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Tue, Mar 11, 2003

State Monopoly and Compulsion Wrecking Flight Schools

...As If Flight Schools Didn't Already Have Enough Troubles

The State of Florida, like most, is facing a budget crunch, and it's turning to every possible venue to raise its fees and taxes. Some of those efforts may be counterproductive, as recent clamping-down on flight schools in Naples (FL) could demonstrate, very soon.

The state requires Workman's Compensation insurance to be carried by a variety of employers, flight schools among them. Flight schools have often, and typically, not been affected by this, as they often employ independent contractor CFIs to do that work. The CFIs (not the schools, per se), would be required to provide any Workman's Compensation insurance -- if indeed they were required to carry it.

The State doesn't think that's right, and has, in the past month or so, closed all the flight schools in the ritzy southwest-Florida city.

The schools say two things: that they aren't required to purchase such coverage; and/or that they simply cannot get it, except -- of course -- from the State, which charges -- of course -- three times what private carriers used to.

Private companies are pulling back from insuring flight schools, especially since September 11 of last year, because of a perception of increased risk. Meanwhile, [Workman's Comp] insurance-industry-wide, the private companies are, they say, are paying out a buck and a quarter for claims, for every premium dollar they take in. That figure, coupled with the paranoia that now surrounds flight training, has caused private companies to simply stop writing WC insurance.

Monopoly Boomerangs.

That makes things look juicy for the State, which requires the insurance and is now the only underwriter. The problem is, the State won't collect its exorbitant levies; and it may get stuck with paying displaced flight school workers (including those CFIs) Unemployment Compensation. [If the CFIs can't be 'independent contractors' for the purpose of WC, then they must be covered by UC, right? --ed.]

State sees more money, just over the hill...

The State also is assessing fines. One flight school, which has recently seen its insurance on its airplanes rise to $250,000 a year, is looking at an addition quarter million in WC insurance -- on top of $168,000 in WC fines. With the school's already operating near the financial edge, if the State pushes a little harder, there won't be a flight school there, at all -- and there won't be any (aircraft) insurance payments made; and there won't be any fines collected; and there won't forty or so people employed, as there were, a month ago, when the most-recent vendetta started.

R. Scott Cameron, ATP, the AOPA Airport Support Network Volunteer in Naples writes ANN, "We have recently had all three of the flight schools at Naples Municipal Airport (KAPF) grounded because of a situation with the Department pertaining to Worker's Comp. Insurance. As this is a situation that can affect an already troubled industry, I might suggest that you get the word out to our CFIs. It is very hard on our airport budget and impacts our local economy."

Meanwhile, airports hosting flight schools of any size at all will be feeling the crunch. Tie-down and hangar fees, fuel, oil, services -- all are hit by the grounding. The ultimate losses of jobs will hurt the local, and eventually the State, economies, as well, when payments get missed, homes get foreclosed on, and formerly-productive workers go on the dole.

The state 'understands.'

The Naples News noted Saturday, "'They [the flight schools] can reopen their doors once they obtain coverage and can show proof of coverage, and pay the fines,' said Tami Torres, a spokeswoman for the state Department of Financial Services in Tallahassee." See? The State is always ready to be reasonable, and to help. [There's some cynical logic in play: if the airports can be forced out of business, the government can finnaly sell the land to the best-connected developers, making some 'important people' happy --ed.]

FMI: www.naplesnews.com

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