Calculating Operating Costs

[LevelWing]

I've searched both here and the web trying to determine how airplane operating costs are calculated. I've found spreadsheets where you plug information in and it tells you the operating costs and breaks it down by category.

Maintenance, fuel, hangar/tie down, insurance, monthly payment, inspections, reserve costs, etc. all factor into it. But often times I see posts here that say it's, say $20/hour for maintenance. How is that number determined? I understand the plane itself has a lot to do with it. I'm just trying to get a true cost of ownership/operation. I'm sure this has been discussed at length, I just haven't found a thread that details how the hourly cost of operation is determined.

 

[poadeleted20]

But often times I see posts here that say it's, say $20/hour for maintenance. How is that number determined?

Experience like my 36 years of owning airplanes. For more on that, shoot me an email (and only an email -- no posts, PM's, phone calls, smoke signals or ESP thought waves) and I'll send you a copy of the paper I wrote on the ownership costs of a simple 4-seat fixed-gear single-engine airplane.

 

[airdale]

I just haven't found a thread that details how the hourly cost of operation is determined.

It's not hard. Just keep track for 6-7 years, total it up, and divide by the number of hours.

Oh, you wanted to predict ?!!? ;-)

Not so easy. The general problem is that costs can be very lumpy. One year is a honeymoon, the next year you get buried. Both events completely uncorrelated to that year's flying hours. Some things (oil, tires) are smooth but the biggies (jugs, gear problems, ADs, etc.) and the midsize ones (horizon, DG, AP, avionics, vacuum pump, fuel pump) are lumpy. So it really takes a multiyear average to get the big picture.

Worse, if you buy an airplane with a very inexpensive repair history, it may simply mean that you have some big lumps in your immediate future.

 

[EdFred]

Experience like my 36 years of owning airplanes. For more on that, shoot me an email (and only an email -- no posts, PM's, phone calls, smoke signals or ESP thought waves) and I'll send you a copy of the paper I wrote on the ownership costs of a simple 4-seat fixed-gear single-engine airplane.

Yeah, but Ron, how do you account for the newly overhauled engine, that needs to be overhauled again at 200 hours because the last OH shop just pencil whipped it? Does that $2000 set aside come close to covering the $20k for the OH?

The whole hourly maintenance reserve is a load of crap. Have money ready in the bank to pay for a OH at anytime.

 

[wabower]

Use an annual budget format like you do for everything else. You can peg everything you spend within a $5 spread other than fuel price, inspection squawks and non-scheduled MX.

 

[JOhnH]

After all of your necessities (food, shelter, wine) and all of your fixed costs are paid, how much do you have left? Divide that number by the number of hours you fly per year. If your actual maintenance costs fall below that number, then you can put the rest in savings.

My maintenance costs, outside of predictable items like oil changes an annuals were around $300 per year for the 2 years. That came to about $1/hour (above normal maintenance)

Then they were around $39,500 the 3rd year (to replace an engine that blew up at 1,000 ft and fix the wing that actually won the battle with the road sign). So in that year, my maintenance expenses were around $275/hour above.

After that, it varied between about a hundred a year to a few thousand.

 

[poadeleted20]

Yeah, but Ron, how do you account for the newly overhauled engine, that needs to be overhauled again at 200 hours because the last OH shop just pencil whipped it?

I don't. I do good pre-buys so there are no such surprises. But you are correct that anything can break without warning, and you must be prepared for that event. However, over the long run (say, 36 years in my case), it really does average out.

 

[EdFred]

I don't. I do good pre-buys so there are no such surprises. But you are correct that anything can break without warning, and you must be prepared for that event. However, over the long run (say, 36 years in my case), it really does average out.

So you do a full engine tear down and have the crank pulled and sent off to check it for straightness as part of a prebuy inspection?

All of the paperwork and workorders SAID that the shop did what they were supposed to. But, guess what, they didn't. Even three annual inspections didn't catch what happened.

 

[poadeleted20]

So you do a full engine tear down and have the crank pulled and sent off to check it for straightness as part of a prebuy inspection?

All of the paperwork and workorders SAID that the shop did what they were supposed to. But, guess what, they didn't. Even three annual inspections didn't catch what happened.

Whatever you say, Ed.

 

[EdFred]

Whatever you say, Ed.

This exact thing happened to my dad. You can ask him all about it if you want. Or are you calling me a liar?

 

[LevelWing]

Use an annual budget format like you do for everything else. You can peg everything you spend within a $5 spread other than fuel price, inspection squawks and non-scheduled MX.

This is what I'm trying to determine. How much per hour should be devoted to maintenance and the rest?

 

[JoseCuervo]

This exact thing happened to my dad. You can ask him all about it if you want. Or are you calling me a liar?

What percentage of airplanes that get bought and sold have the same thing happen to them that happened to your dad?


Intelligent people can assign a probability to that event, and, budget for the possibility of a probable outcome. I won't let a 1% chance of an event occurring affect my decision. 10% means I might start thinking about it. 30% definitely would have me setting up contingency plans.

 

[JoseCuervo]

This is what I'm trying to determine. How much per hour should be devoted to maintenance and the rest?

Nobody can give you the exact answer, as the correct answer is "it depends".

A simple number to use would be the Dry Rate the local FBO's charge, assuming they are figuring local rates and costs on maint. You may be high, but after a year or two, you could adjust accordingly.


You could do rough things like divide the number of hours you fly into a "hopeful" cost of an Annual, and get an hourly number. ($1000 annual/ 100 hours a year = $10 an hour for annual). ($20,000 engine / 2000 hour TBO = $10 an annual)

And, you can quickly get a "$20 per hour cost".

Problem is, you might fly 80 hours one year, and 120 the next year, then 50 hours. You now no longer are at $20 per hour cost.

Someone else will be along to tell you that no engine will make it 2000 hour TBO without significant costs. The next guy will be along to tell you he routinely gets 3100 hours out of engines by pouring a magic elixer in the oil.


At the end of the day, depending on the plane, your hours spent flying it, the condition it is in, the nit-pickyness you keep it maintained by, plus the area of the country, plus the dates on the Mayan calendar, divided by the square root of your shoe size will yield the most accurate number.

 

[JHW]

For a piston-powered 4-6 seater, take the hourly cost of fuel and multiply by 3-4. That's as close to a total hourly cost as you'll get with any fancy rollup, and it's a lot less work.

 

[airdale]

My maintenance costs, outside of predictable items like oil changes an annuals were around $300 per year for the 2 years. ... Then they were around $39,500 the 3rd year ... After that, it varied between about a hundred a year to a few thousand.

My point exactly. Lumpy. Lumpy. Lumpy.

 

[dell30rb]

This is what I'm trying to determine. How much per hour should be devoted to maintenance and the rest?

Figure hangar, insurance as fixed monthly costs.

Hourly:
Estimate the cost of an overhaul and figure that with how many hrs you have left to TBO. Unless there is a factor that might make you think it will need an overhaul before then (last OH was 25yrs ago, etc...)

Then take a stab at your average annual maintenance cost. Think average. Like one year it might be $1000 and the next it could be $4000. Divide by hours you fly per year.

 

[airdale]

LevelWing,

What specific airplanes are you interested in? I think from all these posts you have been given the theory. (I had not understood the correlation with shoe size before, though.)

There people here with cost experience on many airplanes. If you gave us your specific interests you might end up with some specific data.

 

[wabower]

It's impossible to determine, but easy to estimate. For openers, figure that any significant (big lump) non-insured expense will most likely be for something that can or should span several years, whether or not your accounting method accounts for such allocations.

As RL says, the year in which these "oopsies" occur will vary according to phases of the moon and other equally scientific factors. The single-most important ingredient is dry powder that you can use whenever necessary.

This is what I'm trying to determine. How much per hour should be devoted to maintenance and the rest?

 

[douglas393]

For a piston-powered 4-6 seater, take the hourly cost of fuel and multiply by 3-4. That's as close to a total hourly cost as you'll get with any fancy rollup, and it's a lot less work.

For my T182T that is pretty close(I do not have a loan, so that may skew the number a bit). However, I have not had any big bad things go wrong yet. I look at my planes cost as I do for my boats, it's always more than you think, and typically less than it could be. However, it's not as much a chore paying for the plane than it is for the boat.

 

[Clip4]

I've searched both here and the web trying to determine how airplane operating costs are calculated. I've found spreadsheets where you plug information in and it tells you the operating costs and breaks it down by category.

Maintenance, fuel, hangar/tie down, insurance, monthly payment, inspections, reserve costs, etc. all factor into it. But often times I see posts here that say it's, say $20/hour for maintenance. How is that number determined? I understand the plane itself has a lot to do with it. I'm just trying to get a true cost of ownership/operation. I'm sure this has been discussed at length, I just haven't found a thread that details how the hourly cost of operation is determined.

Its tough to get an hourly cost because different owners fly a different number of hours a year. The more you fly, the less expensive your houly costs.

I think you will get a better understanding of the costs if you organize them into fixed and variable categories.

You will pay for inspections, hangar, insurance, P&I, data subcriptions, ect if the plane doesn't fly an hour a year.

Then you have the variable costs , the things that need replaced over time and use, which include fuel, oil, plugs, tires, brakes, batteries, filters, engine reserve, prop reserve, paint, interior, ect.

Since most of the airplanes flying are 30 years old, you can track how long various components lasted in the plane by checking out the logbooks.

 

[Tony_Scarpelli]

Depends on the aircraft. Simple fixed gear 150hp aircraft are pretty cheap to own. I'd say maintenance is about $10 per flight hour but probably not less than about $600 per year for maintenance inspections.

It depends on where you locate the airplane. If you own a farm with dirt strip it might be free to store but if you pay rent in the midwest $120 a month or if you need a hangar in NYC area then $2000 might not get it covered.

It depends on type of mechanic you are. Do you want to help with owner maintenance or just write a check to have it done? If you want to write a check do you want the A&P to pickup the plane from your hangar and return it or will you deliver the plane to him? Are you going to source the parts yourself and give them to the mechanic to exchange or have the mechanic order the parts and mark them up accordingly?

So even the same plane in the same airport can have different costs depending on the preferences of the Pilot/owner. Are you easily bullied and bluffed into spending exorbitant repair fees or can you stand your own in a negotiation? Are you the type to learn about maintenance so that even if you do not pickup a screw driver you can talk knowledgeably about maintenance? Are you willing to take maintenance seminars or spend time with your mechanic until you fully understand every subsystem on your plane? Do you want to do some maintenance with A&P supervision or just have the A&P do the work?
Are you willing to walk away when a mechanic says something you know to be wrong and find another one or do you just suck it up and pay the Ripper?

There is asymmetrical knowledge between the A&P and the average new owner and some mechanics will use that knowledge to bend you over the wood shed and stuff a 9" pipe up your rear.

All these things will determine what your cost per hour of maintenance and ownership costs are.

It costs me about $1500 to fly the 1st hour each year. This includes annual hangar rent and inspection and oil change. After that it only costs me about $72-84 per every additional hour in fuel/oil to fly the rest of the year. If I fly 100 hrs then I might well have about $10k out of pocket that year in total aviation costs but that 100hrs gets me some very nice vacations and travel to about 20,000 miles of trips carrying up to 4 adults. So I can go to Florida or California about 8 or 9 times a year round trip. Not bad! So when using a plane for travel perhaps I should ignore fuel costs as those apply to the vacation in my case.

Every so many years a new AD comes out and that costs from $200-800. So divide that by how many hours 500 or 1000 hrs that the ad applies for.

I do not particularly care for reserves as I think they do nothing more than discourage people to use their airplane. I do not use reserves on my Toyota, My sailboat, nor my motor cycles. I will likely sell the airplane before putting an engine on it.

But I know that every few years and 500/1000 hrs I am going to shell out $2-4k in additional maintenance on a complex, high performance aircraft with things like prop inspection, landing gear OH, Turbo hose replacement and tail horn inspection ADs.

I have only seen 1 new AD in 11 years on the Cherokee and I have seen 1 new AD in the Comanche in 5 years. The Cherokee ad cost less than $120 and the Comanche ad more like $400 but could be $800 if I replace with new horn to stretch the 500 hr to 1000 hr reinspection.

The more complex Comanche has 3 recurring ad's which will add $2000-4000 every 1000 hrs of flight time or 5/10 years. So the subject gets complex with complex aircraft but is simpler with non complex aircraft.

I have seen none of the reserve expenses everyone talks about and seems to worry about and I had one plane almost 10 years before selling it and the other one 5 years. It is not likely I can fly 2000 hrs in the next 10 years so I doubt i will have to worry about engine reserves which are always way over exaggerated IMO.

My only concern on costs of flying are my cash flow. I know the Comanche is going to cost me $1500 a year to fly the first hour and I know it is going to cost about $70-85 per hour for fuel beyond that and every now and then I am going to get a $500-800 hiccup and about 1 time in 5 years a $1000-2000 hiccup and 1 time in 10 years another $1-2k hiccup.

It it is possible that plenty more will go wrong and in a new to you plane it is likely the first year that things will need to be brought up to par but once your plane is owned by you a year and stabilized it should be sound and steady to own and operate.

My figures do not include taxes as KS does not tax 30 year old aircraft, nor do they include insurance because I do not buy insurance or believe in it.

 

[RotorAndWing]

What percentage of airplanes that get bought and sold have the same thing happen to them that happened to your dad?


Intelligent people can assign a probability to that event, and, budget for the possibility of a probable outcome. I won't let a 1% chance of an event occurring affect my decision. 10% means I might start thinking about it. 30% definitely would have me setting up contingency plans.

A lot more than most think. Aircraft ownership is by a large part by people who really can't afford the airplane they own, so they cut corners and skimp on maintenance. There are lots of A&P/IA's that sell their signature.

Buyer beware.

 

[stratobee]

My approach is very simple for private ownership: I only count fuel, insurance and tie down and I keep nothing in reserve for maintenance. It's un-quantifyable anyway and I cross that bridge when I get to it. We can make budgets until the cows come home, but they won't even come close to reality anyway. Maintenance is the price you pay to be in the club. Some maintenance can be deferrable, or saved to when you have better cash flow. It's not a fixed set of goal posts. Unless you have to make a budget for someone else, just avoid it and be happier for it.

I will say this, though: when you get an aircraft, the two first annuals will be much higher than the previous ones form the former owner. So keep some extra in reserve for these. After that it will settle down as you get the gremlins out, catch up and your mechanic gets comfortable with the aircraft. It's a law of nature in new aircraft.

 

[Clip4]

A lot more than most think. Aircraft ownership is by a large part by people who really can't afford the airplane they own, so they cut corners and skimp on maintenance. There are lots of A&P/IA's that sell their signature.

Buyer beware.

And there are also owners who can afford the airplane they own and still cut corners and skimp maint.

 

[RotorAndWing]

And there are also owners who can afford the airplane they own and still cut corners and skimp maint.

Yep.

 

[wabower]

If so I'd suggest finding somebody else for pre-buy inspections. There's no reason for this to occur.

I will say this, though: when you get an aircraft, the two first annuals will be much higher than the previous ones form the former owner. So keep some extra in reserve for these. After that it will settle down as you get the gremlins out, catch up and your mechanic gets comfortable with the aircraft. It's a law of nature in new aircraft.

 

[LevelWing]

I replied but it didn't post. I wonder if it has to be approved first? My others didn't have to be. I'll just re-type most of it here:

LevelWing,

What specific airplanes are you interested in? I think from all these posts you have been given the theory. (I had not understood the correlation with shoe size before, though.)

There people here with cost experience on many airplanes. If you gave us your specific interests you might end up with some specific data.

I'm looking at getting into a lease back. I've read this thread, among others, both on here and elsewhere on the web. I'm still doing research and I understand that I would have to have a 100 hour done in addition to the annual. If the plane is flying enough hours, it shouldn't be a big deal.

I've looked at a lot of the different factors that go into a lease back, I just haven't listed them here. The plane would be a 172 and I would make upgrades as necessary. I would prefer a plane that has a lower SMOH so that I'm not looking at dropping $30k 300 hours after I buy it. Trying to nail down the costs of operation as close as possible (even if it's an educated guess) is pretty important for accounting purposes.

The purpose of the plane is to offset the cost of my recreational flying and pay for flight training for myself. I'm not getting this to be a personal plane.

 

[wabower]

To save time should we just list all four possibilities and agree they all occur?

And there are also owners who can afford the airplane they own and still cut corners and skimp maint.

 

[airdale]

If so I'd suggest finding somebody else for pre-buy inspections. There's no reason for this to occur.

There is someone who posts here with a sig line something like:

"Possession of an A&P certificate does not give the holder the ability to predict the future."

I've always liked that one.

 

[wabower]

As the golf pros say "there are horses for courses." When we see a problem airplane over the early years of ownership we look first at the "who, how, where" of the pre-buy. In most cases it's not a tough problem to solve.

There is someone who posts here with a sig line something like:

"Possession of an A&P certificate does not give the holder the ability to predict the future."

I've always liked that one.

 

[JoseCuervo]

A lot more than most think. Aircraft ownership is by a large part by people who really can't afford the airplane they own, so they cut corners and skimp on maintenance. There are lots of A&P/IA's that sell their signature.

Buyer beware.

Give me a number, and I can assign a probability to it.

With the probability assigned to the likelihood of the event occurring, I can assign a dollar amount to it.

It ain't rocket surgery.

1%, 10%, 30%, 80%?

Just math.

 

[RotorAndWing]

There is someone who posts here with a sig line something like:

"Possession of an A&P certificate does not give the holder the ability to predict the future."

I've always liked that one.

Better yet "Possession of an A&P certificate does not mean the holder actually knows what he is talking about."

 

[Tom-D]

There is someone who posts here with a sig line something like:

"Possession of an A&P certificate does not give the holder the ability to predict the future."

I've always liked that one.

We are often asked how many hours do you think this engine will last.

or

how much money is this going to cost?

the bottom line is if you get an answer to these questions your probably being lied to.

 

[Tom-D]

Better yet "Possession of an A&P certificate does not mean the holder actually knows what he is talking about."

At least when you read my posts you know who you are talking to. I don't hide behind some phony handle and snipe.

 

[wabower]

Why would anybody lie in response to a "what do you think" question?

If you have a repair quote in hand, why would you lie about the cost? The shop I'm involved with provides a line-item estimate on every job. The one i'm working with today totals 22 pages and almost $49,000. Where's the mystery in that exercise?

We are often asked how many hours do you think this engine will last.

or

how much money is this going to cost?

the bottom line is if you get an answer to these questions your probably being lied to.

 

[stratobee]

If so I'd suggest finding somebody else for pre-buy inspections. There's no reason for this to occur.

The problem isn't necessarily that the upkeep has been deferred or it's in bad shape, it's that the new owner has a lower tolerance and is full off eagerness and wants to upgrade/fix stuff. Plus his mechanic doesn't know the plane.

 

[wabower]

Nothing wrong with that, it's your plane and your money.

But to suggest the annual inspections are more expensive because you chose to use that opportunity to upgrade stuff you want to changed ain't exactly an accurate depiction of the event.

The problem isn't necessarily that the upkeep has been deferred or it's in bad shape, it's that the new owner has a lower tolerance and is full off eagerness and wants to upgrade/fix stuff.

 

[jonnyjetprop]

Buy a plane with a timed out engine and overhaul it yourself.

However, you are correct, if you can't pay for an overhaul, maybe you shouldn't own a plane.

Yeah, but Ron, how do you account for the newly overhauled engine, that needs to be overhauled again at 200 hours because the last OH shop just pencil whipped it? Does that $2000 set aside come close to covering the $20k for the OH?

The whole hourly maintenance reserve is a load of crap. Have money ready in the bank to pay for a OH at anytime.

 

[wabower]

Which is the crux of all airplane cost discussions. An engine overhaul can easily double the cost of many planes. If it's necessary in order to fly the plane, the owner must find a way to fund it if he wants to continue to do so.

The resulting question at the time is often "now what?"

Buy a plane with a timed out engine and overhaul it yourself.

However, you are correct, if you can't pay for an overhaul, maybe you shouldn't own a plane.

 

[jonnyjetprop]

Some of the planes, it's better to scrap it and invest the overhaul money in another plane. We don't think twice about doing this with a car or truck.

Which is the crux of all airplane cost discussions. An engine overhaul can easily double the cost of many planes. If it's necessary in order to fly the plane, the owner must find a way to fund it if he wants to continue to do so.

The resulting question at the time is often "now what?"