Calculating Airplane Ownership Cost
Over the years, calculating the cost to own an airplane is one of the most frequently asked questions I receive. There are a lot of different cost factors that go into owning an airplane. The purchase price is just one piece of the entire cost of the airplane ownership pie.
Other pieces include taxes, hangar or tie down costs, fuel, oil, insurance, ramp fees, engine reserves, routine maintenance, inspection items and subscriptions to name a few. The following article will help you determine what costs are involved in owning an airplane and how to plan your finances accordingly. Keep in mind the following article offers a generic estimate on how to calculate the ownership costs of most piston airplanes.
First, we will divide the total cost of ownership into two sections; the first section will be the indirect cost, and second section direct cost.
Indirect costs are the costs that you will pay whether or not the airplane flies. These expenses include the purchase price of the airplane (or monthly payments), insurance, tie down or hangar fees, subscription fees, taxes, and tax benefits.
Let’s start with the first indirect cost I mentioned, purchase price or capital cost. This is one of easiest expenses to calculate. If you finance the airplane, get a quote from the bank on the down payment required and interest rate. Currently, rates are approximately 6% with a minimum of 15% down and 20 year financing. As an example, if you put 20% down on a new DA40XLS priced at $350,000, your monthly payment would be just over $2,000 a month over 20 years.
To calculate insurance fees, call your insurance agent and obtain a quote for the airplane you are considering purchasing with your experience level.
Hangar fees and tie downs are self explanatory. Call the airport or FBO where you want to base your airplane and ask what options are available. Usually there are about four choices: tie down (leaving your airplane outside in the elements), covered (airplane is outside in the elements but has a shade covering), hangar in common (airplane is constantly moved around in a large hangar shared with several other airplanes), and finally an individual or T hangar.
At many airports hangar space is scarce so don’t be surprised if you end up on a waiting list. Hangar prices vary according to your location. My T hangar in Concord, NC costs just north of $300/month while that same hangar in Fort Lauderdale would cost well over $1,000/month.
If you keep your airplane outside, please be sure to at least cover it. It will protect the interior and the avionics. Also, keep in mind that some insurance companies will lower your premium if you can hangar your airplane rather than keep it on tie downs.
Subscription services may not apply to you. If you own a J-3 cub, you can skip to the next paragraph. Almost all aircraft manufactured after the early 1990s offer an IFR GPS. If you have an IFR GPS, you will need to subscribe to a monthly update to keep your database legal to navigate solely by GPS and shoot GPS approaches. If you have XM weather, you will pay around $30/month for the basic subscription or $50/month for the full package.
The winds aloft feature on the full package is more than worth the additional cost to get it. XM radio is additional. If you own a glass panel airplane, you may opt for Garmin’s safe taxi charts and/or approach plate services. Visit http://www.mygarmin.com for cost information. Jeppesen also offers approach plates for glass cockpit airplanes. This service requires an initial upfront cost to install and a higher monthly payment, compared to Garmin’s approach plate services.
Unfortunately taxes do not disappear with airplanes, with the exception of tax exempt corporations (see an aviation tax consultant for more information to see if you qualify). Taxes vary from state to state. In Florida, it is 6% of the purchase price. In North Carolina it is a flat tax of $1,500. North Carolina, however, charges property tax which varies by county and by city.
Where I live in North Carolina, the airplane property tax rate is around 63 cents per 100 dollars, and I have a city tax of 42 cents per 100 dollars. If you use the airplane for business, you may be able to depreciate the use and cost of the airplane which benefits your estimated cost of ownership. Please consult with an airplane tax specialist to determine your individual situation.
DIRECT OPERATING COSTS
Calculating the direct operating costs is a little trickier. There are different ways of calculating what it will cost you each hour to fly. My method is just one method, but it works. Here you need to decide on how many hours you plan on flying a year to establish an annual base budget.
Let’s start with the basics. Most pistons engines will require an oil change every 50 hours. Depending on where you live, a standard oil change will cost between $150 to $300. Call the local mechanic on the field and find out what he charges. If you plan on flying 100 hours a year, the math is simple.
Fuel consumption varies according to different aircraft. You can usually visit a manufacturer’s website or consult the POH to get the cruise fuel burn. If you are flying an aircraft with a worn out engine, consider the published fuel burn to be the best case scenario (which often is not the case). Find out what avgas costs at your local airport and do the math. Keep in mind avgas prices vary
Engine and propeller reserves are calculated into the equation even if you own a low time or new airplane that you plan on selling long before overhaul. You can usually get a quote from a local FAA engine repair station on the cost of overhauling your engine or on the cost of installing a factory remanufactured engine. Take that price and divide it by the hours remaining till TBO and you will get an idea of how much you need to put away each hour. If you plan on buying a twin, double the fuel, engine and propeller costs.
Scheduled maintenance is another cost worth planning for. Every year your airplane will be due for an inspection. Again, prices will vary depending on where you do your inspection. Shop rates in South Florida average $95/hour, while in North Carolina they are around $70/hour. Call a service center familiar with your airplane and see what they charge for a standard annual inspection.
Keep in mind that the price they quote you doesn’t include squawk items, airworthiness directives, service bulletins or regulatory replacement items. These are extra costs. If your airplane is still under warranty, then you shouldn’t expect any surprise repair bills when you pick your airplane up.
A safe bet for budgeting additional expenses for an airplane out of warranty is to double the price of the annual inspection fee; this budgeting will cover almost any unexpected surprises that may occur during the year. You may also consider a reserve for paint, interior, and avionics upgrades in which case you will want to put away a little extra.
Finally, you will need to determine what your airplane will be worth if and when it comes time to sell it. Airplanes typically stop depreciating after 5 years. Like cars, their depreciation rates vary. Companies such as Vref and Aircraft Bluebook offer retail pricing and trade-in pricing.
Understanding How Airplane Work
Most people aren’t too concerned with how the airplane flies when they travel. They just trust that it will do its thing, and get them where they are going. While the physics of what keeps a plane in the air can get complicated, the basics are pretty simple.
The most important part of an airplane is the wing. Its unique shape is what is responsible for providing lift. The leading edge is fatter than the trailing edge, and it is flat on the bottom, with the top surface tapering downwards from front to back. This allows air to flow straight across the bottom, while forcing it up over the top of the wing, causing it to accelerate. The result is air which is lighter above the wing than below, causing it to rise.
On fixed wing aircraft, the forward motion of the plane provides the air-flow over the wings. This motion is supplied by the engines. Modern aircraft use either propeller or jet engines. Propellers work much in the same way as screws on a ship, while jets burn fuel in a combustion chamber and use a series of rotors to accelerate the air through the engine.
On helicopters, instead of engines propelling the plane forward to give air flow over the wings, they actually spin the wings (rotor blades) to provide the lift.
Getting the plane into the air is only half the story. There are three components to aircraft movement; pitch (up/down), roll (movement on the horizontal axis), and yaw (movement around the vertical axis). With nothing but wings and engines, there would be no control over what the plane did. This control is achieved with movable panels on both the wing and tail assemblies.
The tail consists of two main components, a vertical and horizontal stabilizer. Both of these use movable panels to direct air flow, and control direction of flight. The vertical stabilizer employs a rudder which controls yaw (left/right direction the fuselage is pointing), while the horizontal stabilizer has flaps to control pitch (fuselage pointing down/up).
Movable panels on the wings control roll (movement around the horizontal axis governs left/right direction). Flaps on the trailing edge and slats on the leading edge lower to give extra lift during takeoff and landing.
This, of course covers only the very basic components of how airplanes work. Jumbo passenger jets, and supersonic military craft couldn’t fly without sophisticated, computer controlled electronic flight systems. However, for small, single engine planes, there is little more to them than what has been covered here.
The Truth About Airplane Safety – Is Your Fear of Flying Justified?
Are you a bit jittery about flying? Not convinced that airplanes are all that safe? If so, you’re not alone. Lots of people worldwide are afraid to fly.
Many fearful fliers are willing to choke down their fears and board a plane when they absolutely must, enduring the torment of nerve-jangling anxieties from takeoff to landing – and suffering mounting dread for days or weeks as the flight draws ever closer.
Others just simply refuse to fly, no matter the personal cost. Whether flying for business or for fun, jeopardized careers or strained relationships with friends and family may result from missing out on the advantages of flying. But whatever the pain of staying ground bound, it’s not enough to get this group on a plane.
Are You in One of These Groups?
If you’re a fearful flyer – whether you’re in the grit-your-teeth-and-get-on-the-plane group, or the ain’t-no-way-no-how group – you might be thinking that you’ve got plenty of reason to be afraid. After all, anytime there’s an airplane accident it’s reported front and center on the news. When it happens, you’re sure to hear about it, fueling your fear of flying even more.
Consider the first several years of this century. In just that relatively brief time period, you’ve been scared out of your wits about flying from hearing news coverage about incidents such as these:
- February 2009, Continental Connection flight 3407 crashed on approach to Buffalo-Niagara International Airport in New York. 50 people were killed.
- August 2006, Comair flight 5191 crashed during takeoff from Blue Grass Airport in Kentucky. 49 people were killed.
- October 2004, Corporate Airlines flight 5966 crashed on approach to Kirksville Regional Airport in Missouri. 13 people were killed.
- January 2003, Air Midwest flight 5481 crashed soon after takeoff from Charlotte-Douglas International Airport in North Carolina. 21 people were killed.
- November 2001, American Airlines flight 587 crashed shortly after takeoff from John F. Kennedy International Airport in New York. 265 people were killed.
These accidents all occurred in the United States, and of course additional accidents occurred in other parts of the world during this time period.
If you happen to be afraid of flying, you might be thinking, “There, you see? That’s why I don’t want to get on an airplane!” So if you’re avoiding flying because you feel it’s not perfectly safe, you’re absolutely right – flying isn’t ‘perfectly’ safe.
Oh, and here are some other activities that you’ll want to avoid because they’re even more dangerous – statistically speaking – than taking an airline flight:
- Taking a shower
- Going outdoors (because you might die from a bee sting)
- Going outdoors (because you might die from a lightning strike)
- Going outdoors (because you might die of skin cancer from solar radiation)
- Staying indoors (because you might die of lung cancer from indoor pollutants such as radon and toxic mold)
- Riding in a car (or just about any other type of wheeled vehicle)
- Eating (because you might die from food poisoning)
- Not eating (for obvious reasons!)
- Mowing the lawn
- Using any product imported from China (just kidding… sort of)
Yes, I’ll admit this list is a bit facetious. But each of these activities is statistically more dangerous than taking an airline flight (except for the last one… maybe). And the obvious point is that there are many, many activities you engage in on a regular basis that are far more dangerous than flying.
Airline travel is continuously becoming safer, but recent statistics show that 1 fatal accident occurs for roughly every 8 million flights of U.S. major air carriers. Put another way, you’d have to take one flight per day, every day, for more than 21,000 years before you’d be statistically likely to die in a plane crash.
Pretty good odds!
But it’s Really Not About the Numbers, is it?
If you’re afraid to fly, does reading the above help? I’d be willing to bet not. That’s because the fears and phobias that we all fall victim to are very rarely justified by facts, figures and logic.
I happen to know someone who suffers from a phobic fear of snakes. But she’s seen a snake in nature maybe 3 or 4 times in her entire life. And on each of those very rare occasions you can be sure the snake was far more freaked out than she was, terrified and just simply wanting to get away from the screaming, berserk human as quickly as possible. This person’s extreme fear of snakes is illogical and unjustified, but that doesn’t matter. She feels what she feels.
And if you suffer from a fear of flying phobia, I’m willing to guess that you’re not much different from my snake-fearing friend – except that getting on an airplane is your snake. You probably know that your fear is unreasonable and unjustified, but that doesn’t really change things, does it? It doesn’t change how you feel.
But if your fear of flying is impacting your life, you should know that you can change that. Many people have. And it’s not simply about learning facts, figures and statistics about flying. It’s nothing as trivial and unrealistic as reading an article that tells you how safe flying is, instantly dashing your fears.
It’s about grabbing your fears at the roots and weeding them out one by one, just as you’d weed a garden. It’s about learning to change your feelings rather than trying to ignore them. That’s how you can rid yourself of your fear of flying.