direct operating cost of aircraft

Here to learn the Direct Operating Cost Of Aircraft and the aircraft maintenance cost breakdown? As a rule-of-thumb for initially setting rates, the hourly contribution for Routine Maintenance (Engine and Airframe combined) can be roughly equated to one-half the hourly cost of fuel and oil. ($20 for all maintenance vs. the $23.75 in our example here).  Appropriate adjustments can later be made based upon actual operating experience. So find out the airline operating costs breakdown below.

Direct Operating Cost Of Aircraft

Loan payment. Principle and interest.
Hangar or tie-down 
Sub-total fixed costs per hour = F 
Fuel  ( 1 )
Oil  ( 2 ) 
Annual inspection ( 3 ) 
Maintenance  ( 4 )  
Sub-total direct costs per hour = D 
Reserve Account(s) + Variable Expenses 
Variable: catch-all, or unexpected
Sub-total: optional to include reserve and/or variable in the total

These guidelines provide a basis for determining aircraft operating costs. The actual cost will vary depending on aircraft type, age, and utilization.  Records of actual cost should be maintained for each aircraft in order to make adjustments to the guidelines.

$ / GAL X GPH = $ per hour

$ /QT X QPH = $ per hour (include oil service charges if any)

As a rule of thumb, for initially setting rates, the hourly contribution for Routine Maintenance (Annual Inspection, Engine and Airframe combined) can be roughly equated to one-half the hourly cost of fuel and oil.  Appropriate adjustments can later be made based upon actual operating experience.

As a starting point, set asides for avionics maintenance can be estimated as 5% of the current replacement value of the avionics installed per 500 hours of flying.  ($ value of avionics x 0.05/500 = $ per hour)

Based on the average cost of replacement with factory remanufactured engine or overhaul of existing engine.  Use either the manufacturer’s recommended TBO, or, time remaining until that TBO on your aircraft, and, simply divide the cost (spread the cost) by the hours of use. Cessna 172 overhaul @ $17,000 divided by the TBO (estimated time between overhauls) of 2000 hours = $8.50 per hour. Note: the factory remanufactured engine cost is $27,000. Upon purchase, the aircraft probably already has flying hours on the engine. If you are at 1100 hours on the current engine you will have about 900 hours to go. If a reman engine is chosen, now the math is $27,000 divided by 900 = $ 30.00 per hour.

Propeller overhaul estimates are $0.25/hr for fixed pitch props and $1.00/hr for a constant-speed prop. More for a 3-blade.

Passenger Airlines Operating Costs, United States, 2019 | The Geography of  Transport Systems

DOC is the operational expense directly associated with a flight. This cost is allocated towards the flight planning process (positive or negative outcomes).  DOC is summed up with both fixed and variable costing. For obvious accounting reasons, different airlines and their fleet manufacturers (Airframe and Power Plant) use different definitions on what their DOC is. In addition, airlines, charter companies, air taxis etc use different methods and approach to calculating DOC though some of the variables are constant. For instance Fuel, Crew, etc
In my previous post, I explained that these are the likely contributing variables to DOC
•       Depreciation, Insurance and Interest•       Fuel; the biggest, single line item in the cost •       Station and Ground Services; varies upon weight, class and size of fleet

•       Flight and Cabin crew; varies upon weight, class and size of aircraft

•       Airframe and Power-plant Maintenance – varies on what class and size airliner belongs to
Depreciation, Insurance and Interest

aircraft maintenance cost breakdown

Financially, there are different depreciation methods; however, it’s important to note that when deciding on which depreciation method to use, you have to consider the aircraft utilization, as well as the tax advantages/disadvantages.
For instance, assuming that Southwest Airlines(SWA) purchased a Boeing 737-800 for their New York to Washington DC route, assuming the contractual cost of their airplane for $78million, ($71million (base price)+ $7million which includes taxes, operations engineering examination, flight testing, delivery charge, and the list goes on… etc ).
Depending on how the aircraft will be used (regular or heavy ops), they might decide to use Straight-Line, Declining balance (or Double Declining Balance), or activity based (based on number of hours or miles flown). 
To keep this “very simple”, SWA may decide its utilization is for medium ops and use the Straight-Line Depreciation method.
At $78million, assuming we decide to use the declining method, since this aircraft is “brand new”, SWA is more likely to use the best out of it (heavy use) for the first 4year, average use for another years and standard use over the rest of its life. The double-declining method is the best approach because the airplane is more than likely to be thoroughly stretched during its first four years.

However, we’ve decided to keep this “very simple, and non-complex” and straight to the point. To keep this “easy and going”, SWA may decide its utilization is for medium ops and use the Straight-Line Depreciation method.Here are the basic assumptions, again, nothing complex
•       Aircraft Purchase Price = $78 million•       Residual Value = $3million•       Useful Life = 20 Years•       Depreciation years = 10 years (I purposely left it like this so that the next 10 years of light use will be depreciation expense free).•       Interest Financing = 7.00%•       Number of Periods Financing = 10years (120 periods) or 3,650 days (365 days x 10 years)

Monthly Depreciation Expense is $625,000 (its 120 periods or moths)Daily Depreciation Expense is $20,548 (365days/year x 10 years = 3,650 days)

Now that the Depreciation expense is known, $20,548 daily, it’s a lot easier to allot daily depreciation expense to daily ASM. Taking this assumptions, it flies daily,14 trips on a 161nm short haul, seating 140 passengers, total ASM’s will be (14 x 161 x 140 = 315,560). With this calculation, if we’re to allot every depreciation expense to every ASM, it will be $20,548 / 315,560 = $0.065cents / ASM. For every fulfilled ASM, there’s a $0.65 cent allotted to depreciation expense.Keep in mind that I said 14 trips based on a 65mins (Turn around including flight) because an average new aircraft flies about 15 to18hours daily, some even more. In addition, it doesn’t really matter whether you fly a 500-nm trip that will increase the flight time as well. In addition to this, the airplane is highly unlikely to fly 7-days/wk


To be honest, I am so not familiar with Aircraft Insurance Underwriting, thus, I can’t speculate further on it, although I’ve read through some very interesting articles that explains how it’s written. No single insurer can underwrite a commercial airliner due to high risk factors. Insurance can come in different forms — most insurance underwriters may form a group and sell to any particular airliner.

There are different types of insurance coverage for different classes of aircraft and operators; there’s the type where a)carriers pool their resources together and provide coverage for themselves b). Where Insurance companies provide their own coverage per their own policies. For instance, General Aviation are less riskier  unlike Commercial Airliners that carry greater risk. General Aviation aircraft obviously are not expensive and do not cost up to Airliners, so the class is very important in the writing process.
In addition, the types of pilots who fly these aircraft (number of hours, medical records, etc) play an important role as well. Another important factor to consider is the types of business involved (cargo or passenger), Geographical Location – flight route etc. For instance, airplanes that cross international routes tend to have higher premiums than domestic planes. Also, Airplanes that cross into “high risk airspace” for instance in the middle-east where there are tensions at the moment will often carry higher premiums.

In all, there are several mitigating factors that commercial airline insurance underwriters consider. According to what I’ve deducted from a few resourceful articles online, the rule of thumb is that annual insurance is between 4-8% of the assessed face value of the airplane. Given this assumption, it’s fair to say that and avg annual rate of 6%, or 0.005% monthly rate, that’s a 355,000 monthly.

With this calculation, from the calculation above, daily ASM is 315,560 and if the airplane flies for 6-days a week, 25-days a month, that’s 7,889,000 ASM monthly. If we divide 355,000/7,889,000, that’s a $0.044/ASM.

Financing Interest Rates

Like I said previously, DOC depends on what different airlines compute themselves; there is no direct approach in calculating DOC, however, Revenue Managers are responsible for accounting all possible “direct cost”. Although Interest Rates are not “directly” involved in the flight, they are “indirect cost”, however, I know of an airline that used this model.
On a $78million financing loan, if you use the “IPMT Function” in Excel, you will see that the interest charge for Day 1 $14,959. This interest will gradually reduce as the days go by, therefore, with a daily interest of almost 15,000 at 315,560 ASM, that’s a $0.047/ASM.
Now that we have 
·         Depreciation —$0.065·         Insurance ——$0.044·         Interest Rate —$0.047Total ————$0.156

That’s a total of 15.60cents
Assumptions·         Depreciation was taken for 10years which in certain cases it’s a lot longer·         Insurance Rates and premiums are “unknown” and calculation is based on “theory”.·         Interest Rate could be higher or lower depending on Financial Market rates·         I used 365 days x 10 years = 3,650 days. Calculation could be off due to leap year(s). 

 In all, assuming you scale down the by 20%, thus extend Depreciation by 20% (from 10 to 12 years), decrease insurance rates (from 6% to 4.8%, and Interest, (5.6%), this will surely reduce it from $0.156 to $0.124; that’s a difference of $0.03 savings.

It is an interesting time for not only space travel, but private aviation, too. While larger and larger jets are flying farther and faster, smaller personal jets and enthusiast aircraft are thriving as well. And let’s not forget the vertical takeoff and landing craft that shifted into hyperdevelopment mode. There’s never been a more exciting time to be airborne.

Bombardier Global 7500

Robb Report's Business Jet of the Year 2019, Bombardier Global 7500

Bombardier Global 7500. Courtesy of Bombardier

After much anticipation, the first Bombardier Global 7500 business jet entered service in December of 2018—and to positive fanfare. Since coming on the scene, the 7500 has wasted no time in breaking as many records as possible. At press time, these include distance (between Singapore and Tucson, Ariz.) and speed (between New York and Los Angeles). While performance for a private jet got an upgrade, so did comfort—the Bombardier Nuage chair with its free-floating base is the first true seat revamp in 30 years for the private aviation sector. The 7500 accommodates 19 passengers, has a range of 7,700 nautical miles (8,861 regular miles—say, from LA’s Van Nuys Airport to Dubai or San Francisco to Singapore, among many other pairs) and has a top speed of Mach 0.925. Even the crew gets a posh boost with a private seat that fully reclines for sleeping and is separated by a privacy door. The flexible cabin plan could include, for example, a master suite with queen bed with storage and an en-suite bathroom with shower; a media room with sofa that can become a bed (more stash space underneath); a dining and living/conference area (with a table that folds out for six); the crew rest suite across from the galley (with all the secret hideaway drawers and popup stow slots as well as an oven and sink for fresh preparations); and another forward bathroom. This jet really has everything you might need for that ultralong-range flight.

Controlling sound, movies, blinds and lights—from any seat or bed— just got easier with a state-of-the-art pop-up dial with an OLED display. This dial, named the “nice Touch cabin management system,” is part of a platform developed in collaboration with Lufthansa Technik. And it’s pretty cool—as is the Ka-band satellite communications for fast internet speeds. There’s no doubt that the world’s largest and longest-range business jet lives up to the hype.

Bell Nexus

Robb Report's Best VOTL Concept 2019, Bell Nexus

Bell Nexus Courtesy of Bell

If anyone is going to truly take a vertical takeoff and landing (VOTL) concept to market, our bets are on chopper experts Bell. With seven decades of experience as a helicopter manufacturer, and as the builder of the V-22 Osprey and the V-280 Valor tiltrotor military aircraft, Bell carries cachet among the new and established companies developing vertical takeoff and landing aircraft that also fly horizontally like an airplane. So while you can dismiss some of the recent VTOL concepts as pies in the sky, you can’t do that here. The Bell name lends credibility to the four-passenger hybrid-electric VTOL, which features six 8-foot-diameter ducted fans that tilt to make the instant transition from vertical takeoff to horizontal flight. Plans call for the Nexus to initially be flown by a pilot, but eventually it could fly autonomously. The craft will have a range of about 150 miles and a top speed of roughly 150 mph. It will be small enough to take off from and land on most helipads. Bell hopes to begin flight tests with a prototype in 2023 and have the Nexus in service by the mid-2020s.

Bombardier Challenger 350

Robb Report's Best Super-Midsize Aircraft 2019, Bombardier Challenger 350

Bombardier Challenger 350 Courtesy of Bombardier

For those who need their private jet to be able to cross the country (or the Atlantic) on the regular, the Bombardier Challenger 350 has been the business jet of choice, averaging more than 60 deliveries annually in its first four full years of service (2015 through 2018), many going to NetJets, Flexjet and other private-aviation companies that appreciate the reliable, workhorse nature of the Challenger 350 and see its $27 million price as a solid investment. You just couldn’t fly into airports such as Aspen or London City because of steep approaches or shorter runways. But the aircraft’s capabilities and cabin comforts seemed to outweigh that negative. It has a range of nearly 3,700 miles, a max cruising speed of 548 mph, and room for 10 passengers. The cabin is just over 25 feet long, 6 feet tall and 7 feet 2 inches wide. The standard configuration seats eight passengers in two sets of four comfy club seats. Last year, however, Bombardier enhanced the Challenger 350 so that it could receive steep-approach certification. Now it can land at (and take off from) airports that used to be off limits. The latest version of the aircraft needs less than 2,400 feet of runway to land.

Cessna Citation Latitude

Robb Report's Best Midsize Jet 2019, Cessna Citation Latitude

Cessna Citation Latitude Courtesy of Cessna

The Cessna Citation Latitude was the third most-delivered business jet in 2018, behind the Cirrus Vision Jet and Bombardier’s Challenger 350. In its own midsize class, however, the Latitude was out in front, with 57 handed over last year, up from 54 in 2017. While three more wouldn’t seem like much in other sectors, when you’re talking about a $17 million piece of kit, each and every one is significant. Desire for the Latitude is growing.

Perhaps it’s because its flat-floor cabin has six feet of headroom. Or maybe it’s that 22-foot cabin’s ability to seat nine passengers. The pressurization system gives the feel of flying at 5,950 feet when the jet is actually cruising along at 45,000 feet. With four passengers, the Latitude can fly more than 3,100 miles without stopping at its 513 mph max cruising speed. Garmin’s G5000 touch-screen avionics with synthetic-vision technology give top-notch guidance in the cockpit.

Airbus ACH135 Helionix

Robb Report's Best Helicopter 2019, the Airbus ACH135 Helionix

Airbus ACH135 Helionix Courtesy of Airbus Corporate Helicopters

Quick urban hops and jaunts to remote areas that don’t necessarily have an airstrip got a lot more luxe—and safe—last year. ACH, the Airbus corporate helicopters division launched in 2017 that’s dedicated to corporate and personal choppers, delivered the first ACH135 Helionix in September. The initial example features a five-seat configuration (plus pilot) with ACH’s sports car–inspired Line series interior. Most noteworthy is the bird’s avionics system, which was designed to improve situational awareness and to reduce the complexity of the system and number of displays pilots have to keep track of. It also has a more advanced autopilot system to make flying simpler and safer, including an auto hover “pause” button (ideal when faced with low visibility or busy environments), a “go-around” button (the ACH135 will automatically fly around and reposition itself on the best landing approach) and automated engine management (ensuring a smooth and safe flight even if one of the two engines fails). Two turboshaft engines power the agile aircraft to a maximum cruise speed of 137 knots and a top endurance of 3 hours and 39 minutes. The cabin offers up large windows for great visibility, as well as its corporate jet–style finishing, such as hand-sewn soft leather seats.

Embraer Phenom 300E

Robb Report's Best Light Aircraft 2019, the Embraer Phenom 300E

Embraer Phenom 300E Erich Shibata Nishiyama

The most-delivered light jet for each of the past seven years became even better in 2018, when Embraer began producing the Phenom 300E, giving the popular plane a tech and comfort makeover. Embraer redesigned the interior and installed, among other features, a new cabin-management and inflight-entertainment system by Lufthansa Technik. The system is housed in a panel that runs along the centerline of the aircraft’s ceiling and includes two 7-inch swing-down displays. Reading lights and fans have been moved into the panel to create more headroom above the seats. The panel also includes new ambient lighting. The redesign creates more space, specifically more aisle room (in addition to the extra headroom), while adding larger seats, which now have broader backs and extendable head and leg rests. The 300E, which is usually configured to seat six passengers behind the cockpit (but can seat up to nine plus pilot), has the same range and high cruising speed as its predecessor: 2,270 miles and 521 mph. (Base price: $9.45 million.)

Winch Design

Robb Report's Best Aviation Interiors 2019, Winch Design

Winch Design Courtesy of Winch Design

Founded in 1986 by Andrew and Jane Winch as a yacht-design company—both exterior and interior—London-based Winch Design has made a name for itself by creating bespoke aviation, yachting and land-based masterpieces, inside and out. This year, we applaud the studio for its custom-interiors concepts for Boeing Business Jets and Airbus Neo aircraft.

By employing irregularly shaped spaces within the cabin, with molded paneling and movable (but securable) furniture, the Winch team creates compelling, adaptable and livable spaces that inspire relaxation in flight but are at the ready to do business when the time is right.

Soft leathers, light-colored marble, natural shells, cream-silk carpets, rosewood accents and mother-of-pearl accessories—not to mention artwork—set a residential tone for the serene aircraft interior. Full-size bathrooms give the feel of home. Dare we bring the kids?

Virgin Galactic

Virgin Galactic's First Flight Into Space

VSS Unity Studios

“It was intense and magical and serene and almost unlike anything anyone can imagine.” That’s how Beth Moses, Virgin Galactic’s chief astronaut instructor, described her trip as a passenger aboard VSS Unity, Virgin Galactic’s rocket-fueled space plane that, in late February, traveled beyond the Earth’s atmosphere and into space for the second time—and for the first time with a passenger. If all goes as planned, anyone who can afford a $250,000 ticket won’t have to imagine what Moses described; he or she will be able to experience it. So far, more than 600 people have reportedly purchased tickets to fly aboard a Virgin Galactic space plane. It’s doubtful any civilians will make the trip by July 18, the 50th anniversary of the launch of Apollo 11 and the date by which Virgin Galactic founder Richard Branson has said he hopes to make his first space flight. However, the February flight was certainly more than just a small step for the company, which Branson established 15 years ago; it was a giant leap for space tourism. After flying VSS Unity 51.4 miles above sea level (NASA places the border between the Earth’s atmosphere and space at 50 miles above sea level) and landing it safely in the Mojave Desert in December, Virgin Galactic’s two pilots were joined by Moses for the February flight, which reached an altitude of 55.87 miles and a speed of Mach 3.0. Moses was on board to evaluate the space-flight passenger experience: the intense, magical and peaceful sensation of weightlessness and the sights of the curve of the Earth and the star-filled sky.

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