Aircraft Cost of Ownership Calculation

Over the years, calculating the cost of owning an aircraft is one of the most frequently asked questions I receive. There are many different cost factors that go into aircraft ownership. The purchase price is only part of the total cost of the aircraft ownership pie. Other pieces include taxes, hangar or mooring costs, fuel, oil, insurance, ramp fees, engine reserves, routine maintenance, inspection items, and subscriptions, to name a few. The following article will help you determine what costs are involved in owning a plane and how to plan your finances accordingly. Please note that the following article provides a generic estimate on how to calculate the cost of ownership for most piston aircraft.

First, we’ll break the Total Cost of Ownership into two sections; the first section will be the indirect cost, and the second section the direct cost.

INDIRECT COSTS

Indirect costs are the costs you will pay whether or not the plane flies. These expenses include the purchase price of the aircraft (or monthly fees), insurance, mooring or hangar fees, subscription fees, taxes and tax benefits.

Let’s start with the first indirect cost I mentioned, purchase price or cost of capital. This is one of the easiest expenses to calculate. If you finance the plane, get a quote from the bank on the required down payment and interest rate. Currently, rates are approximately 6% with a 15% minimum down payment and 20-year financing. For example, if you put a 20% down on a new DA40XLS priced at $350,000, your monthly payment would be just over $2,000 a month for 20 years.

To calculate insurance rates, call your insurance agent and get a quote for the aircraft you’re considering purchasing with your level of experience.

Hangar and mooring fees are self explanatory. Call the airport or FBO where you want to base your aircraft and ask what options are available. There are generally about four options: moored (leaving the aircraft outside), covered (aircraft is outdoors but has a shade cover), shared hangar (aircraft is constantly moved in a large hangar shared with various other aircraft), and finally an individual hangar or Thangar. At many airports, hangar space is at a premium, so don’t be surprised if you end up on a waiting list. Hangar prices vary depending on their location. My hangar in Concord, NC costs just over $300 per month, while the same hangar in Fort Lauderdale would cost more than $1,000 per month. If you keep your plane outside, make sure you cover it at least. It will protect the interior and avionics. Also, keep in mind that some insurance companies will lower your premium if you can hang your plane in a hangar instead of keeping it tied up.

Subscription services may not apply to you. If you have a J-3 puppy, you can skip to the next paragraph. Almost all aircraft manufactured after the early 1990s offer GPS IFR. If you have an IFR GPS, you will need to subscribe to a monthly update to maintain your legal database for GPS-only navigation and shooting GPS approaches. If you have XM Weather, you’ll pay around $30/month for the basic subscription or $50/month for the full package. The winds aloft feature in the complete package is worth more than the extra cost to get it. XM radio is extra. If you own a glass-paneled aircraft, you can opt for Garmin’s secure approach board and/or taxi board services. Visit http://www.mygarmin.com for cost information. Jeppesen also offers approach plates for glass cockpit aircraft. This service requires a higher initial setup cost and monthly payment, compared to Garmin approach plate services.

Unfortunately, taxes don’t go away with airplanes, with the exception of tax-exempt corporations (consult an aviation tax advisor for more information and to see if you qualify). Taxes vary from state to state. In Florida, it is 6% of the purchase price. In North Carolina it is a flat tax of $1,500. North Carolina, however, charges property taxes that vary by county and city. Where I live in North Carolina, the aircraft property tax rate is about 63 cents per $100, and I have a city tax of 42 cents per $100. If you use the aircraft for business, you may be able to depreciate the use and cost of the aircraft, which benefits your estimated cost of ownership. Consult an aviation tax specialist to determine your individual situation.

DIRECT OPERATING COSTS

Calculating direct operating costs is a bit more complicated. There are different ways to calculate what each hour of flight will cost you. My method is just a method, but it works. Here you need to decide how many hours you plan to fly per year to set an annual base budget.

Let’s start with the basics. Most piston engines will require an oil change every 50 hours. Depending on where you live, a standard oil change will cost between $150 and $300. Call the local mechanic in the field and find out what he charges. If you plan to fly 100 hours a year, the math is simple.

Fuel consumption varies for different aircraft. You can usually visit the manufacturer’s website or check the POH to get the cruising fuel economy. If you are flying an aircraft with a worn out engine, consider the published fuel consumption as a best case scenario (which is often not the case). Find out how much avgas costs at your local airport and do the math. Please note that avgas prices vary

Engine and propeller reserves are factored into the equation even if you have a new or short-lived aircraft that you plan to sell well in advance of the overhaul. You can usually get a quote from a local FAA engine repair station on the cost to overhaul your engine or the cost to install a factory remanufactured engine. Take that price and divide it by the remaining hours up to TBO and you’ll have an idea of ​​how much you need to save each hour. If you plan to buy a twin, double the costs for fuel, engine, and propeller.

Scheduled maintenance is another cost worth planning for. Every year, your aircraft must pass an inspection. Again, prices will vary depending on where you do the inspection. Shopping rates in South Florida average $95 per hour, while in North Carolina they are around $70 per hour. Call a service center familiar with your plane and see how much they charge for a standard annual inspection. Please note that the price you are quoted does not include alert items, airworthiness directives, service bulletins, or statutory replacement items. These are additional costs. If your plane is still under warranty, then you shouldn’t expect surprise repair bills when you pick it up. A safe bet for budgeting for the additional expenses of an out-of-warranty aircraft is to double the price of the annual inspection fee; this budget will cover almost any unexpected surprises that may occur during the year. You might also consider a reserve for paint, interior, and avionics upgrades, in which case you’ll want to save a bit more.

Finally, you’ll need to determine how much your plane will be worth if and when it’s time to sell it. Airplanes typically stop depreciating after 5 years. Just like cars, their depreciation rates vary. Companies like Vref and Aircraft Bluebook offer retail prices and exchange prices.