How much does it cost to own a business jet?
An Embraer Legacy 600 business jet.
Brad Harris, founder and CEO of Dallas Jet International, breaks-down the operational, variable and fixed costs involved with owning a business jet.
When an aircraft broker consults with a client about the ideal aircraft, it is important that they thoroughly understand the clients’ transportation needs in order to help them select the best aircraft.
Not surprisingly, cost is usually the most important factor. Of course, major considerations also include speed, range, cabin size and dispatch reliability of the aircraft. But what sometimes surprises clients is the difference that operating costs can make to the total financial picture.
MUST-READ: Is it time to upgrade your business jet?
In some cases, operational costs can have such a significant impact on the total investment profile of an aircraft that it becomes a financially sound decision to purchase a newer, larger, or otherwise more expensive plane that has lower operating costs. We will illustrate this as a case study in a future article.
What follows is a discussion of the key factors we consider as we guide our customers through the aircraft selection process.
Operational costs
Operational costs include all of the expenses required to own and operate the airplane, including fuel, pilots and crew, scheduled and unscheduled maintenance, hangar, insurance and many other factors.
WATCH: How to sell your business jet
Operational costs are further divided into variable costs and fixed annual costs.
Understanding variable costs
Variable costs are linked to the number of hours the aircraft is flown.
Fuel is the largest operational expense. Just as smaller, lighter cars get better fuel economy than large SUVs and RVs; smaller, lighter aircraft are usually more fuel efficient. Smaller, simpler jets may have lower crew and maintenance requirements. Landing and parking expenses are also lower for smaller business jets.
The table below lists the estimated cost per hour for five popular business jets:
Understanding annual fixed costs
Whether the aircraft is flown or not, annual fixed costs accrue. Crew salaries, required training costs, hangar, insurance, avionics software updates, and many other expenses must be paid to keep the aircraft ready to fly when you need it.
While some maintenance requirements are based on the number of hours flown, there are also maintenance requirements that are based on the age of the aircraft. These time-based maintenance items are counted as annual fixed costs.
The chart below illustrates the difference in annual fixed costs across these aircraft:
