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Business Aviation & The Boardroom - How Much Does This Aircraft Cost To Operate?

When looking at the aviation-related costs of your flight department- it helps to know what results you are looking for and who is doing the looking- observes David Wyndham. What an aircraft costs to operate may be a simple question- but the answer is far more complicated and dependent upon whom you ask.

David Wyndham   |   1st February 2012
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How Much Does This Aircraft Cost To Operate?
When looking at the aviation-related costs of your flight department- it helps to know what results you are looking for and who is doing the looking- observes David Wyndham. What an aircraft costs to operate may be a simple question- but the answer is far more complicated and dependent upon whom you ask.

The Chief Pilot is responsible for the safe and efficient operation of the aircraft. Regarding cost efficiency- that person is usually most concerned with fuel- an aggregate maintenance allocation and travel expenses. For a typical mid-sized business jet- those costs amount to about $2-400 to $3-200 per hour (depending on fuel cost per gallon).

The Maintenance Director looks at what it takes to maintain the aircraft in an airworthy condition. He/she will dissect the 'maintenance cost' item and really go into detail. Average routine maintenance accruals for the typical mid-size business jet are about $850 per hour ($250 for parts- $200 for maintenance labor and $400 for the engine reserves).

The Aviation Department Manager is concerned with the cost of the aircraft- plus the fixed overhead items such as hangar- training- insurance and salaries. Those fixed cost items for a mid-size business jet can be about $500-000 per year. For a nominal 400 hours per year operation- the Aviation Department Manager's budget for a business jet is about $1-700-000 annually- or $4-250 per hour average.

All the while- the CFO is concerned with all the Aviation Manager’s costs plus acquisition costs- amortization- interest- depreciation and taxes. These costs can add from 10% to as much as 60% on to the Aviation Department Manager's budget depending on the value of the aircraft.

TIMING IS A FACTOR
It gets more complicated. When did you last ask the question- “How much does it cost to operate?” The answer may vary in relation to where you are between scheduled inspection and maintenance work. Aircraft are complex machines. In order to maintain their reliability and airworthiness- they have maintenance schedules that are far more involved than the typical automobile. Required maintenance schedules vary- but a typical one might look like this:

• Routine airframe & engine checks every 500 hours or 12 months.

• More complicated airframe checks every 1-500 hours or three years (now we are seeing some real costs!)

• Engine mid-life inspection every 2-500 hours (could be costly unless engines are on a guaranteed maintenance program).

• Airframe heavy maintenance every eight years. Often- while undergoing heavy maintenance- the aircraft gets paint and interior refurbishment- maybe some new avionics and cabin upgrades. Costs can be $500-000 to $1.5 million depending on the “extras” added.

• Engine overhaul at 5-000 hours. Cost could be $500-000 per engine unless engines are on a guaranteed maintenance program.

• Aging aircraft inspections once the aircraft has reached 12 years of age or older.

What if the aircraft just had a major maintenance inspection- avionics upgrades- and refurbished paint and interior adding to the cost an additional $1.0 million? Due to the downtime to accomplish all that- the hours flown that year might have been only 250 hours. That cost for this one year will have consequently ballooned to $2.25 million- or $9-000 per hour!

To answer the question 'How much does the aircraft cost' really depends on who you ask and when you ask. Give someone a very broad question and you will get a wide range of answers depending on the individual's perspective and timeframe.

None of the answers are 'wrong' or 'right-' they are merely different. Knowing this- when you are talking about aviation costs with various professionals- you should keep in mind who you're talking with (and their unique perspective) so that you can understand the different answers you receive.

Do you have any questions or opinions on the above topic? Get them answered/published in World Aircraft Sales Magazine. Email feedback to: Jack@avbuyer.com

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