Information Page

MELBOURNE AVIATION GROUP PTY. LTD.

ABN 62 004 589 557 – ACN 004 589 557

GENERAL INFORMATION SHEET

5 May 2015

Introduction

Melbourne Aviation Group is a limited liability company that operates two aircraft for the purpose of providing private flying to its members. The members comprise 38 shareholders. All fixed costs are collected through an annual levy while all variable costs, including provision for engine overhaul and other maintenance, are charged on an aircraft usage basis.

Company Organisation and Charter

MAG was incorporated on 13 December 1963 under the Companies Act 1961 and does not pay a dividend.

All flying shareholders are required to hold a current GFPT or higher license.

MAG has a Board of Directors, which includes the Chairman and Company Secretary.  The day to day running of the Company (accounts, finance, bookings, maintenance, secretariat, etc) is carried out by nominated Directors and assistants.  See Appendix A for an outline of the main tasks.

MAG’s main objective is to provide shareholders with ‘the best aircraft at the lowest cost’.  These are conflicting ideals in theory but we have achieved a satisfactory compromise.

Aircraft

The Company currently operates a Cessna 182T (VH-DGQ) and a Piper Archer III (VH-OKY).  (Please refer to Appendix B for details of flying and other charges relating to the aircraft). Both aircraft are IFR equipped and are located at Moorabbin near the RVAC hanger.

Joining MAG

MAG shares are acquired when an existing shareholder decides to sell their shares.  The selling price is negotiated directly between the buyer and the seller.

When joining MAG a familiarisation flight is required with a flight instructor (currently this may be done by one of our members who is a flight instructor). Under the MAG charter, the company Board has the right to refuse the transfer a share if it believes that it is not in the best interests of the group.

Shareholder Privileges and Responsibilities

The rules under which MAG operates are contained in the company Service Agreement. A copy will be provided to the incoming member at the time of settlement (the document can also be downloaded from the MAG booking site). This is an important document with which all members need to be familiar. Some key points are:

  • Shareholder may book and fly our aircraft subject to the relevant CAO’s, CAR’s etc. and the Company’s Service Agreement.
  • A locker key is provided to gain access to aircraft keys, flight logs, etc.
  • Currency – Pilots must be current in terms of recent experience requirements, license validity and Biennial Flight Review when acting as pilot in command of our aircraft. If you have not flown within 90 days, a check flight with a qualified instructor is required.
  • Failure to observe relevant CAO’s and CAR’s may prejudice insurance cover.
  • Insurance – Comprehensive Insurance cover is held on MAG aircraft plus legal liability against claims which may be made by passengers or third parties up to a total of $5million.
  • Bookings – Aircraft may be booked for a maximum of two weeks without Board approval.  Bookings for longer periods require consideration by and approval of the Board. A booking website is available to members for self entry of bookings.
  • Dry rates are available for flights meeting the criteria specified in the Service Agreement.
  • Accounts are usually issued at the end of every month or at other intervals at the  discretion of the Board. All invoices shall be drawn up in the name of the registered MAG member and payment is requested within 14 days of the date of issue of the account.
  • Daily Inspection – The Pilot in Command is responsible for the inspection and making an entry in the Maintenance Release.
  • Only shareholder pilots and qualified instructors giving shareholder pilots checks/ instruction/ endorsements/ tests are permitted to fly MAG aircraft.
  • Pilots who are not financial for more than 60 days are not allowed to book or fly the aircraft until their account is paid.

General Matters

MAG claims to be the oldest company of its kind in Australia.  This success has depended on:

  • Strict observance of our rules.
  • Complete honesty with Flight Log entries, e.g. reporting heavy landings, proper engine handling, etc.,
  • Prompt payment of monthly accounts.
  • Care of YOUR aircraft at all times.

Detailed privileges and responsibilities are contained in the Service Agreement that is issued to all shareholders and supernumeraries and periodically updated.

There are occasional wash and polish working bees.  Notice is given either by newsletter or email.

The Annual General Meeting is held around November each year.  Due notice is given.  During the ‘General Business’ session, shareholders are encouraged to express their views.  At other times, suggestions, complaints, requests, etc., may be made to the Secretary (in writing), or to the responsible Director for necessary action.

Prospective purchasers are invited to inspect the company books before purchasing.

MAG Aircraft Replacement Policy

Aircraft follow a depreciation curve where they reduce significantly in value in the first 8 – 10 years.

By purchasing at the bottom of the depreciation curve, we minimise the actual depreciation loss and ensure that at eventual replacement the capital contribution is minimised. Purchasing newer aircraft would subject the group to significant depreciation and hence lead to larger calls at replacement. The 8-10 year purchase guideline we believe will lead to the best possible fit to the “best aircraft at the lowest cost” goal.

MAG has determined that it will replace each aircraft in the fleet approximately every TEN years on average.

The choice of 10 years is somewhat arbitrary, and is a compromise between maintaining a modern, up-to-date aircraft and limiting funding calls on members’ to a reasonable amount. With a staggering of replacement, calls should be required only every 5 years and by limiting the aircraft replacement age differential to 10 years, the size of those calls should be relatively small.

The staggering of aircraft replacement is intended to both limit the size of calls on members and also to spread the effort required to transact aircraft.

It is anticipated that aircraft approximately 8-10 years old and/or with around 1000 hours TTIS will be selected. Assuming normal usage of 300 hours a year, this should result in MAG selling an aircraft at around 18 years of age and approximately 4000 hours TTIS.

Prospective years for replacement of each aircraft are:

Cessna 182
(or successor)

Piper Archer
(or successor)

2027

2023

2037

2033

2047

2033

The financing of MAG aircraft acquisitions will be made through proceeds of sale (or insurance payout in the event of a loss) and funding calls on members for any difference needed. The Board will secure all the funds required for an aircraft purchase (including the amount needed to re-build reserves to the correct levels given the prospective aircrafts engine and propeller times to overhaul) prior to signing any purchase agreement.

Approaching the time for an aircraft replacement, the Board will estimate the size of the call likely to be needed and forewarn members of the amount and likely timing.

In the event of the complete loss of a MAG aircraft, the Board will endeavour to secure a rental aircraft for the group for a period of time whilst a new aircraft is researched and acquired. If possible, a rental aircraft of a type similar to that which is proposed to be acquired will be secured.

Following replacement under this scenario, it will be necessary to adjust the age at which each aircraft is replaced to re-establish a five year staggered cycle. It is left to the Board to recommend this adjustment once a replacement aircraft is purchased.

Additional Information

Additional information can be obtained from the MAG web site at www.mag.com.au

 

APPENDIX  A

Board of Directors

  • Peter Cossins – Chair
  • Rod Hunt
  • Richard Weil – Secretary
  • Andrew Jeffreys
  • Nigel Weston
  • Andrew Stopp
  • Mark Semer
  • Selwyn Favish
  • Colin Dale

Company Management

  • Chairman – Peter Cossins
  • Deputy Chairman – R Richards
  • Company Secretary – R. Weil
  • Finance Director – R. Hunt
  • External Accountant  -Peter Smith, Randsmith Accountants
  • Maintenance Director  – R. Hunt
  • Accounts – R. Hunt

APPENDIX  B

Charges

Fixed Levy

Fixed costs (Insurance, FAC Gait charges, Administrative expenses, etc.) are recovered by an annual levy set around the beginning of each financial year.

The 2017/2018 levy is $910.00

Flying Rates (20th February 2019)

The flying rate is set to recover all variable costs and includes provision for future maintenance (eg. engine overhaul).

  Wet rates $/hour Dry Rates $/hour  
VH-DGQ $255.00 $139.00 By Airswitch
VH-OKY $185.00 $108.00 By Tacho

N.B. all rates include GST.

Air Services Australia TNC/ERC/MET charges and landing charges are extra. Rates vary in line with costs; fuel fluctuations sometimes require monthly variations.

Late Payment Charge

3% per month, subject to a minimum of $20

Joining fee

A one off non-refundable fee of $100.00 (including GST) is charged to supernumeraries/new share purchasers.