Understand Your Business Jet’s Costs: Training & Insurance

When it comes to the operating costs of an aircraft, pilot training and insurance are related. This is because depending on the way you operate your business aircraft your cost of insurance will partly dictate how often your crew trains.

Aviation is an activity with a physical risk. Given the speed, operating environment and complexity, there is a risk of significant loss of both aircraft and people. Through risk management we have developed ways to eliminate, manage, or control those risks to make flying extremely safe.

The aircraft we operate today require an equally high level of safe practices from those who operate and maintain them. The crew and maintainers of your aircraft are professionals in every sense of the word. They strive for excellence and seek to improve their skills and knowledge continuously. Training is a critical part of being a professional aircrew.

For complex, high performance turbine powered aircraft, simulators provide the vast bulk of the training. This is because the cost of operating the simulator is less than that of the aircraft, and in a simulator you can perform all sorts of complicated scenarios (e.g. engine fire with stuck landing gear and partial electrical failure) that you can’t duplicate on the actual aircraft.

For business jets and many turboprops, the FAA Level D simulator is as good as it gets. These simulators are exact duplicates of the cockpit and have complex hydraulic systems to allow for six degrees of movement.

Their computer screens are capable of high-resolution imagery so you can feel like you’re actually landing at London City Airport on a windy, rainy day (for example).

Initial and recurrent training are done in these sims. But before the crew gets into the sim, there are several days of classroom training to review the systems and procedures for all phases of flight and for any emergency situation that may be encountered.

Recurrent training tests both flying skills and crew coordination skills (i.e., Crew Resource Management), essentially.

How Often Should Your Flight Crew Train?

Depending on the aircraft, the recurrent courses can be about two weeks long, and the cost of training can run to tens of thousands of dollars, per pilot. Moreover, while your pilots are training, they’re unavailable to fly your aircraft.

How often to train your flight crew and mechanics, therefore, is an important discussion. Recurrent crew training is mandatory, with both the aviation authority and your insurance provider requiring it.

Many aviation safety specialists recommend training should be twice-yearly for most business jet and turboprop pilots as optimum, and most aviation authorities require an annual check ride which can be done in the sim.

When evaluating whether to train your crew annually or biannually, keep in mind who is being transported in the back of the aircraft: you, your senior leadership, other key employees, your family, or other very important people. How safe a pair of hands do you want to place your and others’ travel in?

How to Manage Your Insurance Costs...

Insurance is part of your risk management strategy. The risks that cannot be eliminated or minimized through crew training must be managed, and insurance shares this risk with others.

The global airline industry losses drive the global aviation insurance market, ultimately. One bad airline accident with significant loss of life will have a greater impact on your rates than almost anything that you can control. Throw in catastrophic natural events (such as hurricanes and wildfires in populated areas), and every insurance rate across the industry can rise to cover the losses.

In managing your insurance costs you’ll need to have an insurance expert on your side – specifically, your insurance broker.

While selecting or changing your automobile insurance is easy, for an aircraft operation it’s much more complicated since you have the aircraft, the passengers and crew, and possibly your hangar to insure. Moreover, Business Aviation operations all function slightly differently.

For example, a Light Jet operating domestically will have significantly different insurance needs than an Ultra-Long-Range Jet routinely operating to remote regions of the world. An insurance broker who knows you and your operation can be the best one to represent you to the insurance market and help obtain the coverage you need.

But here’s where a close relationship with your broker matters: providing your broker with your operation’s training records, pilots’ certificates, and recent flight experience will not get you the better rate. Your Flight Department must be known to your broker.

Do you have a Safety Management System in place? How is it set up and managed? Does your entire company have a similar safety culture? Maybe you do operate your aircraft into remote airstrips in non-radar environments – how do you manage the hazards this presents? The old sentiment to “invite your broker to lunch” is valid!

This also means that changing insurers every other year to “chase the lowest rate” may not be in your best interest...

Insurance on an Aircraft Management Certificate

Another insurance consideration is if you have a full-service managed aircraft and the management company has an exemplary safety record insuring multiple aircraft on its certificate. That management company is likely to enjoy a discounted insurance rate compared to what a single aircraft operator could obtain.

In such a situation, do get professional guidance to understand who the ‘named insured’ is, who are ‘additional insureds’, and where the liabilities exist for you and the management company.

In Summary...

Both training and insurance costs tend to rise in proportion to the size and cost of your aircraft. While the aviation authority sets the minimum standard, you want your employees to exceed the minimum standard, don’t you? Budget for excellence in the operation of your aircraft!

Read more articles in this series on AvBuyer