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Managing Your Maintenance Budget

Better Cost Control and Asset Protection

Managing Your Aircraft Maintenance Budget

Your aircraft definitely will incur substantial costs throughout its life cycle, whether through unplanned events or scheduled maintenance. For new aircraft, warranties may cover many of the unplanned events for some period of time, or some number of flight hours and/or landings, but once those warranties expire, you’re on your own. At that point, these costs may account for as much as 35% of your aircraft’s annual operating budget. You can opt to “pay as you go,” or to enroll your aircraft in an hourly cost maintenance program.

An hourly cost maintenance program (HCMP) allows you to manage these expenses and minimize your operational and financial risk. With a budgeted and predictable maintenance program in place, you can avoid both unexpected cost spikes related to scheduled events, such as airframe maintenance or an engine or auxiliary power unit (APU) overhaul, and the unscheduled, often costly, maintenance events that may occur at any time.

An HCMP offers budget stability by charging a set fee for every hour of operation to cover certain major components, such as the engines, avionics, and APU. You even can opt to cover virtually the entire aircraft, including the passenger cabin, on a per-hour-of-operation basis, depending on your specific usage requirements.

HCMPs may include additional features, among them:

  • implementing manufacturer service bulletins and FAA Airworthiness Directives,
  • providing engine leasing options,
  • offering airframe component protection,
  • extending coverage for life-limited components, and
  • making available logistical and troubleshooting support.

Should you experience an engine issue in a remote location, it is hard to overstate the importance and reassurance of being able to call one number at any time, day or night, and receive the service support and technical knowledge needed to get your aircraft flying again. And all this without receiving an unexpectedly large bill, one that can run to six figures or more.

Just as large airlines frequently leverage economies of scale to achieve lower and more predictable aircraft maintenance costs across their fleets, your HCMP is able to develop similar agreements with maintenance facilities around the world. This means that your provider can buy maintenance services in bulk and can pass along those cost savings to you, thus reducing your overall cost of aircraft ownership.

Enrolling your aircraft in an HCMP also may lead to more favorable leasing and finance terms. A well-maintained aircraft represents a far more attractive proposition to business aviation lenders and helps to streamline the financing process for all parties.

And if you purchase a pre-owned aircraft which has no HCMP in place, you have the option to “buy in” to an applicable program. Your chosen HCMP provider will calculate a “catch-up” fee to cover hours accumulated on the aircraft or components prior to enrollment.

HCMPs are available independently and from all the major airframe, engine, APU, and avionics OEMs. Whether your aircraft is enrolled in a program with a manufacturer or an independent provider, it can help maintain aircraft value and potentially aid in the sale of your aircraft – an especially important factor given current market conditions (See “Hourly Cost Maintenance Programs,” BAA Sept/Oct 2014).

A singular benefit of an independent maintenance program is that you can transfer unused maintenance funds across any make and model of aircraft. The program simply moves to your replacement aircraft, or you could choose to sell it with the aircraft to enhance the aircraft’s value.

The business jet market has evolved significantly in recent years. Aircraft owners and operators who historically have “self-reserved” funds for maintenance increasingly are migrating to HCMPs. These programs now have become an essential component of aircraft ownership, as owners and operators recognize the benefits of maintenance budget stability, asset preservation, and having a dedicated financial and technical safety net in place. BAA

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Neil Book
Neil Book is the President and CEO of Jet Support Services, Inc. (JSSI), which for nearly 30 years has been the largest independent provider of maintenance programs for business aircraft, engines, and APUs.

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