I got a lot of great feedback in response to last week’s column on aircraft ownership costs. Thank you all for your reading and your thoughts!
A question I have asked more than once is: “How did you find 200 hours per year as the minimum acceptable?” One reader mentioned that some mechanics and pilots set this threshold at 100 hours instead of 200.
This reveals a universal aviation law: if you ask 100 pilots a question, you will get at least 101 different opinions. It also shows the power of creating a spreadsheet and plugging in real world numbers. This column is not only about the opinion of a pilot. Let’s run the plane example from last week, but let’s just change the number of flying hours per year to 100 and see what happens.
The 100-hour hypothesis
Our assumption for this experiment will be that we cannot change anything other than the number of flying hours per year compared to last week’s example and still arrive at a reasonable cost of aircraft ownership.
We’ll take a look:
For me, this difference is glaring. Yes, we are spending almost $ 8,000 less per year than if we had flown 200 hours. However, our hourly cost has skyrocketed to $ 227.23! I don’t think many of us can support the aviation business while paying so much money to fly a 50 year old VFR plane.
Have we refuted our hypothesis?
This realization brings us to an important point: Sometimes it’s better to just rent.
Rent vs own
In some ways, renting isn’t as much fun as owning. The plane is not mine, and I have to take care of countless other people who will never treat it as well as I do. However, from a financial standpoint, if you only fly 100 hours per year or less, the rental costs you a lot less.
How about some examples?
Leading Edge Aviation in Doylestown, Pa., Rents a VFR C-172M with an O-320 for $ 116 an hour including fuel. It’s two years older than the one we’re looking at, but to fly it 100 hours a year would cost about half of what we’d pay to own a similar aircraft.
And, there is another element to consider if you were to become a homeowner instead of renting in Doylestown. According to Airnav, the only fuel available in the field costs $ 5.89 per gallon. Plugging this cost into our calculator, it would cost us $ 243.91 per hour to own and operate our example plane from KDYL.
And on the west coast?
Corsair Aviation in Van Nuys, Calif., Has a Piper Cherokee for $ 140 an hour and a C-172N for $ 145. Fuel at KVNY ranges from an incredible $ 5.69 to $ 8.30 per gallon.
In my experience, renting on either coast tends to cost more than in the Midwest. This means that you may be able to find even cheaper aircraft rentals across the country. At these fares, flying just 100 hours a year in your own plane is a very tough sell.
Remember that renters avoid many of the headaches associated with owning an airplane. Tenants do not have to:
- Wash the plane
- Hire mechanics and hunt them down every few days to complete the job
- File any property or tax document
- Look up the part numbers and order those parts themselves
- Feel upset when the plane has a rash in the hangar, unless you have to pay the owner’s deductible
If we were really honest with ourselves, our calculator would include a line for the value of your time spent managing your aircraft. I left that out because it’s hard to quantify, but it’s something to consider.
How do they do?
You are probably wondering how these companies can afford to lease these planes at such a low price. Between the economies of scale and the benefits of owning the farm, they enjoy many discounts.
When you own a fleet of planes, you don’t pay per shop hour for maintenance. You pay a salary to one or more A&P mechanics. They know your plane so well that they can work faster. They can probably even save you thousands of dollars by doing engine overhauls in-house.
When you own the FBO, you don’t pay full price for fuel. You can also have hangars. You can deduct a few hundred dollars per hangar per month as a loss, but you don’t actually pay rent to store your planes.
As a business, you can also deduct depreciation in the value of your planes from your taxes. The tax rules for depreciation and commercial debt are so generous that the purchase price of an aircraft can be negligible for an FBO or flight school.
These companies also benefit from a break on insurance. Although the rates are much higher when an aircraft is leased, they can insure the entire fleet under one policy.
Here’s what the costs might look like for one of the FBOs we just looked at:
No wonder they can afford to charge so little for their plane. Even at these rates, they still make money every time you travel.
Let’s return our calculator to our basic assumptions and take another look at the effect of hours. Using the same assumptions we had at the top of this page, we see that stealing an annual total of:
- 100 hours gives an hourly rate of $ 227.23
- 150 hours gives an hourly rate of $ 177.54
- 200 hours equals an hourly rate of $ 152.70
- 250 hours gives an hourly rate of $ 137.79
- 300 hours gives an hourly rate of $ 127.85
Somewhere close to 225 hours a year, our cost of ownership matches the price of renting that plane at Van Nuys, not including the much more expensive fuel in California. But would I honestly fly that many hours every year in my own plane?
Many aviation enthusiasts will try to “remind” you that you get the purchase price of your aircraft when you sell it. At times this has been true. In fact, prices have gone up so much lately that if you sell an aircraft that you’ve owned for at least five years, you could potentially double your money. I don’t think these prices are going to last though. The sad truth is, if you buy an airplane in the near future, it will likely sell it for less.
Even if you just broke even when selling, remember that inflation is eating away at the value of the money you have tied up on that plane.
I’m not saying you absolutely shouldn’t buy a plane if you can’t cut your costs as low as renting the local FBO. Personally, I would pay an extra $ 7.70 per hour for my own plane. The more honest you are with the numbers you plug into your calculator, the more realistic the results will be.
You may be able to save or optimize some of the costs that we are assuming here. Next, we will look at the main factors affecting the costs of aircraft ownership. We will see clear ways to get more flights per dollar.
Thanks again for reading. Please keep giving us feedback and fly safe!