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Aircraft Ownership Costs
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copyright 1998, 2005 by Ronald B. Levy, all rights reserved
This paper discusses the costs of owning a typical family airplane (4-seat, 4-cylinder 150-180 HP, fixed gear, fixed prop – for two-seaters, see the note at the bottom). It’s based on 25 years of (at various times) ownership, flying club management, and FBO experience. We currently own a 180 HP Grumman Tiger, owned a 150 HP Grumman AA-5A Cheetah for ten years, and previously owned a Grumman AA-1B Yankee for several years. I’ve been a founder and officer of two flying clubs, and a member of two others. I’ve also spent a few years as an instructor and charter pilot for an FBO.
Initial Purchase: Price range depends on type, age, and condition. New aircraft in this class in 2005 are going for around $250,000. For a “typical” used aircraft in this class, the price in 2005 is anywhere from about $40,000 and up. For an average airplane built before the production crash of the 1980’s, prices will run around $35K to $80K. The question then arises as to how to pay for it. If you get a loan from a bank, you’ll be making monthly payments based on the loan value, interest rate, and term of the loan. Check with a bank on what you can get. Stick with banks that have existing aviation loan operations -- the others don’t understand the business and you’ll wind up with a bad deal. Check the aviation magazines for banks advertising aircraft loans. Remember that unlike a car, an airplane that is over seven years old will appreciate in value. I bought a 1976 Cheetah for about $21K in 1990 and sold it (with a number of improvements) for $47K in 2000. To get a feel for asking prices, check out a few issues of Trade-a-Plane, but remember that these are asking prices -- there is generally some negotiating room. Also, take a look at the AeroPrice software advertised on AvWeb or the Vref valuation on AOPA’s web site (free to members).
In addition to the price of the airplane, there are a lot of “gotchas” to consider, including AD compliance, title searches, pre-purchase inspections, etc. Always expect to spend a couple of thousand making sure that the airplane you buy is a) actually in the condition you think/he says it’s in, b) up to speed on FAA paperwork, and c) legally yours clear of encumberences from the previous owner or other lienholders. But when you’re buying a $60,000 airplane, that’s small change compared to the potential risk. People have spent tens of thousands fixing problems they discovered after they bought it or complying with AD’s they didn’t know about. People have lost their entire investment when some bank shows up with a lien on the plane they just bought and takes it -- and the person from whom they bought it is GONE. AOPA has an excellent title search and AD list service, and you damn sure better get the plane inspected BEFORE you buy by a mechanic who a) is familiar with that type of aircraft and b) you personally trust with your life and money. This may mean paying your mechanic’s time and expenses out to the plane -- that’s the biggest bite. If the plane is local, it’s easier. Or you may be able to get the seller to fly it out to your mechanic for expenses if you don’t buy it.
Many prospective owners consider “lease-back” deals with FBO’s or flying clubs. If you are buying an airplane as a tax shelter, this is a good idea. If you are buying it to fly, forget it. You lose control of the plane, and are at the mercy of others. Expect it to be abused by other pilots, and not to be available when you want it. Maintenance will be performed at the discretion of others. In other words, you become a banker, not an aircraft owner. I know of no active pilot who went this route and liked the result.
Direct Costs: This includes the costs of ownership that are directly driven by how much you fly the aircraft. These include fuel/oil, routine maintenance, and overhaul reserve.
Aircraft in this category burn about 8.5 to 10 gallons per hour. Avgas generally costs $3.00 to $3.50 in the continental US, so fuel cost will run $25-35 per hour. Add in the cost of an oil change every 50 hours (8 quarts at $2.50/quart for standard single grade oil) plus oil burn of a quart every 8 hours or so, and that’s another $1 per hour (plus labor if you don’t do the oil change yourself). Figure an average of $32/hour.
Routine maintenance includes the cost of fixing those things that break or wear out during routine use. This includes everything from tires to brakes to light bulbs (and aviation-certified light bulbs cost a lot more than other bulbs) to radios. Remember that the average airplane in this class has about 5 radios in it (2 nav/coms, ADF, transponder, LORAN/GPS). My experience is that the cost of maintenance is about half the cost of fuel -- this has held up over many years as fuel prices have risen from 35-40 cents a gallon in the 1960’s up to today’s prices, and over the range of aircraft (those that burn more fuel require more maintenance. Figure another $16/hour.
Overhaul reserve is the cost of overhauling the engine. Aircraft engines in this class require a major overhaul after about 2000 hours of operation. This includes complete teardown; replacement of spark plugs, pistons, and rings; refurbishing cylinder walls and crankshaft; and overhaul of all engine accessories (starter, alternator, carburetor, magnetos, etc). The cost of the overhaul for these engines is around $15,000 plus removal, shipping, and reinstallation. Allow about $9/hour.
Indirect costs: These are costs that do not depend on how much you fly the plane, but rather on the passage of time. They include annual inspection, biennial static system and transponder check, insurance, storage, paint, and interior.
Annual inspections are required by the FAA. Usually it takes a couple of days plus time for any work on items the inspector discovers as being required. The cost of the inspection itself on these airplanes is on the order of $700 plus any repair or other maintenance work. Those extras are included in the routine maintenance figure under direct operating costs.
The static system check is required for instrument flight operations, and the transponder check is required for all aircraft with transponders. These must be done every two years, and run about $300 for both together. You would be ill-advised not to have both done even if you are flying only VFR since a) it’s hard to sell an airplane without this check and b) your airspeed indicator and altimeter are extremely important to safety.
Insurance is a necessity. You have two principal areas to cover -- liability and hull. Liability is the same as your auto insurance -- it covers you for injuries, death, and damage to the property of others. Insurance companies usually recommend $1,000,000/$100,000 liability coverage. That means each of your passengers is covered for up to $100,000 and your total liability coverage is $1,000,000 in a single accident. Hull insurance is a combination of what your auto policy would call “collision” (damage to your vehicle in an in-motion accident) and “comprehensive” (damage to your vehicle when it’s parked -- hit and run, vandalism, theft, etc). The price for insurance coverage is driven by your piloting experience and qualifications, the value of the airplane, the use of the plane, and the insurance company’s loss experience with your make/model of airplane. Liability coverage is usually independent of aircraft value, and hull coverage is usually a percentage of aircraft value. For a $60,000 airplane personal use (pleasure plus incidental business flying), the total price could run from $1100 per year for an accident/violation-free 5000-hour ATP to $2000 a year or more for a student pilot.
Storage means where to put the plane when you’re not flying it. Options include hangars, shelters, and tiedowns. Hangar options include individual T-hangars and communal hangars (large hangars in which many aircraft are stored. T-hangar options include heating, electrical outlets, lighting, and powered doors; prices for this size aircraft can run from $150 to $500 per month depending on locality, but usually in the $175-250 range. Tiedowns are simply space on the airport (sometimes on the grass) with anchors for tie-down ropes. Prices can run from $30 to $150 depending on locality, but usually in the $50-100 range. Shelters are long roofed structures without walls over a whole row of aircraft. Prices will be midway between tie-down and hangar. Expect a small insurance break if you store the airplane in a locked hangar, but only a small fraction of the cost of the hangar. Figure $2400 per year for an example, but get good numbers from the local airports.
The principal advantage of hangaring as opposed to open storage is protection of the aircraft from the elements. This affects primarily maintenance, interior, and paint, and has an indirect effect on resale value. For example, a quality paint job will last about twice as long if the airplane is hangared. When our Cheetah was 20 years old, we were often asked where and when we had the interior refurbished. In fact, it was the original interior -- the plane had been hangared since new.
Paint is a significant concern. Weatherbeaten, cracked, peeling paint or bare spots are not only bad for resale value, but also can lead to corrosion problems. Virtually all airplanes in this category came from the factory with standard enamel paint. Virtually all repaintings are done with top-quality polyurethane paint (Imron, AcryGlo, Alumigrip, etc). Polyurethane is longer lasting, thicker, harder, and glossier, and significantly increases the value of the airplane. Cost of a paint job for an airplane in this class can be $5,000 to $10,000 depending on the quality and details. The life of a paint job can be 10 to 20 years depending on location (climate) and storage (hangar or tie-down). Figure an allowance of $500 per year.
Interiors include seat upholstery, headliners, and side panels. This is one area you can do yourself as opposed to having it done. There are several sources for aircraft-specific kits including all the upholstery and paneling. Materials cost for a complete interior refurbishment on these sorts of planes is around $1500-2000, and figure double that for a “professional” job. How often? Interior life is more variable than paint. Not only is it subject to climate and exposure, but also to use. Consider the difference in interior wear for an owner-driven car versus a commercial vehicle such as a taxicab or construction company pickup. However, a 10 to 20 year life is a good estimate. Let’s figure another $150 per year.
So what does this all come to?
Direct operating costs should run about $57 per hour, and indirect costs should run about $6500 per year. Now remember that these figures include reserves for overhaul, paint, and interior. You don’t have to spend that money until they’re due after 10 to 20 years, but they’re a big bite if you haven’t budgeted for them. Beyond that is the capital cost of the aircraft. Figuring a $60,000 airplane, and you’ve got maybe $4000 in capital cost for either loan interest or the cost of funds tied up in the airplane if you own it outright, although you’ll get maybe half of that back in appreciation in value.
Now, get ready for some big numbers -- but don’t get scared by them (if you do, forget owning an airplane). Let’s say you fly this plane a typical 100 hours per year. Run all the above numbers out and you’ll see that if you own a plane for twenty years, you can figure on spending about $245,000 over those twenty years. That averages out to about $125 per hour. A comparable airplane rented from an FBO will run about $100 per hour. Of course, if you fly it more, the price differential gets smaller -- breakeven with a rental occurs at around 200 hours per year. If you aren’t flying 60-80 hours a year, you run into other problems, primarily in maintaining your proficiency and keeping the airplane in good condition. The worst thing you can do to an airplane is to let it sit unused. The engine, instruments, avionics, wheels/brakes, and flight controls will deteriorate. If the airplane regularly goes weeks at a time without flying, you are looking for extra maintenance costs due to corrosion, deterioration, and shortened overhaul intervals.
Our experience has been an average of 140 hours per year, but we for a number of reasons, we fly a lot more than most. FAA data suggests that 75-100 hours per year is typical of the average owner-flown aircraft who actually fly their planes (a lot of planes just sit and rot). And if you aren’t flying this much, it’s hard to justify the cost other than to write it off as a hobby for which cost is not a prime consideration. After all, owning a boat can be a lot more expensive, and it won’t go 140 mph or on a business trip to Dayton, Ohio. And we USE that airplane a lot -- business trips, personal and vacation travel all over the East Coast -- for trips we’d otherwise make on the airlines or by car. So we can balance some of the costs as money we’d have spent anyway. Even though the car is less expensive in cash cost, the ability to turn a 10-hour drive into a 3-hour flight has significant noncash value and can often save us an overnight.
So why spend the extra $25 per hour? No daily minimums. No restrictions on night/instrument flight. Availability -- if you want to fly, it’s there. (If you want it over Memorial Day weekend to fly two hours to Grandma’s house and two hours home three days later, you can do it. Just try getting an FBO to let you do that with their airplane. Bet you’d see a four-hour per day minimum on a summer weekend, if they’d even let you do it at all.) Condition -- think about how the average rental plane looks compared to your personal car. And it’s equipped and maintained the way YOU want it -- you just don’t see IFR GPS’s and engine analyzers in rental aircraft, and I can assure you that the average FBO doesn’t maintain their airplanes as fastidiously as we do ours.
All in all, owning an airplane is more expensive than owning a car, but can be worth it if you are going to fly it regularly.
P.S. If you’re looking at a two-seater (C-150, AA-1, Tomahawk), expect a reduction of about one-third in insurance, 10% in maintenance, zero change for hangar/tiedown, 30% in fuel per hour (but only about 15% in fuel per mile), and 20% for interior and paint.
