Fixed Costs
Total Fixed Costs are expenses which are required no matter how many hours you fly. These costs typically include crew, hangar, insurance, training and other miscelaneous expenses.
Breakdown of Fixed Costs
Crew
Crew expenses will vary based on many factors such as the experience, certifications, location and amount of time they are expected to be away from home base. Some questions to ask yourself before committing to a crew budget:
- What level of experience will you require for your pilot and copilot? If you plan to place your aircraft on a charter certificate, they may have minimum number of hours in total and in type. Check with your insurance provider to see what types of requirements they may have.
- Will you hire a management company or will you have your pilots manage the operation? If you are not hiring a management company, you may wish to add a crew member for times when you have turnover, training or other scheduling issues. A management company with similar jets on certificate has more flexibility in scheduling crew from one jet to another.
- How long are your trips away from home base? Do you tend to travel out and back the same day, or spend extended periods of time away from home? The shorter the trips, the lower the turnover, training and salary you will have to pay.
Crew training
There are two primary companies who provide crew training and both offer discounts for large fleet operators. If you have a management company, they will often times pass their fleet discounts on to owners.
Hangar
Hangar costs will vary greatly by region and airport. High density airports such as Teterboro or White Plains will have higher fees than other locations. Some high density locations offer shared hangar space which is offered on a first come-first served basis and is a good option for those who will be away from home base often. Lower fees can also be obtained by relocating to less populated areas and ferrying the aircraft back and forth which will increase the number of flight hours and maintenance cycles.
Insurance
Insurance costs will vary by type and amount of coverage, size of fleet and other factors. Most management companies will have fleet policies with discounted rates.
Miscellaneous Fixed
This will include fees for things such as charts, software and computers to manage your jet.
Direct Operating Costs
Breakdown of Direct Operating Costs
Fuel
Most owners purchase the majority of their fuel at their home base airport which is why the selection of a hangar an important component in managing costs. Fuel prices will vary greatly while the aircraft is away from home base and will depend on how much competition there is at each airport. A good management company will have most major jet fuel cards who negotiate discounts with the fuel providers (FBO's) and will check pricing prior to landing to better manage these costs.
Maintenance
Scheduled maintenance events, which are required and predetermined by the manufacturers specifications, can be predicted and costs controlled since they can be performed close to home base at prenegotiated rates. Unscheduled events are more difficult to manage and happen on the road such as a blown tire, bird or lightning strike. Larger fleet operators will have a network of pre-approved maintenance facilities around the World, reducing the costs and improving safety. Some aircraft types will have maintenace programs in place for more predictable costs. Much like an insurance plan, you pay into a pool each hour you fly and when maintenance is required, it is paid out of that pool.
Engine Overhaul
Most engine types have programs much like an insurance plan, you pay into a pool each hour you fly and when engine is ready for an overhaul, it is paid out of that pool.
Miscellaneous Crew/Landing/Handling
These costs are highly dependant on the routes you fly. Overnight expenses will be greater in New York City than in the other parts of the country and flights to Europe will incur large handling and landing fees.
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