Can you Afford a Private Jet? Variable Operating Costs

Let’s assume you’ve found what looks like the ideal aircraft to buy for your mission requirement. The purchase price falls within range, but does that necessarily mean you can afford it?

Analyzing the hourly Direct Operating Costs (DOCs) of the aircraft is vital. It is particularly important to look at the DOC from the perspective of the average stage length you anticipate flying, as well as how these might change on shorter or longer flights.

The DOC (which we’ll refer to as the Variable Costs) should include fuel, maintenance, landing, parking and ground handling fees, spare parts, crew expenses (including layovers), and catering costs, among others.

You’ll need to establish several assumptions when preparing a variable cost analysis which will form the baseline of your assessment.

Following are various of these...

Once you know the most frequented destinations you’ll travel to, or the most common city-pairs, you will be in a better position to determine the average trip stage length. You should also try to understand what the average payload will be (passengers and luggage/equipment) since this will all have a bearing on projecting your fuel costs, for example. It is good practice to assume 10% over your flight time estimate to arrive at an accurate block hour estimate.

Fuel Cost

The block fuel burn of an aircraft can be derived from the manufacturer’s route performance results and various other industry sources. When accounting for fuel costs, calculate the cost of fuel per US gallon based on the typical cost of fuel at your intended operating base location, or at your most common city-pair FBOs – and get quotes.

Table A (below) shows that fuel costs account for a significant portion of the total operating cost of a private jet, so this is an important cost to estimate carefully. According to Conklin and de Decker data, having assessed five aircraft fuel costs in each category, the average fuel cost for a Light Jet is 46% of the total DOC, 47% for Mid-Size Jets, and 48% for Large Jets.

Table A - Fuel Cost Contribution to Aircraft Direct Operating Cost

Of course, fuel costs fluctuate, sometimes wildly, so it is good to budget with contingencies, allowing for unexpected increases in the cost of Jet-A fuel. You would also be wise to explore which fuel is supplied to the FBOs you expect to frequent, and the fuel card benefits available from those fuel suppliers/FBOs offers for bulk fuel purchases.

Maintenance Cost per Hour

Multiple sources offer approximate costs of maintenance per hour, including manufacturer data, Conklin and de Decker, JETNET, AMSTAT and others.

It’s sensible to assume a maintenance cost per block hour for all aircraft types under consideration. Maintenance costs may increase if you’re planning to fly higher numbers of hours annually, owing to the wear and tear on Life Limited Components and the acceleration towards periodic maintenance events.

Calculating maintenance costs can be made easier through enrolment with engine, APU, avionics and airframe hourly maintenance programs – which require owners to pay a pre- agreed sum of money into an account for every hour they fly. These are provided by engine and avionics OEMs and third-party providers.

The money paid accrues towards scheduled and unscheduled maintenance events, depending on the program coverage, giving the aircraft owner a much more predictable outlook on their hourly maintenance costs.

Spare Parts Provisioning

Parts inevitably time out, wear out or fail unexpectedly on business aircraft. It’s important to have a pool of spare components available to help resolve these issues quickly when they happen.

The inventory you build should include spares to cover expendables, AOG items, and also parts that may be needed in the future but are difficult to obtain quickly – particularly with the current global supply chain issues that are impacting the aircraft parts industry.

Research may reveal specific parts are more commonly needed for the aircraft you plan to acquire, which will directly impact the cost of spare parts you should account for.

Crew Expenses

Does the aircraft you’re planning to buy require one pilot or two? Are trips with the aircraft going to require a third pilot to relieve pressure on the first two and ensure they all stay within the limits of the maximum permitted flying hours per day? How often? Will the aircraft require an in-house mechanic or is maintenance expertise for your make and model provided at your home airfield? And will flight attendants be needed to make longer journeys comfortable?

These are all considerations you’ll need to make regarding the fixed costs of crew salaries, but they will also impact the variable costs of expenses associated with the crew, too.

Crew meals, hotel and layover costs need to be calculated. Depending where you fly to depends how high or low these will be. I have seen aircraft owners paying average daily crew layover rates of between $400 and $500 per flight, per crew member.

Times this by the number of overnight trips you anticipate making over the next 12 months, and the number of crew that will be required for those trips, and you’ll build an idea of the impact of crew costs on your budget. Read more about crew salaries on AvBuyer.

Landing, Parking & Ground Handling Fees

Be aware that aircraft have different Maximum Take Off Weights which will often impact the landing fee and parking fee due at the airports they visit. Having already established which airports and/or city pairs you will fly the aircraft to, it should be fairly easy to ascertain what the landing and parking fees will be at those locations, and to build a picture of how much to budget.

Some locations closer to city centers are likely to charge more than others that are located further away, but you should also keep in mind that some locations may offer discounts or waive parking or ground handling fees if you make bulk purchases of fuel (for example).

Catering Costs

When it comes to calculating catering costs, which type of journey do you anticipate will require a full meal as opposed to refreshments, and how many people will typically fly on those legs?

For example, journeys of less than 1,500nm (approximately three-hour duration) will require only light snacks and coffee or water, whereas longer trips will require a meal. The time of day the flights are likely to occur will also determine whether catering is needed.

Given the way aircraft galleys are equipped (or not) and the missions aircraft are typically designed to fly, catering costs associated with Light Jets are likely to be much smaller than for Super Mid-Size and Large Jets.

In Summary...

Table B (below) provides a typical breakdown of variable cost percentages associated with aircraft. In this case, the analysis shows two competing business jets with similar capabilities.

Table B - Aircraft DOC Analysisi Sample

If you are considering two or three specific models, this method of comparison highlights where DOCs get allocated for each aircraft.

The same analysis should be conducted for your potential subject aircraft and at least three competing models as you try to understand the aircraft’s DOCs.

After benchmarking suitable aircraft within your mission profile and acquisition budget, the next step is to run various sensitivity analyses. We’ll cover applicable sensitivity analyses to model DOC assumptions next time. Stay tuned!