How to Price Block Time and Prepaid Flight Accounts

Flight school block time is flying sold in advance at a lower rate than pay-as-you-go. Price it well and it smooths your cash flow, keeps students flying on a rhythm, and cuts the number of card declines the front desk chases. Price it badly and you have sold hours below cost, taken on a liability you spent as if it were revenue, and written a refund policy nobody can explain. The discount should come out of costs you actually save by being paid up front, never out of your engine and maintenance reserves.

There are three common structures: straight hourly billing, block packages of a fixed number of hours, and a prepaid dollar balance that every flight draws down. Before you pick one, decide what the money is for, what it covers, when it expires, what happens to unused hours, and what happens when an account goes negative. Those rules matter more than the size of the discount.

Three ways to charge for flying

Hourly billing is the simplest. The flight is completed, the Hobbs or Tach time goes on an invoice, and the card is charged. You carry no liability, but you carry all the collections risk, and every flight is a separate payment that can fail.

Block packages lock in hours. WingPath Flight School in Daytona Beach, for example, sells block time in 25 or 50 hour packages for its RV-12iS fleet, paid up front and usable for solo flights and rentals but not dual instruction. That last restriction is the kind of rule every block package needs written down.

A prepaid balance locks in dollars, not rates. It is easier to run because nothing needs repricing when fuel goes up, and a student can use the same balance for aircraft, instruction, ground, and fees. The incentive to prepay can be a member rate or a credit bonus instead of a cheaper hour.

Nothing stops you from running all three: hourly for walk-in renters, blocks for time builders, and a prepaid balance for everyone in a training program.

Setting a flight school block time discount you can afford

Start from your cost per hour, not from the school down the field. For each aircraft, add up what one Hobbs hour actually costs you:

• Fuel and oil, if you rent wet
• Engine overhaul reserve and propeller reserve
• Maintenance: inspections, parts, and the squawks that come with hours
• Insurance, hangar or tie-down, and financing or lease payments, divided by the hours you realistically fly in a year
• Your share of overhead: the front desk, software, the building, card processing

The gap between that number and your rental rate is your margin. A block discount comes out of that margin. To see how fast it goes, take made-up round numbers: if an hour costs you $150 all in and you rent at $185, you have $35 of room. A $10 block discount gives away more than a quarter of it on every block hour. Run the real numbers for your fleet before you print a price.

Then ask what prepayment actually saves you:

• Fewer failed payments. One payment instead of 10 means fewer declines and fewer awkward calls.
• Lower processing cost per hour. Card fees are mostly a percentage of the amount, so one large payment saves only the small per-transaction part. Don't build the discount on it.
• Predictable cash. Useful, but only if you treat it as money you still owe (more on that below).
• Utilization. A student with 25 hours on account has every reason to book. That is the best reason to offer blocks at all.

Some details that change the math:

• Fuel. A wet block sold at a fixed rate exposes you to fuel price increases for as long as the block lasts. Either add an expiration date, write in a fuel surcharge clause, or sell blocks dry.
• Hobbs or Tach. Sell the block in the same unit you bill. A block sold in Hobbs hours and drawn down in Tach hours creates arguments.
• Instructor time. Decide whether the discount covers instruction or only the airplane. One reasonable choice is to discount the aircraft and leave instructor rates alone, because instructor pay doesn't drop when a student prepays.
• Which aircraft. A block for the 172 shouldn't quietly turn into hours in the complex airplane. Tie each block to a make and model, or define how hours convert.

Write the rules before you sell the first block

A one-page policy, signed at purchase, settles disputes before they start. Cover:

1. What it covers. Aircraft, specific makes and models, instruction, ground, fuel surcharges, cancellation fees. Say plainly what it does not cover.
2. Expiration. Whether hours expire, and when. Check your state's rules before you set one.
3. Transfers. Can a student share hours with a spouse, or sell them to another student?
4. Maintenance downtime. What happens when the block aircraft is down for a week. Substitute a similar aircraft at the block rate, or pause the expiration date.
5. Refunds. One approach that holds up: refund the amount paid minus the hours flown, repriced at the standard hourly rate, so the discount only applies to hours the pilot actually used. Whatever you choose, write it with numbers.
6. Negative balances. How far below zero an account can go, and what happens next.

Unused balances, refunds, and state rules

Prepaid money isn't revenue until the hours are flown. Ask your CPA how to book it; it is usually carried as a liability until it is earned. The practical rule for an owner is simpler: don't spend block money as if it were already yours. When a school does, a slow season or one big maintenance event can leave it unable to deliver the hours students paid for.

Students know this risk. In April 2026, AOPA reported on a school closure that left students with prepaid hours in doubt, noting that the FAA doesn't regulate prepaid tuition and that pilots are advised to limit how much they prepay. A good prepaid program answers that worry directly: modest block sizes, a written refund policy, and a balance the student can check at any time.

States can also have their own rules. California is one example: Education Code 94874(j) exempts flight instruction providers from the state's private postsecondary education law only if they don't require students to sign contracts of indebtedness and don't require or accept prepayment of instruction-related costs over $2,500. Other states have their own consumer protection, gift card, and unclaimed property rules that can apply to unused balances. Check with your attorney and your CPA before you set block sizes, expirations, or forfeiture terms. This isn't legal advice.

Handling negative balances

Prepaid accounts go negative. A long cross-country costs more than the balance, a fuel surcharge lands after the flight, or an instructor adds ground time. Pick a rule and apply it to everyone:

• Top up before the next booking. The cleanest rule. The pilot can't book again until the balance is back above a minimum.
• Charge the card on file. Automatic, but only fair if the pilot agreed to it in writing.
• Allow a small negative limit. Convenient for regulars, but it needs a firm ceiling and a reminder schedule.

Whatever you choose, send the reminder the day the account goes negative, not at month end. The same card-on-file and balance rules help with late cancellations too, which we cover in how to reduce no-shows at your flight school.

Make the balance visible

Students trust prepaid accounts when they can watch each flight draw them down. Every invoice should show what was used and what is left. Every month, reconcile the total of all prepaid balances and unused block hours against the liability on your books. If the two numbers disagree, find out why before you sell another block.

Good flight school billing software keeps these numbers in front of everyone. In Sky Schedule, a prepaid balance has a top-up checkout and a ledger, invoices drafted from completed flights can be paid from the balance, staff can add a manual credit, and negative balances can be charged to a saved card or sent a reminder. A school setting can require a minimum balance before a pilot books. Packages track hours in buckets, can be tied to one make and model, and can carry an expiry date. When a package covers a flight, the invoice shows the hours used and the hours left, so the student sees the same numbers the front desk does.

Your next step

Pick your two busiest aircraft and work out the all-in cost of one Hobbs hour for each. Compare it to your rental rate, decide how much of that margin you are willing to give up for prepayment, and write the one-page policy above with real numbers in it. Then have your CPA read it before you sell the first block.