Insights from a multiple SR22 operation

[alfadog]

Just had a long discussion with a fellow that is the operations manager of a privately owned aircraft operation that utilizes brand new Cirrus SR22's. Currently they have four airplanes and are in the process of purchasing a fifth. Thought y'all might have some interest in what he had to say.

These are non-turbo aircraft. They purchase them brand new and sell them when they have about 1200 hours on them.

Since they are brand new aircraft all maintenance other than routine maintenance is covered under warranty. Operational costs for fuel, maintenance, insurance, hangar, run about $200 per hour. That figure includes doing more maintenance than necessary e.g. replacing brake pads every time they replace tires.

Insurance costs are low because this is basically a privately-run charter service and all aircraft are professionally flown by high-time pilots.

Only one of the aircraft has FIKI. They take about a 20% hit off full retail when they sell them with 1200 hours and a couple of years on them. They sell quickly because Cirrus currently has a close to one-year waiting list for new aircraft.

 

[Kenny Phillips]

Do they operate under 14 CFR part 135?

 

[alfadog]

Do they operate under 14 CFR part 135?

I didn't ask. I would doubt it because basically these are business aircraft and the only passengers are the principles of the business or associated businesses that own the aircraft. They fly about 4 days a week on average each airplane and it is a mix of business and pleasure.

 

[Kenny Phillips]

I didn't ask. I would doubt it because basically these are business aircraft and the only passengers are the principles of the business or associated businesses that own the aircraft. They fly about 4 days a week on average each airplane and it is a mix of business and pleasure.

Good old part 91.

 

[scottfromboston]

Not much to say here other than to comment about insurance costs;we (three PPL-IR 400, 500, 1500hr each) have found the insurance to be very reasonable for our early SR22, despite not being pro pilots.

I would imagine that the above comment is important when comparing this op to a Pt. 135 operation.

 

[Clip4]

Just had a long discussion with a fellow that is the operations manager of a privately owned aircraft operation that utilizes brand new Cirrus SR22's. Currently they have four airplanes and are in the process of purchasing a fifth. Thought y'all might have some interest in what he had to say.

These are non-turbo aircraft. They purchase them brand new and sell them when they have about 1200 hours on them.

Since they are brand new aircraft all maintenance other than routine maintenance is covered under warranty. Operational costs for fuel, maintenance, insurance, hangar, run about $200 per hour. That figure includes doing more maintenance than necessary e.g. replacing brake pads every time they replace tires.

Insurance costs are low because this is basically a privately-run charter service and all aircraft are professionally flown by high-time pilots.

Only one of the aircraft has FIKI. They take about a 20% hit off full retail when they sell them with 1200 hours and a couple of years on them. They sell quickly because Cirrus currently has a close to one-year waiting list for new aircraft.

An $800k aircraft being sold at 20% hit at 1200 hours has a $133 a hour operational cost for depreciation that was not included in your operation values. Assuming $75 an hour for fuel, you can quickly see where the $200 an hour value is not accurate.

The warranty is basically pre-paid maintenance as part of the original purchase and must be included in the operational cost along with the depreciation.

“The CIRRUS WARRANTY program transparently offers an array of warranties for all customers; from new student pilot owners all the way through commercial operators”

 

[alfadog]

The $200 per hour cost does not include depreciation. I mentioned that he was running about $350 figuring in depreciation he said that's true but no one would factor in depreciation when figuring operating cost.

 

[weilke]

For the owners, there is of course also a tax angle to this. They depreciate/ expense some of the new purchase and you don't know what they used to pay for the plane and what taxes they would have paid on the money otherwise. Without knowing their tax situation, you just don't know what their capital/depreciation expense (capex) is. $200/hr direct operating cost (doc) sounds about right for a professionally managed SR22.

 

[alfadog]

For the owners, there is of course also a tax angle to this. They depreciate/ expense some of the new purchase and you don't know what they used to pay for the plane and what taxes they would have paid on the money otherwise. Without knowing their tax situation, you just don't know what their capital/depreciation expense (capex) is. $200/hr direct operating cost (doc) sounds about right for a professionally managed SR22.

Yes. I dictated one of my posts while working on an airplane for someone who's familiar with that operation and he called it a "depreciation machine".