Over the years, calculating the cost of owning a plane is one of the most frequently asked questions I get. There are many different cost factors that go into owning an aircraft. The purchase price is only part of the total cost of the plane’s ownership pie. Other parts include taxes, hangar or mooring costs, fuel, oil, insurance, ramp fees, engine reservations, routine maintenance, inspection items, and subscriptions, to name a few. The following article will help you determine the costs involved in owning an airplane and how to plan your finances accordingly. Please note that the following article provides a generic estimate on how to calculate the cost of ownership for most piston aircraft.
First, we will divide the total cost of ownership into two sections; the first section will be the indirect cost and the second section will be the direct cost.
INDIRECT COSTS
Indirect costs are the costs you will pay whether the plane flies or not. These expenses include the purchase price of the aircraft (or monthly payments), insurance, mooring or hangar fees, subscription fees, taxes, and tax benefits.
Let’s start with the first indirect cost I mentioned, purchase price or cost of capital. This is one of the easiest expenses to calculate. If you finance the plane, get a quote from the bank on the required down payment and interest rate. Currently, rates are approximately 6% with a minimum of 15% down payment and 20-year financing. For example, if you put a 20% down payment on a new DA40XLS priced at $ 350,000, your monthly payment would be just over $ 2,000 per month for 20 years.
To calculate insurance rates, call your insurance agent and get a quote for the aircraft you are considering purchasing with your level of experience.
Hangar and berth fees are self explanatory. Call the airport or FBO where you want to locate your plane and ask what options are available. There are usually about four options: dock (leave your plane outside in the elements), covered (the plane is outside in the elements but has a shade cover), common hangar (the plane is constantly moving in a large hangar shared with several other planes), and finally a single hangar or T. At many airports, hangar space is at a premium, so don’t be surprised if you end up on a waiting list. Hangar prices vary depending on your location. My T-hangar in Concord, North Carolina, costs a little over $ 300 a month, while that same hangar in Fort Lauderdale would cost over $ 1,000 a month. If you leave your plane outside, make sure you cover it at least. It will protect the interior and the avionics. Also, be aware that some insurance companies will lower your premium if you can put your plane in a hangar instead of keeping it moored.
Subscription services may not apply to you. If you have a J-3 puppy, you can proceed 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 maintain your legal database for GPS-only navigation and GPS approaching. If you have the XM weather, you will pay around $ 30 / month for the basic subscription or $ 50 / month for the full package. The headwinds feature in the complete package is worth more than the extra cost to get it. XM radio is extra. If you own a glass paneled aircraft, you can opt for secure taxi charts and / or Garmin’s approach plate services. Visit http://www.mygarmin.com for cost information. Jeppesen also offers approach plates for glass cockpit aircraft. This service requires an initial setup cost and a higher monthly payment, compared to Garmin approach plate services.
Unfortunately, taxes don’t go away with airplanes, with the exception of tax-exempt corporations (check with an aviation tax advisor 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 taxes that vary by county and city. Where I live in North Carolina, the property tax rate for planes is around 63 cents per $ 100, and I have a city tax of 42 cents per $ 100. If you use the aircraft for business, you may be able to depreciate the use and cost of the aircraft, which benefits your estimated cost of ownership. Consult with an air tax specialist to determine your individual situation.
DIRECT OPERATING COSTS
Calculating direct operating costs is a bit more complicated. There are different ways to calculate what it will cost you to fly each hour. My method is just a method, but it works. Here you must decide how many hours you plan to fly per year in order to establish an annual base budget.
Let’s start with the basics. Most piston engines will require an oil change every 50 hours. Depending on where you live, a standard oil change will cost between $ 150 and $ 300. Call the local mechanic in the field and find out what they charge. If you plan to fly 100 hours a year, the math is simple.
Fuel consumption varies for different aircraft. You can usually visit a manufacturer’s website or check the POH for cruise fuel. If you are flying an aircraft with a worn out engine, consider the published fuel economy to be the best case (which is often not the case). Find out how much avgas costs at your local airport and do the math. Please note that avgas prices vary
Engine and propeller reserves are calculated into the equation even if you own a new or short-lived aircraft that you plan to sell long before overhaul. You can usually get a quote from a local FAA engine repair station on the cost of overhauling your engine or the cost of installing a factory remanufactured engine. Take that price and divide it by the hours remaining until TBO and you will get an idea of how much you need to save each hour. If you plan to buy a twin, double your fuel, engine, and propeller costs.
Scheduled maintenance is another cost worth planning. Every year your aircraft will need to be inspected. Again, prices will vary depending on where you do the inspection. Store rates in South Florida average $ 95 / hour, while North Carolina is around $ 70 / hour. Call a service center that is familiar with your aircraft and see what they charge for a standard annual inspection. Please note that the price quoted to you does not include funny items, airworthiness directives, service bulletins, or regulatory replacement items. These are additional costs. If your plane is still under warranty, then you shouldn’t expect surprise repair bills when you pick up your plane. A safe bet for budgeting for the additional expenses of an out-of-warranty aircraft is to double the price of the annual inspection fee; This budget will cover almost any unexpected surprise that may occur during the year. You might also consider a reservation for paint, interior, and avionics upgrades, in which case you’ll want to save a bit more.
Finally, you will need to determine how much your plane will be worth if and when it is time to sell it. Airplanes usually stop depreciating after 5 years. Like cars, their depreciation rates vary. Companies like Vref and Aircraft Bluebook offer retail prices and exchange prices.
