How To Use The 2024 Operations Planning Guide

This year’s Operations Planning Guide covers-turbine powered, in-production aircraft. Aircraft operating costs are presented in a format that separates information into six areas: Direct Mission Costs, Fixed Annual Costs, Variable Costs, Annual Cockpit Subscription Services Costs, Annual Cabin Subscription Services Costs and Annual Trip Support Costs. The Operations Planning Guide also includes comprehensive information from leading Business Aviation Industry Experts covering flight department compensation and planning, hiring, salary analysis and contract crew strategies; legal aspects related to aircraft acquisition, tax planning and contract considerations; and insurance factors affecting coverage expenses and considerations to plan for.

Aircraft Category:

Aircraft are grouped into six categories reflecting similarity of aircraft size, mission and operations. Category 1 aircraft are turboprops weighing less than 12,500 lb. and very light jets weighing less than 10,000 lb.; Category 2 aircraft are multiengine turboprops weighing 12,500 lb. or more and light jets weighing 10,000 lb. to 19,999 lb.; Category 3 aircraft are jets weighing 20,000 lb. to 29,999 lb.; Category 4 aircraft are jets weighing 30,000 lb. to 40,999 lb.; Category 5 aircraft are jets weighing 41,000 lb. and up; and Category 6 aircraft are ultra-long-range jets with National Business Aviation Association instrument flight rules ranges above 6,000 nm (6,905 mi.).

Certain data is common to all aircraft in a category for purposes of calculating mission cost by listed range including airframe systems parts and labor, engine reserves, auxiliary power unit (APU) reserves and propeller reserves for turboprop aircraft. Fixed costs, annual cockpit subscription services costs, annual cabin services costs and annual trip support cost figures are provided for reference only and are not included in the Direct Operating Cost (DOC) figure for each of the Mission Ranges (300 nm, 600 nm, 1,000 nm, 3,000 nm and 6,000 nm).

BCA Equipped Price:

This number is taken from the Q1 2024 BCA Purchase Planning Handbook, and reflects BCA-equipped, completed aircraft. The listed price is based on the latest model produced.

Direct Mission Costs:

Mission Costs are calculated based on the business aircraft missions shown in BCA’s Q1 2024 Purchase Planning Handbook. Three missions are shown for each aircraft (Categories 1 – 5): 300 nm, 600 nm and 1,000 nm. Ultra-long-range aircraft (Category 6) missions are 1,000 nm, 3,000 nm and 6,000 nm. The fuel expense for each mission is based on the fuel burn figure for the mission, provided by the OEM, and calculated under conditions shown in the handbook.

Missions are calculated utilizing manufacturer’s recommended cruise setting; therefore, cruise settings may vary from aircraft to aircraft, for example, max cruise versus long range. Where the aircraft cannot cover the mission distance with an 800-lb. (four-passenger) payload, BCA shows a reduction in payload or a reduction in mission length at the editor’s option.

Direct Mission Costs include a bundling of mission fuel consumed from BCA’s Purchase Planning Handbook, maintenance labor, parts and reserve costs from the Variable Costs section of this guide, apportioned to the actual flight time for the listed nautical mile mission length. Fuel price used is based on a nationwide average price of $6.07 per gallon for Jet-A at press time.

Fuel consumption calculations account for taxi, takeoff, climb, cruise, descent and landing for the applicable mission as appropriate for the aircraft category. (Note: Longer missions will lower average hourly fuel burns due to more time in cruise; conversely, shorter missions will increase average hourly fuel burn figures since proportionally more time is spent in the takeoff and climb phase rather than cruise.)

• Fixed Costs (Annual):

This area of expense includes those costs that must be borne by the flight department irrespective of the level of aircraft utilization. Last year through 2024 have been transitional, particularly for flight department salaries and the continued emphasis on flying privately over the last 24 months. Airline demand for qualified pilots remains robust as passenger loads remain strong. Salary surveys published last year quickly became obsolete as flight department staffing plans retain momentum and airlines and fractional share companies negotiated higher salary contracts. This year is shaping up as a combination of strong economic news and higher inflation as demand and supply shift toward hiring of qualified flight crew in the corporate segments. Most corporate operators are facing tough competition for qualified crews. Compensation adjustments including longer-term incentives continue escalating to prevent migration to airlines or other opportunities.

Salaries: Included are salaries for Flight Crew, Cabin Crew and Director of Maintenance, where appropriate. We interviewed Sheryl Barden, CEO at Aviation Personnel International, for state-of-the-industry insights with respect to aviation salaries and the current state of business aviation operations. Barden's message this year, 2024, is this: “We continue to see robust flight operations with an additional emphasis on hiring typed and current flight crew members to meet increased mission needs and increasing staffing levels to even out crew workloads. Compensation adjustments remain critical to retain or attract new flight crews. Airlines are not hiring at the pace they were last year, but that may be temporary. Internal compensation equity issues between corporate departments are now being discussed as flight crew salaries continue to climb. Jobs have been recalibrated to add more responsibilities to justify salary increases. Exacerbating the compensation challenges are discerning aircraft owners that want experienced crews at all levels, and they are willing to pay top dollar for the talent they want.”

Barden further stated: “Maintenance salaries which have been stagnating, are again on the rise. There are not enough people going into maintenance roles such as A&Ps in addition to maintenance staff attrition due to retirements. Also, the maintenance role is changing into strategic planning as aircraft technology continues to become more sophisticated. Cabin entertainment and satellite communication systems are extraordinarily complex, placing additional demands on the maintenance staff. Flight department maintenance teams are following the aircraft to manage work being performed at the MRO. The bottom line: Compensation has not kept up.”

The aircraft management company sector and flight crew training companies are facing the same pressures on hiring and crew salaries, Barden said. Fractional and charter operators are also in hiring mode as their demand has increased over the last 12 months. “Airlines are actively hiring using creative means to fill positions,” Barden said. She further stated that “airlines are recruiting and negotiating higher salaries, which is attracting pilots out of the business aviation market.”

Business aviation flight departments are staffing at higher numbers to accommodate more frequent flying and work-life balance. COVID concerns are significantly diminished or gone, Barden said. Corporate flight department crew retention remains key as the economy continues to expand. Salary adjustments for 2024 resumed their upward trajectory this year in anticipation of having to make significant operational adjustments in the near term.

“Salary increases for flight departments are anticipated to continue upward and have not yet normalized and will not in the foreseeable future,” Barden said. “Overall, business flying has been impacted by qualified crew supply and increased hiring competition. There is no one-size-fits-all formula that can be applied to define current conditions.” Additionally, Barden said, “flight department managers are also concerned that they will look for lower-cost solutions to control cost as flight crew hiring and salaries continue to be challenging.”

Barden emphasized retention strategies such as “bonuses, restricted stock, retention bonuses, work-life balance, and general working conditions in flight departments, large or small, play key roles in mitigating personnel churn and attracting talent when needed.” She also cautioned that “maintenance professionals continue to be in short supply with retirement becoming a factor to consider with salaries rising to retain and attract new talent. Directors of maintenance play a crucial role and can have a direct impact on airframe resale value by ensuring a high degree of aircraft maintenance and repair status along with associated documentation.” Barden stated that “cabin crew salaries have risen more than previous years as emphasis on qualified talent is in high demand.”

Barden discussed additional shifts in the crew hiring landscape, such as “hiring tactically and strategically, resulting in hiring people that can be brought up to the corporate flight department standards.” Available pilot capacity remains significant, she said, which is adding emphasis on the contract crew market.

Contract Crews Members: To gain additional perspective on the contract crew and staffing business, we spoke to Jennifer Guthrie, CEO of In-Flight Crew Connections, which specializes in on-demand staffing solutions for pilots, cabin crew and maintenance technicians.

The importance of “reliable and professional business aviation team members cannot be overstated,” Guthrie said. With over two decades of experience in aviation staffing, Guthrie brings a wealth of knowledge and passion to her role as CEO. Speaking with her makes it evident that her dedication to excellence and commitment to customer satisfaction are at the core of In-Flight Crew Connections' ethos.

"At In-Flight Crew Connections, we understand that the success of any flight hinges on the quality of the team members supporting it," Guthrie said. "That's why we go above and beyond to hand-select the most qualified and experienced professionals for our client’s supplemental staffing needs."

One of the key factors distinguishing In-Flight Crew Connections is their rigorous vetting and risk-mitigation processes. Guthrie explained: "We leave no stone unturned when it comes to ensuring the competence, credentials and reliability of our contract team members. From extensive background checks to comprehensive training, we take every measure to guarantee that our clients receive nothing but the best."

But it is not just about qualifications and expertise—Guthrie understands the importance of personal connections in the aviation industry. "Building strong relationships with our clients is paramount," she said. "We take the time to understand their unique needs and preferences, allowing us to tailor our services to exceed their expectations."

Indeed, it is this personalized approach that has earned In-Flight Crew Connections a reputation for excellence in the industry. "Our clients know that they can rely on us not just as a staffing agency, but as a trusted partner in their success," Guthrie said. She also elaborated on contract pilot compensation expectations: “We went from a benign period of flat salary expectations to an environment where salary demands were significantly higher. Pilot compensation expectations were not a point of discussion as the need for qualified staff exceeded available capacity.” Guthrie did indicate that “compensation expectations for contract pilots appears to be leveling out in 2024.”

Looking to the future, Guthrie remains optimistic about the prospects for In-Flight Crew Connections. "As the demand for business aviation continues to grow, so, too, does the need for reliable and skilled aviation professionals," she said. "We are committed to staying ahead of the curve, continuously innovating and adapting to meet the evolving needs of our clients."

Compensation Analysis: This year, we again spoke with Christopher M. Broyhill, Ph.D., CAM, inventor and CEO at AirComp Calculator, LLC, to discuss compensation strategies and salary survey results. Broyhill shared data-driven comments and advice for aviation decision-makers as follows:

CPI VS. PRIVATE INDUSTRY & BIZAV COMPENSATION CHART HERE

Broyhill said: “A review of the data from multiple surveys across 14 positions found an average increase in compensation of 6.5% from 2022-23 [the most current data available at this printing]. This figure corresponds to data from the U.S. Bureau of Labor Statistics that shows growth in private industry compensation at 4.8% over the same period. The cost of labor (Private Industry Compensation) is growing at a rate below the cost of living (Consumer Price Index) while Business Aviation Compensation has exceeded it somewhat. However, these metrics do not tell the whole story. The current labor market for business aviation personnel, particularly pilots, remains very dynamic. Every major airline has agreed to new contracts from their respective pilots’ unions with compensation increases between 34% and 50%.” Additionally, Broyhill stated: “NetJets’ pilot union just landed a contract with a 52.5% increase. These factors will generate consistent wage pressure in the pilot market for years to come.” Broyhill further elaborated on compensation factors: “Another variable in the marketplace is the willingness of high-net-worth individuals to pay high wages to poach pilots and technicians alike from corporate operators. Personnel who are trained and have experience with the newer, ultra-long-range equipment (Gulfstream G650, G600, G700 and Global 7000/7500) have become commoditized. It is not uncommon for pilots in these aircraft to make figures in the mid $300,000 for merely performing captain duties.”

Broyhill continued: “While paying at the 50^th percentile or using a lead-lag modality centered on the 50^th percentile used to be an accepted strategy, business aviation operators are now regularly targeting the 75^th percentile to ensure they stay ahead of the market. Make no mistake, in today’s compensation market, an operator is accepting risk if they target the 50^thpercentile, because someone, either the airlines or a competitor, will pay more.”

Flight Crew Training:  Crew training constraints are anecdotally improving due to better planning and scheduling. However, the available qualified employees remain very tight as pilot training slots can now extend out two years. This is putting extreme pressure on flight departments to find already qualified flight crew members. The training expenses shown are based on average transaction costs for representative aircraft models. Actual expenses can vary due to market capacity fluctuations, changes in training locations and other factors such as training volume and length of commitment.

Cabin Crew Training: These expenses are provided as budgetary planning numbers only.

Maintenance Training: This estimated cost is per technician and includes initial maintenance training on an aircraft model. Data reflected here was initially compiled by ARGUS and escalated to accommodate inflation.

Hull and Liability Insurance: Aircraft hull and liability (and all aviation insurance in general) premiums have remained dynamic since last year’s Operations Planning Guide publication, particularly for single-pilot, owner-flown, high-asset-value aircraft. Annual premium increases have slowed from the single-digit increases seen last year to more favorable single to double-digit decreases as noted by Tom Hauge, national sales director at Wings Aviation Insurance. However, “the hot-button topics” noted by Hauge remain “escalating airframe values over the last year, low inventory availability for sale and new entrants into the insurance underwriting pool.”

Tom continued: “Naturally, aircraft owners and buyers alike are adjusting to upward pressure on airframe valuations, changes in insured values and the attendant impact on premiums. However, with additional underwriting capacity, many professionally flown operators could see improved insurance premiums in the coming year.”

Hauge and the aircraft insurance industry are closely watching war risk and confiscation of commercial aircraft related to the Russia-Ukraine war, with the potential to impact aviation insurers as one of the largest loss events in aviation insurance history. Hauge said, “Airliner confiscation could be a driving factor, and the future impact on insurers is to be determined as insurance companies are in a wait-and-see mode to see how this issue works out.” Hauge points out that “the aviation insurance industry is one massive risk and financial pool. Everyone paying aircraft insurance premiums can be impacted if the pool is drained by war risk coverage losses due to confiscated aircraft.”

Therefore, market forces will continue to impact premiums including global catastrophic property/casualty loss events, aviation losses in the sector (aircraft hull and liability claims), cost of repairs and loss of underwriting facilities over the last several years, increased underwriting competition and increased capacity. All these factors have made the marketspace less restrictive on high hull and liability limit aircraft, along with continuing to drive tighter requirements on pilot qualifications.

Tom noted that “there is, however, some additional capacity in the U.S. aviation insurance market with three ‘new’ carriers entering the hull and liability space as of 2024—with a fourth targeting to start underwriting later in 2024. The additional market capacity should help soften the sub-$5 million hull value aircraft premiums (owner flown and professionally flown). The underwriting space in the USA now stands at 11-12 carriers for midsize and large cabin aircraft,” Hauge said.

Hull and liability rates reflected in the Guide are established based on key experience and type-specific training, as noted below. Actual premiums can vary significantly from those noted in 2024 and beyond. Hauge shared additional guidance for this year’s Planning Guide: “My job as an insurance broker is akin to that of a salesman. I work to position the buyer in the best possible light to the underwriter. The level of thoroughness and detail on a particular risk achieved through interviews with my clients can directly correlate to the quality of the market results. Come prepared to give your broker all the information needed to put you in front of an underwriter.” Hauge indicated your broker will specifically ask about your:

• Pilot experience (the more detail provided, the better). Pilots without prior make/model experience, adequate turbine time as pilot in command and prior overall experience can dramatically impact the overall total annual premiums. Premium variation can be 5%–10% lower or more from previous years depending on experience metrics noted.
• Planned utilization for the aircraft, including estimated annual flight hours, territory you plan to operate in and how you will use the aircraft.
• Detailed training plan (if you are transitioning into a higher-performance aircraft or turbine transition, this area is particularly important to define).

Your broker will also dig into your aircraft use case aircraft, including:

• Where you fly and how often.
• Owner flown versus professionally crewed aircraft – there is a significant difference in risk between the two designations.
• Size of the aircraft make/model pool and overall safety record—for example, an experimental turbine aircraft with limited numbers in service will have a vastly different insurance market acceptance versus a legacy OEM production aircraft with hundreds or thousands of the models insured worldwide.
• How many times a year do you utilize the aircraft/flight hours estimated per annum?
• Expectations on liability coverages/any third-party passenger exposure (how many and how frequent).
• Where the aircraft is based and how it is secured when finished flying (tied outside versus hangered).
• Number of underwriting companies willing to write coverage for a specific aircraft type and planned crew operation.

Tom advised: “When you get down to the last step of selecting one insurance policy over another, choose the proper policy for broadness of coverage, liability limit needs, checkout or transition pilot requirements, and finally pricing.” Other considerations include: “Do you plan to dry lease time in the aircraft to a third party? Does the policy cover this use? Can dry leasing be added to the policy, and if so, at what additional cost? We have seen several insurers prohibit third-party dry leasing—others that may permit dry leasing to third parties typically cap the number of leases that may be added to the policy and will surcharge the leases at a flat, fully earned premium per lease.”

Additionally, Hauge said: “What minimum experience requirements do your pilots need to have to be approved by the policy underwriting company or what might be the requirements/minimum experience threshold to add additional pilots? Do all your pilots currently hold these qualifications and experience, and if not, what will be required to have them approved by the insurance underwriting company?” Also, as of recently, some insurers will mandate simulator-based training for the pilots and some allow training to be completed in-aircraft, so this topic should be addressed with your broker when reviewing insurance quotes from various underwriting carriers.”

These are just examples to consider, Hauge said. Additionally, he noted: “When you review your policy choices, make sure all your missions/usage, pilots, etc. are covered. Without this knowledge, you could find yourself in an uncovered situation, responsible for a multitude of damages. With the right broker by your side, and the proper information, timing and knowledge about your policy, you can smoothly navigate the aviation insurance purchasing process and gain a policy that best fits your needs. Insurance estimates are based on the aircraft flown by professional, simulator-trained flight crews or well-qualified pilots with sufficient pilot in command time in type, particularly for the owner-flown, single-pilot class platforms. In other words, best case scenario as opposed to minimum qualification scenarios.”

Hull Insurance per $100: This is the factor used as a multiplier to arrive at the total annual cost of hull insurance for a particular aircraft. It is derived from actual aviation insurers’ quotes. Insurance quotes can vary depending upon whether the aircraft is covered under a fleet policy or a standalone policy. The first number reported is the estimated annual cost of hull insurance for a particular aircraft based on its BCA-equipped price as reported in the June 2024 Purchase Planning Handbook. The cost is computed by multiplying the cost per $100 of hull insurance factor by the BCA equipped aircraft price. The figure includes war risk coverage, which constitutes on average $0.03 to $0.05 per $100 of hull insurance (this figure is increasing in 2024, as noted earlier).

Liability Insurance: This figure represents the total annual cost for liability insurance for an aircraft model. Aircraft in Categories 1 and 2 are assumed to carry $5 million in liability insurance; Category 3 aircraft carry $100 million; and Categories 4 through 6 carry $200 to $500 million in liability insurance coverage depending on make and model. The annual cost is computed by multiplying the amount of liability coverage in millions by a per-million factor supplied by a leading provider of this type of insurance coverage.

Maintenance Software: The figure shown for maintenance Software Programs represents the average annual cost for a software program to track maintenance activities, intervals and expenses. This number should be utilized as a budgetary planning estimate.

Hangar/Office Facilities: Expenses shown here are based on national average annual costs reported by flight departments and escalated for 2024 based on the annual rate of expected inflation. The figures shown in each cost area are broken down by the six aircraft categories and will be the same for all aircraft included in the same category. This figure is an annual cost per aircraft and includes hangar and office rent as well as additional facilities costs such as utilities, ground upkeep, snow removal, janitorial service and insurance (other than aircraft insurance).

For more than one aircraft, it is valid to multiply the figure by the number of aircraft to arrive at a total flight department cost. Actual rental costs will vary widely from one geographical area to another.

• Variable Costs (Per Flight Hour):

These expenses are directly related to the operation of the aircraft and are represented as an hourly cost figure. Included are Maintenance Labor Expense, Parts Expense, Engine, APU, Avionics and Propeller reserve expenses as appropriate. For in-production aircraft, it is assumed the aircraft is covered by the manufacturer’s warranty. The figures shown are based on aircraft OEM direct estimates with warranty effect incorporated unless otherwise noted by an asterisk (*). For OEMs that did not participate this year, an inflation escalation was added to the most current available data.

Service center maintenance labor expense is computed by multiplying the Maintenance Man-Hours per Flight Hour ratio by the nationwide average service center hourly maintenance labor cost (Category 1: $138/hr.; Category 2: $138/hr.; Category 3: $144/hr.; Category 4: $150/hr.; Category 5: $161/hr.; Category 6: $161/hr.; Category 6 BBJ MRO: $115/hr.) Labor expenses for each category noted here were used in the preparation of in-production aircraft maintenance labor costs per flight hour.

Airframe Systems Parts and Labor:

This figure is a model-specific hourly expense with warranty considered. It should be noted warranty periods and coverage vary from OEM to OEM and are not specifically defined in this description. Contact the OEM for policies related to new aircraft warranty and pre-owned aircraft within the warranty period for transfers related to the airframe, engines, APUs and avionics. The following descriptions define how maintenance man-hours and parts expense were calculated into mission costs:  

Maintenance Labor Hours/Flight Hour (in-production aircraft): An aircraft manufacturer-supplied ratio of maintenance man-hours per flight hour. The number reflects an average for the first five years of operation while under warranty, including scheduled maintenance and unscheduled maintenance events. Maintenance man-hours per flight hour are multiplied by corresponding labor rate, by aircraft category and incorporated into the Airframe Systems Parts and Labor variable cost figure line item.

Parts Expense (In-production aircraft): This hourly expense is derived from model-specific manufacturer’s quotes and included parts expense for airframe systems. In-production aircraft parts expense provided by the OEM have warranty taken into consideration. It should be noted some warranty periods covered time frames of fewer than five years, as mentioned in the remarks section of the operating cost tables. Airframe systems parts calculations assume unscheduled maintenance events would be covered by warranty and do not include reserves for engine or APU overhauls, hot sections, long-range maintenance events or propeller reserves. Those items are listed separately in the variable cost section. Avionics repair costs during the warranty period would also be covered by the OEM warranty, and therefore no reserve costs are shown for Category 1-6 platforms. Regulatory mandates should be separately budgeted for when evaluating operating costs for each aircraft.

Engine Reserves and APU Reserves (where applicable): These expenses are based on OEM input for in-production aircraft where provided. Engine and APU OEMs and third-party service providers offer programs designed to fix or cover operators’ scheduled and unscheduled maintenance requirements on a per-hour, fee-paid basis. Engine and/or APU loaners may not be covered by these programs for unscheduled events, resulting in significant out-of-service time for the aircraft. Consult policy terms and conditions or the service provider for specifics.

Avionics Reserves: For in-production aircraft, avionics reserves for Categories 1-6 are assumed not to be applicable due to OEM warranty coverage during the first five years of operation following entry into service. Additionally, upgrades to cover regulatory mandates are not factored in hourly operating costs.

Propeller Reserves (where applicable): These expenses are based on OEM input for in-production turboprop aircraft.

• Annual Cockpit Subscription Costs:

These are expenses related to cockpit navigation equipment database updates, safety services associated with flight planning and other services associated with flight operations. These services are typically purchased through the OEM in the case of flight management systems and GPS navigators or ground proximity system databases, and service providers for datalink, flight planning, charts, graphs and digital weather-related products. Information in this section is dependent on cockpit avionics configuration and pricing offered at the time of aircraft delivery, or as contracted with a cockpit services provider. Procurement of subscription services from a provider that offers training support on use of products as well as troubleshooting, system configurations on-wing and satellite communication link setup for service delivery where needed are highly desirable support elements. Typical subscription costs, which vary depending on mission needs, are reflected in this section. However, annual aircraft utilization and bundling of other services may reduce these expenses.

Navigation and EGPWS/TAWS Databases: Annual subscription prices are derived from OEM data sources or estimated where OEMs do not publish publicly available pricing, and therefore should be viewed as directionally correct for budgetary planning purposes. Navigation database prices do not include optional bundled or enhanced feature pricing unless specifically noted. For example, navigation database, plus terrain, traffic or other charts and maps, can be covered in a one-time renewal or an annual subscription price, depending on the avionics manufacturer. The aircraft or database supplier should be consulted for price quotes. Expenses shown vary depending on cockpit avionics equipment configurations and are approximated averages for in-production aircraft.

• Annual Cabin Services Costs:

Cabin services costs assume the aircraft is optioned with appropriate equipment at time of delivery from the factory. Aircraft Budget Analyzer provided budgetary planning numbers for Swift Broadband (SBB), KA/KU, SatTV and Cabin Iridium services. Estimated Air to Ground service costs are derived from published pricing where available. Cabin services, except for Air-To-Ground and cabin/Iridium phone, are applicable to aircraft Categories 4-6 due to suitable empennage and/or vertical stabilizer antenna/radome solutions and suitable space for installation. Cabin services costs are for activation, on-wing field labor support, aircraft crew training expense or ongoing technical support associated with troubleshooting complex satellite communications equipment and networks are not included. Many service providers offer a continuum of support services and should be contacted directly for information related to ongoing support and service activation.

• Annual Trip Support Costs:

Annual trip support expenses are similar for all aircraft in a particular category, reflecting comparable aircraft capabilities and mission utilization. Trip expenses include catering service, flight crew travel, international trip support, concierge, ground handling and landing/parking fees. Fees reflected are annual numbers assigned to specific aircraft categories. For aircraft in Categories 5-6, 400 annual flight hour utilization rates were used to arrive at budgetary planning estimates. For Categories 1-4, 250 annual flight hour utilization rates were used. Mission durations vary, which resulted in a change in the way these costs were calculated for the 2024 Operations Planning Guide. Many operators elect to use a service provider in the case of concierge and international trip support due to complexities associated with overflight and landing permitting and other logistical arrangements. International trip support and concierge were not factored in for aircraft in Categories 1-4 unless otherwise noted, or the aircraft had a sufficient NBAA IFR range to justify a budgetary planning estimate.

• Operations Planning (Aircraft Acquisition):

Selecting a new or replacement airplane can be a complex, daunting task, particularly for first-time buyers and those upgrading to a new platform. Acquisition planning involves a thorough operational needs review to ensure the right aircraft for your unique mission needs is purchased. We interviewed Michelle Wade, managing partner at Jetstream Aviation Law, P.A. (https://jetstreamlaw.com/), this year to add updated perspective to the overall Operations Planning Guide.

Due Diligence:  Wade cautioned that: “The due diligence portion of an aircraft acquisition is critically important. This includes due diligence on the aircraft and due diligence on the other parties.” To ensure you receive the aircraft value for which you negotiated, do not limit the scope of your due diligence just to close on the purchase. Confirm the physical condition and title of the aircraft are satisfactory and work with your team to ensure the aircraft you purchase will meet your needs. Closing on the purchase with an escrow holdback of a portion of the seller’s proceeds to allow the buyer to fly the aircraft and then have discrepancies repaired requires planning. Be specific as to what will be repaired, how it will be repaired and when it will be repaired. Know what is required by the parties and by the escrow agent for the holdback funds to be released from escrow. Identify who is responsible for any leased parts. Perform due diligence on other parties in the transaction to confirm you are not buying an aircraft from a sanctioned party or an entity whose ultimate beneficial owner is a sanctioned party and to confirm to whom payments are being made. This involves requesting, receiving and reviewing information from the other parties to your agreement as well as parties to any back-to-back transaction. With the U.S. government’s recent focus to ensure that general aviation aircraft are following export processes, due diligence also includes confirming the export/import status of the aircraft.

Team Planning: Wade shared key advice: “Assemble a team of subject-matter experts including technical, operations, tax, legal, staffing and general consulting expertise in addition to the owner’s in-house business team. Using a robust team to create a complete acquisition plan that considers mission needs, utilization plans, business goals, tax laws and FAA regulations can avoid future problems.” Wade emphasized allowing sufficient time to accomplish all tasks associated with the acquisition, as well as the need to “start your planning early, allowing sufficient time to research questions arising from unique business needs.”

When asked for additional clarification, Wade advised: “Well-defined utilization information narrows the list of aircraft to consider, narrows the list of significant tax issues to address and helps identify how FAA regulations will affect ownership and operation of new aircraft.” The answers to these questions will help clarify the intended utilization of the aircraft:

• Will flights be primarily for business use with limited personal flights?
• Will flights be predominately personal flights?
• With personal use by multiple generations, should the flights be charter flights?
• Does the owner expect anyone to pay for their flights on the aircraft?
• Will a professional aircraft management company be hired?
• Will the aircraft be leased to a charter company to provide charter flights to the owner, friends or third parties?

Tax Goals: Wade emphasized this is an area to which “particular attention needs to be paid.” Wade said: “Missteps here can be costly. Defining tax goals is essential, including both federal and state tax factors. One significant decision in an owner’s federal tax planning includes whether to take a tax deduction for bonus depreciation. Bonus depreciation may allow the owner to deduct a significant percentage of the purchase price on the owner’s tax return in the year of purchase; however, it is important to understand the impact of IRS bonus depreciation regulations on the planned flight operations.”  

Wade further stated that: “Significant flight hours for personal use, or business flights which also carry passengers traveling for non-business purposes, may negatively affect an anticipated bonus depreciation deduction. Planning with the entire team to address how to best satisfy tax goals and business goals while complying with FAA regulations can avoid unpleasant 11^th-hour surprises. State sales and use tax, state property tax and the availability of any exemptions should be considered and will impact ownership planning and aircraft operations. Each aircraft owner has a unique business structure, unique tax goals and unique business goals. There is no one-size-fits-all tax plan when buying a new aircraft. Early discussion of the planned operations and desired tax benefits will allow the team to identify and address any potential conflicts between business plans, tax laws and the FAA regulations.”

Financing: Wade stated: “The process of identifying potential aviation lenders, obtaining quotes and selecting a lender should begin at least several months before funds are needed. It takes time to provide the required due diligence to the selected lender, obtain loan approval, review the loan documentation and negotiate important business points into the loan documents while ensuring a smooth closing.” 

Home Base Logistics: Depending on where the aircraft will be geographically based, this planning element is critical to ensure an expensive asset is not parked on the ramp, unprotected. Wade further advised, “the aircraft acquisition team should also identify the resources needed to support the new aircraft.” According to Wade, these are important questions:

• “Where will the aircraft be hangered? This decision is affected by identifying a convenient departure airport for most flights, hangar space availability and state tax laws.
• How will the aircraft be staffed?
• How many pilots will the owner employ? Will any contract crew be utilized?
• Will a maintenance technician or a flight attendant be employed?
• What maintenance/service programs will be utilized?
• What insurance coverages will be obtained?”

Purchase Agreement: Wade said: “Once the desired aircraft is identified and basic business points of the acquisition negotiated, the parties will execute a sales agreement. For new aircraft, the manufacturer provides their standard sales agreement. Certain terms are not negotiable, but others can be revised to ensure a good delivery experience for everyone.

• Consider the pre-purchase inspection and delivery process to ensure that it meets the buyer’s expectations.
• Consider addressing what closing documentation the buyer will receive from the manufacturer at delivery time.
• Consider addressing the closing procedure in more detail.
• Do you have any specific delivery conditions to include for your aircraft?”

Wade added, “Planning for the delivery when negotiating the purchase agreement can create an easier closing experience.”

In summary, there are many other details to be planned and executed in the purchase of a new aircraft. The use of experienced expertise is essential to avoid delays and unexpected surprises during the planning and purchasing process. Working with an experienced team will significantly streamline and ensure your experience is a good one. 

General: Abbreviations and annotations are used throughout the tables: “NA” means not available or Not Applicable to a particular aircraft model. An asterisk in brackets (*) in the Model Column indicates data was not available from the OEM or other sources, and operating costs were estimated. Single Pilot (SP) certified aircraft may not include a salary for the Captain or Copilot in the Guide Tables, and assumes the aircraft is owner-flown unless otherwise noted due to insurance requirements or typical mission usage; “NP” signifies that the specific performance is not possible; “OC” means On Condition; and “INCL” indicates a particular cost item is combined with another specifically noted item.

Cirrus Aircraft offers an all-inclusive operating cost per flight hour product which includes recurrent training, all scheduled and unscheduled maintenance, all subscriptions and more. Variable costs are broken out only for the purposes of calculating direct mission costs for each of the predefined ranges.

ABOUT AIRCRAFT BUDGET ANALYZER, LLC, AND INDUSTRY EXPERT CONTRIBUTORS:

Aircraft Budget Analyzer conducts research and data collection related to aircraft operating costs for both in- and out-of-production aircraft, primarily focused on fixed-wing, turbine-powered platforms, as well as a limited number of high-performance piston aircraft.