

Total Operating Expenses $61,606 $49,756 $65,452 $96,002 $117,747 $123,547 $161,512 $164,062 $167,212 $170,612 $173,762 $177,062 $1,528,332

Net Profit (Loss) ($61,606) ($49,756) ($35,452) $53,998 $32,253 $56,453 $43,488 $55,938 $67,788 $79,388 $91,238 $102,938 $436,668

Cumulative Profit (Loss) ($61,606) ($111,362) ($146,814) ($92,816) ($60,563) ($4,110) $39,378 $95,316 $163,104 $242,492 $333,730 $436,668

Income Tax $148,467

After Tax Profit (Loss) $288,201

Figure 5: HAFA's First Year Income Statement

Aug-19 Sep-19 Oct-19 Nov-19 Dec-19 Jan-20 Feb-20 Mar-20 Apr-20 May-20 Jun-20 Jul-20 Total

Sales $280,000 $280,000 $280,000 $280,000 $280,000 $295,000 $310,000 $325,000 $340,000 $355,000 $370,000 $385,000 $3,780,000

Operating Expenses

Utilities $500 $400 $300 $200 $150 $150 $150 $200 $300 $400 $500 $500 $3,750

Salaries $80,833 $80,833 $80,833 $80,833 $93,333 $93,333 $93,333 $93,333 $93,333 $93,333 $93,333 $93,333 $1,069,996

Payroll Taxes & Benefits $25,079 $25,079 $25,079 $25,079 $28,957 $28,957 $28,957 $28,957 $28,957 $28,957 $28,957 $28,957 $331,972

Simulator Rental $61,600 $61,600 $61,600 $61,600 $61,600 $64,900 $68,200 $71,500 $74,800 $78,100 $81,400 $84,700 $831,600

Office Rent $4,750 $4,750 $4,750 $4,750 $4,750 $4,750 $4,750 $4,750 $4,750 $4,750 $4,750 $4,750 $57,000

Advertising $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $2,000 $24,000

Office Supplies $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $200 $2,400

Insurance $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $400 $4,800

Cleaning $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $250 $3,000

Legal & Accounting $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $300 $3,600

Licensing $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0 $0

Telephone $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $150 $1,800

Miscellaneous $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $1,000 $12,000

Total Operating Expenses $177,062 $176,962 $176,862 $176,762 $193,090 $196,390 $199,690 $203,040 $206,440 $209,840 $213,240 $216,540 $2,345,918

Net Profit (Loss) $102,938 $103,038 $103,138 $103,238 $86,910 $98,610 $110,310 $121,960 $133,560 $145,160 $156,760 $168,460 $1,434,082

Cumulative Profit (Loss) $102,938 $205,976 $309,114 $412,352 $499,262 $597,872 $708,182 $830,142 $963,702 $1,108,862 $1,265,622 $1,434,082

Income Tax $487,588

After Tax Profit (Loss) $946,494

Figure 6: HAFA's Second Year Income Statement

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0%

43%

13%

39%

2% 1%0%0% 0% 0% 0% 0%

Utilities Salaries Payroll Taxes & Benefits Simulator Rental Office Rent Advertising Office Supplies Insurance Cleaning Legal & Accounting Licensing Telephone Miscellaneous

Figure 7: HAFA's Typical Operating Expenses

20 APPENDIX: HUMAN RESOURCES INFORMATION

20.1.1 Chief Executive Officer

20.1.1.1 General Description Oversees the strategic direction of the company including major decisions regarding personnel, facilities, and finances. Must be able to build partnerships with other business and community leaders that will bring long- term benefit to HAFA.

20.1.1.2 Job Activities  Work with employees to develop short-term (1 year) and long-term (5

year) strategic plans

 Plan the workforce size, compensation, benefits, and make hiring decisions

 Make purchasing decisions for major assets such as simulators, aircraft, heavy maintenance equipment, and facility leases

 Make contacts with business partners, government officials, and community leaders

 Sign off on daily class schedules and flight schedules

 Stands in for Operations Manager when he/she is on leave

20.1.1.3 General Qualification Requirements  Minimum of ten years managerial experience with at least three years

in an executive position

 Experience with military aviation, civilian aviation, and an understanding of training courses is required

 Four-year college business degree required, M.B.A. preferred

 Supervises an expanding company with an initial size of 12-15 people

20.1.2 Operations Manager

20.1.2.1 General Description Manages the production of daily class and flight schedules. Responsible for student enrollment, customer service, and operational decision making for HAFA.

20.1.2.2 Job Activities  Manage Administrative Assistants in scheduling daily class and flight

schedules

 Oversee the enrollment process for incoming students

 Handle student concerns and analyze their feedback

 Verify accuracy of payroll and expense log and make operational purchasing decisions related to HAFA HQ

20.1.2.3 General Qualification Requirements  Minimum of seven years management in intensive operational

environment

 Experience in military aviation or civilian aviation operations, preferably related to pilot training

 Experience managing budgets and forecasting expenditures

 Supervises a deputy Operations Manager and two Administrative Assistants

20.1.3 Classroom Instructor

20.1.3.1 General Description Teaches classes on FAA regulations, aerodynamics, weather, aircraft systems, navigation, and piloting skills. Performs simulator training for student pilots.

20.1.3.2 Job Activities  Provide classroom instruction for groups of 10-12 students over the

course of a three-week course

 Create simulator scenarios to test and improve student pilot proficiency

 Operate full-motion simulator console

 Debrief simulator rides with students

 Grade and evaluate student performance, and provide remedial training as required

20.1.3.3 General Qualification Requirements  Minimum 1,500 flying hours of pilot-in-command time

 Minimum two years airline flying experience

 Four-year college degree, preferably in a technical field

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 Aviation instructor experience desired

20.1.4 Education Specialist

20.1.4.1 General Description Develop and improve the educational curriculum for HAFA’s ground school. Process student financial aid requests with the Veteran’s Administration and other organizations.

20.1.4.2 Job Activities  Design curriculum for HAFA’s ground school, including PowerPoint

presentations and computer based lessons

 Ensure instruction leads to desired education outcomes

 Process financial aid requests and work out administrative funding challenges

 Recommend improvements for curriculum based on industry standards, regulatory compliance, and student feedback

20.1.4.3 General Qualification Requirements  Minimum five years’ experience in education, preferably at the post-

secondary level

 Four-year college degree, with emphasis on education or aviation training

 Ability to produce professional quality instructional materials

20.1.5 Administrative Assistant

20.1.5.1 General Description Provides support to the Operations Department for scheduling and accounting. Handles day-to-day recordkeeping and initial student inquiries with HAFA.

20.1.5.2 Job Activities  Produce the daily class and flight schedule in accordance with the

Operations Manager’s guidance

 Respond to incoming phone and internet inquiries regarding training, and handle applicant processing

 Maintain record logs detailing student training and performance

 Enter accounting information for payroll and expenses

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20.1.5.3 General Qualification Requirements  Minimum two years’ administrative experience

 High school diploma or G.E.D.

 Basic proficiency with MS Office products including Word and Excel

 Ability to learn accounting software such as Intuit QuickBooks

 Fluent in English with sound oral and written communication skills

20.2 COMPENSATION AND BENEFITS

20.2.1 Chief Executive Officer

20.2.1.1 Salary  $250,000 per year

 5% of HAFA’s after-tax profit

20.2.2 Operations Manager

20.2.2.1 Salary  $120,000 per year

 Additional $1,000 per 10 students completed through course

o Average of 300 students per year = $30,000

20.2.3 Classroom Instructor

20.2.3.1 Salary  $130,000 per year

 Additional $1,000 per student group instructed

o Average of 10 student groups per year = $10,000

20.2.3.2 Benefits  Can telecommute or work from home except when instructing students

20.2.4 Education Specialist

20.2.4.1 Salary  $90,000 per year

 Additional $500 per 10 students processed for GI Bill benefits

o Approximately 200 students per year = $10,000

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20.2.4.2 Benefits  Can telecommute or work from home except when required in the

office

20.2.5 Administrative assistant

20.2.5.1 Salary  $60,000 per year

 Additional $1,000 per 10 students completed through course

o Average 150 students per year = $15,000

20.2.6 Benefits Common to All HAFA Employees  Four weeks’ annual vacation with maximum of six weeks’ carryover

through January

 Paid sick leave as required with no maximum

 180 days of paid maternity leave pre- or post-pregnancy

 Two weeks paid paternity leave pre- or post-pregnancy

 High quality family health and dental care with Preferred Provider Organizations (PPOs) in the Fort Worth area

o Less than $500 deductible for most procedures

o Health check-ups and preventative health care included with no deductible

 100% 401k matching up to 5% of the employee’s salary

20.3 PRIVACY RULES Our company will carefully handle Personally Identifiable Information (PII), defined by the Department of Labor as data:

“(i) that directly identifies an individual (e.g., name, address, social security number or other identifying number or code, telephone number, email address, etc.) or (ii) by which an agency intends to identify specific individuals in conjunction with other data elements, i.e., indirect identification. (These data elements may include a combination of gender, race, birth date, geographic indicator, and other descriptors). Additionally, information permitting the physical or online contacting of a specific individual is the same as personally identifiable information. This information can be maintained in either paper, electronic or other media.”17

17 “Guidance on the Protection of Personal Identifiable Information,” United States Department of Labor, accessed August 14, 2015, http://www.dol.gov/dol/ppii.htm.

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Student and employee information that contains PII will be kept in locked cabinets and destroyed after it is no longer needed. Long-term records maintained by the company will minimize the use of PII.

20.4 SAFETY RULES Halls of Air will seek to comply with all OSHA standards, including those for computer workstations and electrical machinery (flight simulators). Simulator maintenance contractors will conduct quarterly inspections which will include electrical and mechanical safety checks. Company leadership will seek to provide a clean, healthful, headquarters building with ample space for each team member to perform their duties. Employee concerns for safety or personal health issues will be prioritized for resolution by management.

20.5 AVOIDING DISCRIMINATION Our company values the different gifts and backgrounds of our employees. Any complaints of discrimination will be addressed promptly by leadership and solutions will be sought before a problem escalates. Our hiring actions will look at each candidate objectively, without respect to their race, color, religion, sex, or national origin. Pay for jobs will be tailored to the position, not the individual. Additionally, age will not be a factor in the hiring or continued employment of individuals over 40.

20.6 PERFORMANCE REVIEW AND DISCIPLINE Performance reviews will be conducted annually, with an informal counseling session held with the supervisor at the mid-point of the cycle. Students will provide feedback at the end of each class and supervisors will track this information for employee trends. This feedback will be provided to individual employees on a regular basis.

Issues of poor performance or misconduct will be documented consistently. Coaching will be provided to redirect the efforts of employees in a positive direction. Supervisors will hold the primary responsibility for providing performance improvement training. HAFA employees will be let go if they are unwilling or unable to meet company standards after repeated coaching efforts.

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20.7 TYPICAL HAFA PAYROLL BUDGET Month Salary Bonuses Medical Insurance FICA Taxes Medicare Taxes Unemployment Taxes Total

January $80,833.33 $8,333 $10,901 $4,353 $1,330 $162 $105,913

February $80,833.33 $8,333 $10,901 $4,353 $1,330 $162 $105,913

March $80,833.33 $8,333 $10,901 $4,353 $1,330 $162 $105,913

April $80,833.33 $8,333 $10,901 $4,353 $1,330 $162 $105,913

May $80,833.33 $8,333 $10,901 $4,353 $1,330 $162 $105,913

June $80,833.33 $8,333 $10,901 $4,353 $1,330 $162 $105,913

July $80,833.33 $8,333 $10,901 $4,353 $1,330 $162 $105,913

August $80,833.33 $8,333 $10,901 $4,353 $1,330 $162 $105,913

September $80,833.33 $8,333 $10,901 $4,353 $1,330 $162 $105,913

October $80,833.33 $8,333 $10,901 $4,353 $1,330 $162 $105,913

November $80,833.33 $8,333 $10,901 $4,353 $1,330 $162 $105,913

December $80,833.33 $8,333 $10,901 $4,353 $1,330 $162 $105,913

Annual Total $970,000 $100,000 $130,808 $52,235 $15,965 $1,944 $1,270,952

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