- 13 Sep 2021
- René Armas Maes
René Armas Maes explains a systematic approach to comparing operating costs of candidate aircraft, once you have identified the aircraft types that best fit your requirement.Back to Articles
Previously, we explored how to execute a comparative analysis of suitable aircraft (whether for a private or charter operation), including the necessary steps and key analysis. Here, we'll focus on route performance, technical specifications, passenger comfort, and more.
This time, the discussion covers the assumptions that should be made when comparing multiple aircraft, including the Direct Operating Cost (DOC), different levels of Original Equipment Manufacturer (OEM) warranties and service, technical support, training, hourly maintenance programs and coverage levels.
Direct Operating Cost
When seeking to obtain an apples-to-apples comparison of business jets, you should begin by analyzing the hourly direct operating costs along the typical mission routes the jet will fly.
This cost analysis should include pilots and cabin crew salary (plus any layover expenses), fuel costs, maintenance, insurance, landing, ground handling and parking fees, navigation, and catering costs. Several assumptions will need to be made for the analysis including:
Having sourced the information and costs, summarize your findings and compare all of the candidate aircraft in your comparison. This should cover the total operating cost before and after ownership costs have been considered. Establish the two aircraft on your list that offer the biggest advantage in terms of direct operating costs, and re-evaluate (where necessary) the aircraft that appear to have the highest operating costs.
Once you are sure of your operating cost numbers, shortlist two jets for sale for the next round of analysis.
Warranty, Service and Support
In the case of a brand-new aircraft, you should ask the OEMs about their level of warranty, service and technical support, and build a scorecard table.
Table A provides an example, and includes details of the basic warranty terms for the airframe, engine and other major aircraft components. Having done so, you will be able to quickly identify which OEM generally offers an advantage, per warranty item.
To deepen your exploration of warranties, it is worth investigating which OEMs provide warranty coverage for specific items with no hourly limitation. Moreover, you could assess which manufacturers offer a worldwide support network that provides technical support 24/7/365 in your city, country or region.
Do the OEM’s service and support facilities have an on-site field service representative where you are planning for your aircraft to be based? At the very least, do they offer representatives close to the country or region you’ll base your aircraft in, providing support, parts, training, maintenance and other services?
In the case of a pre-owned jet or turboprop, investigate which companies offer hourly maintenance cost programs covering the engines, APUs, avionics and airframe, as required. For example, all of the engine manufacturers offer their own programs, including General Electric’s OnPoint program, Pratt & Whitney Canada’s ESP, and Rolls-Royce’s CorporateCare. Meanwhile, third-party providers such as Engine Assurance Program and JSSI are also options.
Keep in mind that when you come to shop the pre-owned market, aircraft for sale may already be enrolled on a program that can be transferred to the new owner. In many cases, these programs offer with different levels of coverage, and you should establish exactly what is covered by each coverage level, so that you can assess pre-owned jets that are of interest on a case-by-case basis.
Training and Additional Spare Parts
For a brand-new aircraft, initial training for two pilots and one maintenance technician should be offered free of charge by OEMs. You may also try to negotiate for one additional pilot and one flight attendant to be trained free of charge.
Keep in mind that recurrent training will be necessary for two or three pilots and a maintenance technician from year two onward, irrespective of whether you buy a new or preowned jet. Likewise, a flight attendant will require refresher training annually.
In order to minimize spare part costs, analyse the parts-by-the-hour inventory programs that the respective aircraft manufacturers offer. Are there any ongoing parts needs that are not covered by these programs? Will it be necessary to invest a small amount in spare parts to cover expendables and AOG items? Be aware that manufacturers may be willing to provide some of this investment (particularly in spare parts) on consignment, thereby further reducing costs.
For pre-owned aircraft, evaluate third parties that offer such services in order to stabilize your annual budget.
Conclusion and Recommendation
After careful examination of all the various metrics outlined, select the aircraft that is likely to be the most suitable, based on its ability to perform the highest majority of expected missions, offering the lowest costs advantage (both from an operating cost and an acquisition cost perspective), and its ability to provide a level of comfort adequate for your needs and expectations.