Aircraft Ownership Cost (Obvious and Hidden)

 

This blog is a primer on the cost of aircraft ownership. In shedding light on aircraft ownership expenditure, certain costs are manifest overtly while others are hidden.  These ownership and operational costs are categorized into fixed and variable costs.  New and prospective aircraft owners must understand these costs and meticulously allocate their resources and budget accordingly, thus preventing unforeseen expenses and sticker shock, which might prove disconcerting for some buyers and owners.  Moreover, it's advisable and prudent to secure the services of a worthy Aircraft Consultant with specialized knowledge of your particular aircraft type & model.  Detailed consultation ensures expert guidance and the formulation of an optimal strategy for your aircraft's seamless operation and smooth maintenance.  Some buyers might be unaware of several hidden costs of owning an aircraft.  Below is a transparent list of some of the most common obvious and hidden ownership and operational costs:

Insurance Cost 
Airplane insurance can be expensive, especially if you're flying a high-performance or vintage aircraft.  Aviation Insurance has two inclusions; one is Liability, and the other is Hull insurance.  It is essential to purchase liability insurance to protect yourself and others in case of accidents or injuries.  Aviation insurance premiums are influenced by several factors, such as pilot experience, history of previous claims, and the purpose of the aircraft (either for personal use or commercial operation).  Hull Insurance covers any damage to the actual aircraft and is based on an "Agreed Value" with the insurance company.  Also, geographical considerations, which include weather patterns & local airport conditions, tend to significantly impact the insurance premium and rates, which further contributes to an increase in the overall cost of the coverage.

Maintenance Cost

An airplane requires regular specific maintenance by an FAA-certified Maintenance Repair Overhaul (MRO) specialist/facility to operate safely and efficiently like any other vehicle.  Maintenance costs can increase quickly, especially for older planes requiring specialized repairs and upgrades.  For vintage or older airplanes, sourcing replacement parts could be challenging; certified skilled mechanics and technicians are needed and may be scarce in this regard.  Such scarcity can raise the costs for some specialized repairs, making maintenance for vintage planes costly.  Moreover, stringent safety regulations mandate thorough inspections and routine overhauls, which further contribute to a rise in the overall maintenance cost.  That may include the following:

A. Scheduled Inspection Cost: For safe flight operations and required airworthiness certification, aircraft must undergo regular Scheduled Inspections based on the use designation, number of hours flown, and annual checkups. Each airplane's inspection mandate must be adhered to; a good ownership practice is maintaining them. It protects the owner, passengers, the public, and the aircraft's value. 

B. Engine Program Cost / Engine Reserves: By their nature, Jet Engines are expensive and complicated machines and require additional care and protection. A good Engine Program should be considered as insurance for your Jet engine. If your Jet airplane needs to be enrolled in an engine program, you should build a reserve and budget for this potential repair or replacement. Here is a blog article from PlaneTadaa discussing the merits of enrolling in an Engine Program.

https://planetadaa.com/blog/engine-programs

A. Ground Handling: Depending on the location, country, and weather, fees such as deicing, landing, etc. can be a significant cost. Plan your trip, know the costs, and avoid many surprises.

B. Cleaning Cost: Due to the recent global pandemic, better health safety standards have made aircraft cleaning paramount and the norm.  You always want to travel in a safe, secure, well-maintained, and clean airplane.

C. Hangar Cost: Storing a private airplane can be costly. You may need to rent space at a local airport or pay for storage at a private facility. The hangar rental fee is based on the size of the aircraft purchased, its displacement if placed in a shared hangar, and the storage facility's location. Hangar costs are often higher for secure, climate-controlled hangars, which provide better protection against environmental elements. For those who do not have access to any personal hangar space, these storage costs will reduce the overall financial cost of aircraft ownership.

Operating Costs
Owners and buyers need to consider other operating costs, including the pilot & crew costs, which may include the training cost, pilot cost, cabin crew cost, pilot & crew travel cost, landing fees, pilot salaries, and administrative expenses. High-performance, bigger aircraft often have elevated fuel consumption, which intensifies the fuel & operating costs. Pilot salaries, landing fees at different airports, administrative expenses for regulatory compliance, and routine inspections also contribute to the total operational expenditure. 

A. Pilot & Training Cost: If you are not already a pilot, you must hire a professional pilot or acquire the necessary training and rating. The cost of hiring a pilot will vary based on the pilot's ratings, the plane to be flown, and the pilot's availability. Acquiring your pilot license requires training from a good flight school, time, and financial investment. 

B. Cabin Crew Cost: Depending on the size of the plane and the level of service and experience you want for yourself and your passengers, hiring the right crew member(s) is needed.

C. Pilot & Crew Travel Cost: Depending on where the pilot and crew are based/reside and where the aircraft is based, the airplane owner will incur additional travel and related expenses.    

Fuel Costs: Fuel is a significant expense for airplane owners, and the cost can vary depending on the type of aircraft you own, the kind of fuel the airplane consumes, the quantity, and the distance you fly.  Fuel prices may also fluctuate based on geographical areas.

Upgrades and Modifications: As technology evolves, you may need to invest in upgrades or modifications to keep your aircraft current and compliant with new regulations. These costs can add up quickly and may be required by law. Navigation equipment, avionics systems, and communication technologies recurrently advance, necessitating expensive upgrades to meet these evolving regulatory standards. Compliance with such mandatory modifications ensures safety and adherence to different aviation regulations. Failure to upgrade might even result in imposing some operational restrictions or grounding, thus emphasizing the need to budget correctly for these continuing expenses incurred during aircraft ownership. 

Accounting & Legal Cost
The Accounting and Legal costs vary based on the complexities of the aircraft ownership structure, the number of fillings, and location.  Protect your financial interest and assets with the best accounting services & legal compliance.

Consultancy Cost
An excellent professional Aircraft Consultant provides transparent guidance, care, and expertise in aircraft ownership, operation & maintenance.

Overall, owning an airplane can be a significant expense, and it is thus essential to consider all the costs involved with an Aircraft Consultant before purchasing a plane.  However, many aircraft buyers and owners find the freedom and convenience of owning an aircraft worth the investment.  Consult with PlaneTadaa; we ensure you purchase the right aircraft for your utilization, financial strengths, and requirements—we save you time and money. Schedule a consultation here: 

https://planetadaa.com/aviation-aircraft-consultation#Business_Jet_Personal_Aircraft