How to Understand Your Jet’s Maintenance Costs

Maintenance can be one of the more confusing categories of aircraft operating costs, while other areas are easier to define. Following we'll explore some of the complexities of aircraft maintenance costs...

Aircraft fuel is a variable cost: every hour that you fly, you consume and pay for fuel. As an hourly cost, fuel is essentially a constant – the more you fly, the greater the total cost, though the cost per hour remains constant. But how about maintenance? Are the costs variable or fixed? In reality, they’re both, making them quite complex to budget for!

While most operating cost guides show maintenance only as a variable cost per flight hour, if you double the hours flown, maintenance costs double too. While this simplifies the cost, it can wreak havoc on your annual budget and your average hourly flying cost. A few examples will help to illustrate the complexities here...

If an aircraft needs an annual airframe inspection costing $10,000, then no matter how much or little you fly, the bill is fixed at $10,000 per year. If, however, an engine check is due every 100 flight hours costing $300, every 100-hour interval sees a $300 expense incurred at an average of $3 per flight hour.

Fly 600 hours annually and your bills will total $1,800, but they will still average $3 per flight hour.

On the other hand, if an airframe inspection is due every six months (or every 300 flight hours) at a cost of $15,000, operators flying less than 300 hours every six months have a fixed cost averaging $2,500 per month. Operators flying more than 300 hours in a six-month period face what would be considered a variable expense of ~$50 per flight hour.

To elaborate, if you fly 300 hours per year, you incur $30,000 in maintenance annually at an average $100 per flight hour. An operator flying 600 hours annually still only pays $30,000, but at an average of $50 per flight hour.

Scheduled and Unscheduled Aircraft Maintenance Costs

Another reality of aircraft maintenance is that it has scheduled and unscheduled cost components. Scheduled maintenance can be based on hours flown (variable cost) or months since the last event (fixed cost), as highlighted in the above examples.

Alternatively the formula could be based on “cycles” flown (e.g. every so many landings), or be a combination of all of these. Conversely, unscheduled maintenance is based on something failing (a flat tire) or an unexpected part or component breaking.

Unscheduled maintenance is unpredictable, though the nature of your operations may provide some indicators of how to budget for the unknown. 

For example, if your aircraft typically flies into long runways, it may be that only light braking is necessary which will help extend the brake life and mean that you don’t need to budget for new brake pads so often.

In contrast, if a larger percentage of your operations are on relatively short runways requiring the pilot to apply moderate braking, wear and tear on the brake pads will be greater. That’s because brake pad thickness is inspected and measured regularly. When its thickness falls below the acceptable limit, the pads are replaced.

Where Does MRO Shop Labor Sit on the Fixed/Variable Cost Scale?

One maintenance cost that may be either fixed or variable is shop labor. If your aircraft is maintained by a third-party maintenance facility, shop labor is billed hourly according to the maintenance performed.

Scheduled items are commonly billed at a flat rate. A simple example would be to open an access panel to inspect the hydraulic connection.

The time to open, look, and close the panel is billed at a fixed fee. If, however, the hydraulic connection inspection reveals a leak, the clock starts ticking and the cost of parts are billed as necessary.

Troubleshooting is usually an unscheduled event billed by the hour. So, if the radio is working intermittently, it could be due to a connector, the line to the antenna, the antenna, or the radio unit itself and will require some troubleshooting to fix. 

(Note: a scheduled inspection often finds things that need repairing or replacing and the cost of these items is billed as an unscheduled part of the scheduled event.)

Should you appoint a Director of Maintenance in your flight department, this could represent a significant, fixed cost in terms of a full-time salary. That individual (or team of individuals) may be extremely busy one month and relatively slow the next, so allocating their salary, benefits, and associated overhead as an hourly cost will be difficult, if not impossible.

Aircraft Engine Overhaul and Refurbishment Costs

Engine overhaul and refurbishment costs are generally considered variable costs. Whether it is a piston engine overhaul at 2,400 hours or a turbine overhaul at 6,000 hours, the costs are a significant portion of the operating budget.

A large business jet turbine overhaul can run to over $1 million each! Although a cost such as this is infrequent, it is significant and requires your close attention.

Next time, we will discuss maintenance costs from the perspective of cash versus accrual in maintenance budgeting, discussing hourly engine/airframe maintenance programs and their potential impact on the resale value of your aircraft.

We’ll also explore what happens when confusion over these costs meets with miscommunication, and how to avoid that from happening... Stay tuned!