Private jet: the cost of ownership
Owning a Private Jet is a life changer for a business or owner, freeing them to decide when they travel. It can offer travel from A to B in a way that no airline can match, saving time, increasing productivity, ensuring security, maximising safety and, can become a reliable and efficient resource for a busy individual. It is a mark of entrepreneurial spirit and success like nothing else.
But owning a jet also implies a new set of responsibilities. At Av8jet, we believe in being transparent with owners who often spend millions on an asset but have little knowledge of how to operate it or what it should cost. For some, understanding the true cost is perhaps not essential, but for those that need to know, we can help! One of our frequent consultancy tasks is to advise businesses on the operating costs. Understandably, certain people want to go into ownership with their eyes wide open! Aside fuel, landing fees, crew, we have the demanding task of estimating maintenance costs.
A well-known industry resource, Conklin & Decker, publishes maintenance costs per hour, including numbers for airframe parts, labour and engine reserves for every model. However, these numbers are derived from the manufacturers and are based on maintenance costs of brand new aircraft, operating under warranty, with US Labour rates and maintained at a local OEM service centre. For a pre-owned jet, we think these numbers are almost irrelevant to the true maintenance costs of a jet, save that they might be used as a very crude estimation of the relative costs between different types, but little more.
Frustratingly, there is very little independent research into the increasing maintenance costs of a Jet over time. However, some research for the U.S. Airforce in 2006 showed that the age of an aircraft has considerable effect on the maintenance cost. For the first six years of an aircraft’s life, the annual rate of increase in maintenance cost was shown to increase on average 17.6% percent per year. Thereafter, this age effect reflects aircraft coming off warranty, and overall, increase the periodic cycle of maintenance. For mature aircrafts, aged 6–12, a 3.5 percent annual age effect was found and intriguingly, for aircraft over 12 years of age, an age effect of 0.7 percent zero was computed.
The maintenance work can be divided into various functions.
Technical Records Management
This comprises record keeping, inventory and claims, monitoring manufacturer publications. In short all administrative functions which are handled by a Continuing Airworthiness Management Organisation (CAMO). Often the CAMO of the aircraft will use a computerised online tracking product to maintain a track record of each and every task that will be required.
Warranty and non-warranty fault fixing, smaller scheduled inspections, updating of the electronic databases, minor upgrades and the day-to-day upkeep of your aircraft fall into the category of Line Maintenance. In many circumstances, this line work is completed at home base to avoid incurring positioning costs. Additionally, many individual items (such as fire extinguishers, locator transmitters) have their own maintenance cycle, which doesn’t necessarily tie up with a pre-determined interval, so we refer to these items as “Out of phase”.
Your aircraft will require significant preventative safety checks at pre-defined intervals. Typically these fall at 200, 400, 600, 1200, 2400, 4800 & 9600 flight hours, plus calendar inspections (annual/bi-annual etc). During the base maintenance, panels are removed and this is often when corrosion is discovered, which cannot be left untreated. Base maintenance involves a substantial amount of work and must take place in an approved, well-equipped hangar. Depending on your base it may well be required to fly the aircraft to your chosen maintenance facility for these checks, as not all airfields have the right facilities.
Major Component Overhauls
Typically Engines have a fixed life, but some are on condition. At the fixed life hours (e.g. 3,500 or 6,000) or on condition, if applicable, the engines require a full overhaul (i.e. zero timing) and each component within the engine must be then repaired, replaced or overhauled depending on its age and condition. Landing Gears also require overhaul, and typically this occurs at either 10 or 12 years. Undoubtedly, the overhauls and larger interval Base Maintenance create spikes in the cost of maintenance.
Modifications & upgrades
Over time new airspace requirements mean that aircraft must be upgraded for compliance with the latest Communication, Navigation, Surveillance equipment, plus optionally owners may want to upgrade the satellite communications and entertainment systems for better cabin connectivity. When you take all the above into account, what you end up with is a cost profile that both increases over time, but also is very spiky. An example cost curve over time is shown below: Now you can see from the above chart that the cost increases after warranty expiry, and after that, has some rather unwelcome spikes. So the overall cost per hour for an owner will depend upon what timescale is considered and the hours flown during that period, and it can be remarkably different for two owners of the same aircraft, just because they own it at different times. If one knows the current status of a specific aircraft, have audited the records, and have a fixed and known period of ownership, then we can begin to estimate the maintenance costs. But there will always be unknown new modification requirements, corrosion and unscheduled defects, which make any estimate only budgetary in nature.
Manufacturers of both engines and airframes have sought to flatten out these spikes by selling programs for airframe and engines. These aftermarket maintenance programmes cover both scheduled and unscheduled maintenance events, which in theory eliminates unforeseen surprises … or do they? Among the oldest and best regarded of these engine programs is Honeywell’s Maintenance Service Plan (MSP) which was first offered back in 1976. MSP was designed to help smooth out the costs of ownership and maintenance of Honeywell’s TFE731, which is fitted to every Hawker amongst other aircraft. These engine programmes are to a large degree an insurance against unscheduled stoppage and a piggy bank for the cost of the overhaul in several thousand hours’ time, which the owner gets in return for a fee per hour flown, per engine. Today around 80 percent of TFE731 engines are enrolled in the program. These programmes therefore help the operator predict their maintenance costs, eliminate unexpected expenses and even out the big costs. Scheduled and unscheduled maintenance are ordinarily covered, as are replacement costs of life-cycle limited components, some Service Bulletins. The MSP program is also transferable at time of sale of the aircraft. Also, the value of aircraft not covered by MSP can be significantly less. However, there are some catches and we help point these out to owners.
Post originally published on bworth.net