Acquiring and utilizing an aircraft can be an enormous financial commitment. Understanding what you will be paying on an ongoing basis for the costs associated with ownership is critical for making an informed decision. If you are a business owner or individual investigating private aviation or aircraft ownership, understanding what aircraft ownership will cost you will be critical for your decision.
An aircraft cost calculator will serve as a valuable aid while planning for your new aircraft, allowing you to gain a better understanding of what aircraft ownership will cost you.
In this guide, we will provide a clear explanation of the costs associated with aircraft ownership and operation and demonstrate how using an aircraft cost calculator will allow you to make informed, confident decisions without the need to rely on guesswork.
What is an Aircraft Cost Calculator?
An aircraft cost calculator is a financial planning tool that will allow a potential purchaser to estimate the total costs related to the ownership and operation of an aircraft. This calculator does not only evaluate the cost of the aircraft, but it also considers all future costs that an aircraft owner may incur, including, but not limited to, fuel, maintenance, crew, insurance and cost of depreciation.
The majority of individuals purchasing aircraft for the first time will underestimate the amount of money they will need to pay for aircraft operating expenses. An aircraft cost calculator enables potential purchasers to avoid this by providing a realistic projection of aircraft operational expenses based on the type and frequency of use of an aircraft, the purchase location of the aircraft and the type of use the aircraft will be used for, such as, business, pleasure and/or charter.
Why You Should Know How Much Aircraft Cost of Ownership is Really Going to Cost You
As the name implies, aircraft cost of ownership has numerous parts, not just the one-time cost of purchasing an airplane, but much more. The best price on an aircraft does not necessarily mean it will be the least expensive aircraft to own if you do not do your homework when calculating the operating costs. Ownership costs can generally be broken down into two categories:
- Fixed Costs (Costs that are incurred regardless of hours flown)
- Variable Costs (Costs that fluctuate according to how much the aircraft is flown)
Knowing the above costs will give aircraft owners a clear picture of whether to purchase an aircraft outright, become a fractional owner, or use charter services.
Key Components of Fixed and Variable Costs for Aircraft Ownership
Fixed Costs
Fixed costs for aircraft ownership will be the same whether the aircraft is flown 50 hours or 500 hours per year.
Hangar Or Ramp Costs
All aircraft require a place to store them as safe and secure, therefore the cost of hangar or ramp storage will be different based on where an aircraft is located, how large an aircraft is, what airport the aircraft is located etc.
Insurance
Insurance rates for aircraft are dependent on the value of the aircraft itself, how experienced the pilot is who will be flying the aircraft and for what use the aircraft will be used (business or personal). Insurance premiums can be considerable depending on the type of aircraft and pilots so be sure to budget for insurance accordingly.
Annual Inspections And Regulatory Requirements
All aircraft must undergo routine inspections and complete airworthiness compliance every year; therefore, these expenses should be included in aircraft ownership budgeting.
Pilot Salaries And Training Costs
If you plan to hire professional pilots or crew members to operate your aircraft, crew members' salaries, benefits and ongoing training will continue as part of your fixed annual costs.
Variable Operational Costs of Aircraft
Variable costs associated with aircraft operations increase as the number of flight hours increases.
Fuel Expenses
Typically fuel is the largest component of variable costs. The amount of fuel used to perform a flight will vary based on aircraft type, its engine's efficiency, and the length of the flight.
Maintenance and Repair Expenses
Variable operational costs can include maintenance due to normal wear and tear, engine reserves, and the cost of unplanned repairs.
Airport Operations and Navigation Charges
When an aircraft operates to/from an airport, the airport may charge a landing fee, a parking fee, and navigational service charges; particularly for larger aircraft and/or international operations.
Cost Calculators for Aircraft Owners
Projecting Accurate Annual Budgets
A cost calculator will combine all of the expenses related to the ownership and operation of the aircraft into one estimate that an owner can use to provide them with the following benefits:
- Be confident when projecting their annual budget.
- Make comparisons between different models of aircraft.
- Identify hidden or overlooked costs that may exist.
Comparing Aircraft Types
Aircraft have different characteristics that affect their operational costs. Operators may use a turboprop, light jet, and midsize jet for the same mission type, yet the associated costs for those three different types of aircraft will be very different. An aircraft cost calculator allows an operator to see this information side by side, enabling them to identify the best choice in terms of costs for the mission type.
The comparison of costs between aircraft ownership and chartering an aircraft
- When it makes sense to own an aircraft
- You fly often (at least 250 hours a year)
- You have the flexibility of schedule
- You operate in areas with limited airline service.
- When It Is Better To Charter
- Chartering makes sense when:
- You are an occasional flier
You prefer to pay one cost per trip that is known to you prior to flying
You want no maintenance obligations in aircraft ownership.
In order to determine where the break-even point is between owning an aircraft and using a charter service, using an aircraft cost calculator will be beneficial.
Mistakes That Buyers Make When Not Mapping Out Their Costs.
Buyers focus on price only.
Most buyers choose a plane by its cost only. This does not consider the on-going operating cost for the aircraft, which will continue for the long term.
Underestimating Maintenance
Maintenance of an aircraft will increase with age, and many owners are not properly forecasting for maintenance costs. This may lead to unexpected maintenance bills.
Ignoring the Usage Rate of Aircraft.
Low usage rates will generally result in a higher cost per flight hour. The majority of aircraft cost calculators will adjust the operating costs based on a more realistic number of flight hours.
FAA-Approved Aircraft Pricing
Aircraft Types Based on Their Operating Pricing For Aircraft Owners
Single Engine Piston Prices
Single Engine Piston Aircraft (SEPA) typically have lower prices to purchase, less amount of fuel to operate, but often times have unpredictable maintenance costs.
Turboprop Prices
Turboprop Aircraft (TPAC) are great options for short to medium-haul trips with excellent reliability, and also burn less fuel than Jets.
Light to Midsize Jet Pricing
Light and Midsize Jet Aircraft (LMJ) are more expensive to operate due to their greater fuel costs and maintenance costs, however they allow for quicker travel times and greater comfort for passengers.
For each category of aircraft there is a unique pricing structure that can be analyzed using a digital aircraft pricing calculator.
The Importance of Accurate Data
Accurate data is essential for a digital aircraft pricing calculator to produce reliable results. A digital pricing calculator will use accurate data from multiple sources such as:
Average Fuel Prices
Industry Average Maintenance Prices
Accurate Insurance and Crew Cost Ranges
When accurate data is used it provides an accurate representation of an aircraft's true cost of ownership and helps support the long term planning for an aircraft purchase.
To end on a positive note, you can look forward to an exciting time ahead, but you will continue to need to learn about all the ways in which you might save money with regards to your current aircraft or perhaps even buy your very first aircraft. If you truly want to take the most advantage of your investment and make a wise decision regarding your future aircraft purchase, you will need to understand all the aspects of the cost associated with owning and operating an aircraft, which are just as critical for a buyer/operator to consider as they are when selecting the ownership model that best suits their individual needs.
