What does it cost to own and operate an airplane?
I discuss my own airplane ownership experience and cover Finance, Insurance, Maintenance, Upgrades and Add-ons, Hangar vs Tie-down, and engine reserve. I’ll also share my strategy for ensuring there are no surprises when it comes to paying for airplane maintenance.
The instrument rating did not significantly reduce the insurance premium; it was the hours that mattered.
Today we’re going to talk about the cost of aircraft ownership based on my experience owing a Piper Warrior. I’ve had my share of expenses and one “investment,” which I’ll share with you later on. This information is aimed mainly at new airplane owners or people who are considering buying an airplane.
It’s often said you need to fly 100 to 150 hours a year to justify the cost of owning an airplane. But for the most part, you buy an airplane for the freedom it gives you to go where you want to go, when you wanna go and also to equip it and maintain it up to your own personal standards.
The cost areas associated with owning a light general aviation airplane that you’re probably not exposed to as a renter are financing, insurance, maintenance, operating cost and of course, hangar or tied down.
Financing. Let’s start with personal aircraft financing. To finance your airplane, you probably need 20% down, that’s the common threshold. You can approach small banks and credit unions about an aircraft loan. Bank of America and AOPA have an aircraft loan relationship. Bank of America has its own aircraft lending unit. If you have home equity, you could consider a home equity loan to purchase the airplane which would allow you to deduct the home equity loan interest.
Also included in the aircraft financing are various government tax programs for new and used planes that enable you to accelerate the depreciation. That’s something you may want to investigate with your accountant.
Expect to pay anywhere from $600 per year and up depending on the airplane, your time in type and total hours.
Insurance. Next up is insurance which, like car insurance, protects the aircraft owner from financial loss caused by damage to the airplane or persons or property. The main factor with insurance is the time in type and total number of hours you have.
If your first airplane is a complex airplane, that is, one with a retractable landing gear and a constant speed prop, then you might have to fly with an instructor for a certain number of hours specified by the insurer before you can fly solo.
Insurance policies on small planes are generally what are called name-insured policies. That is a policy written on a certain airplane. Pilots are named to that policy. Obviously, you as the owner would be one of the names insured. If you have other people who are allowed to fly the plane, they would also be named on the airplane insurance policy.
There is also a provision for open pilots on these name-insured policies. Open pilot standards might be something like a pilot with 100 hours and 25 hours in type. In which case, the insurance company is going to assume that that pilot is qualified to fly the airplane and he will not have to add that person as a named insured.
Expect to pay anywhere from $600 a year and up for your [annual aircraft insurance] premium depending on the airplane, your time in type and your total hours. $1,100 a year seems to be fairly typical of a Cessna 172 class airplane flown by a VFR pilot. That was what I was paying when I first bought my PA-28 Warrior. After I reached 350 hours total time (by which time I also had my instrument rating), my insurance premium went down to $600 a year. The instrument rating did not make a significant difference in the premium; it was the hours that mattered.
There is also the matter of hull insurance. This is something to speak with a broker about because. If you over-insure to cover the recent upgrades you will pay more and could be at risk of the insurance company “totaling” the airplane if their book value figure is less than the hull value. If there is a loan on the plane then the lender is your partner and it’s unlikely it will be under-insured.
Sources for airplane insurance include insurance brokers and aviation organizations such as AOPA, and the Experimental Aircraft Association. They don’t actually underwrite the insurance but they work with companies that do. You’ll find plenty of other resources from a search engine query for airplane insurance companies.
Hangar vs Tie-down. You’ve got the financing. You got the insurance. You picked up your airplane. Now it’s time to bring it home. In all likelihood, that’s going to mean hangar versus tied down. Hangar versus tie-down is not as easy as it sounds. It really all boils down to money.
Hangar versus tie-down is not as easy as it sounds. Location matters.
In Long Island, New York, for example, the difference between a hangar and a tied down can be $600 or $700 a month. Well, 12 times of 6 is 72. $7,200 a year can cover the cost of a new paint job of a small airplane like a 172. You really have to evaluate the situation depending on where you live.
The other factor is how often the airplane is flown. You’d probably be hard pressed to find a flight school that hangars its airplanes every night regardless of what part of the country it’s located in. That’s because airplanes that are flown frequently stay healthier.
If you plan on flying your airplanes a few hours a week, then what you’re really looking at is routine maintenance for the internal systems and a paint job that’s going to deteriorate faster than if the airplane were hangared. On the other hand, if you’re not flying that frequently and you’re parking it outside to save money, again, depending on the situation in your area, that could come back to bite you in the form of maintenance surprises.
The bottom line is hangaring an airplane is best for the airplane, but it might not be what’s best for the owner. It depends on where you live and the cost differential is between a hangar and a tie down, and the usage pattern of the airplane.
Being verbally quote $600, I was handed a bill for $2,200 when I went to pick up the airplane!
Maintenance. Now let’s move on to aircraft maintenance, fertile ground for hangar talk and where a happy ending is just one possibility.
If you own an airplane long enough or if you visit the aviation forums, you’ll learn pretty quickly that aviation is a business and it has its share of honest, marginal and fast-dealing people. Don’t forget that fact when it comes to aircraft maintenance.
In fact, I recommend that you follow a maintenance process that protects all involved. When you bring your airplane to the shop or otherwise hire a mechanic, follow these steps.
- Get a written quote with the service items specifically identified.
- Authorize specific repairs on that quote, not to exceed a fixed monetary threshold.
For example, you could tell your mechanic, “Okay. Go ahead and fix the widget. But call me for authorization if you’re going over $500.” Believe me, the shop doesn’t want to do the work and have to fight you for the money. Conversely, when you go to pick up your airplane, you don’t want to be surprised by the bill.
I once had a situation where I noticed this smell of exhaust fumes just after I started the engine. Worrying about carbon monoxide in the cockpit, I called the shop, had them tow the plane over for an examination and assessment of what was going on. They got back to me and said the exhaust system needed some work and it should cost about $600 to fix.
When I went back to pick up the airplane, I was handed a bill for $2,200. I was floored and pretty angry. Considered the options for both parties at that point. If I were to refuse to pay, it would have ended up in court, a collection agency and the shop could have put a mechanics lien on my airplane which would have prevented me from selling it. An alternative would have been to take the shop to court which is expensive and time-consuming. It’s best to avoid either one of those possibilities by having a specific dollar amount, having everything in writing and following a process.
In that case, we were dealing with telephone authorizations. Nowadays, with the prevalence of email and text messaging, I’ve just found that it’s easy for both parties to exchange emails to confirm the work. So following a process and having it in writing protects everyone involved.
Number 2 [this should have been #3 in the podcast] is to verify the work. You can do that by having a serial number entered right into the logbook of any parts that are removed from the airplane and added to the airplane. Obviously this will be limited to devices that have serial numbers and not bolts and washers. The other option is to have the faulty part held aside for you. For example, if it’s something like a starter with a core value, then have the shop hold it aside so that you can visually see that part before it’s sent in for the core return.
You might think it’s ridiculous or even overdoing it. I have learned, however, through personal experience that sometimes things that show up in the invoice might not show up in the airplane.
The danger of doing the work while the airplane is being inspected is that you could end up paying for maintenance activities on an airplane that doesn’t pass the annual.
Annual inspection. Now let’s move on to the annual inspection. An annual typically consists of checking the logbooks for AD compliance, removing inspection plates to examine inside the fuselage and the wings, checking hoses, lines and cables, removing the airplane’s interior to inspect what’s behind there, such as plumbing, cabling and corrosion, checking the landing gear, checking the electrical system, the ELT and upfront, checking the spark plugs and cylinder compression.
Notice how all of these things are inspection activities and not service activities like lubricating the cables. You really want to stay away from intermingling work that has to be done on the airplane to bring it into compliance with the inspection itself. Nine times out of ten, there won’t be any big surprises during the annual. The person who does the inspection will also do the work on the plane.
The danger of doing the work while the airplane is being inspected is that you could end up paying for maintenance activities on an airplane that doesn’t pass the annual. For example, the mechanic might decide to remove all the inspection plates to start. He is looking inside the wings, spraying lubricant up in there, same thing on the other wing, then at the back of the fuselage, finally gets to the front of the airplane and discovers that there is a $12,000 engine problem.
When you get the bill, you will get a $1,500 charge for the annual inspection and you’ll also get a charge for lubricating the airplane [that won’t be going anywhere anytime soon]. That’s just one example with the dollar figure of lubricating the airplane. It probably isn’t going to be that much. But I think you get the point.
If you keep the inspection of the airplane separate from the actual maintenance activities, you give yourself the flexibility to respond to anything that comes up that’s unexpected. Bottom line, have the airplane inspected first then sit down with your mechanic to discuss your options.
At some point during your ownership experience, you might want to attempt in owner assisted annual. I’ve done one on my airplane and the work consisted of taking off all the inspection plates, removing the interior, taking off the wheel pants, lubricating the airplane, touching up the paint and putting it all back together again after the aircraft inspector check my work.
It was tedious work and I personally wouldn’t do it again. But I did learn a lot about my airplane. There is no better way to get an education about the systems of your airplane than to take it apart then put it back together again. It did take longer than it would have had I brought it to a shop, but on the flip side of that, I did save a few bucks.
The typical cost of an annual inspection for Cessna 172 or a Piper Warrior class airplane is $1,500 – $2,500 for a plane with no major issues or ADs since the last annual. That is based on a shop doing it.
Don’t count on upgrades to increase the resale value of your airplane to a significant degree.
“Upgrades” Let’s now move on to adding things to your airplane. Earlier in the podcast, I mentioned a dubious investment that I made with my plane. I originally bought the plane for use as a flying club plane. It came with an ADF and Loran C. Both of them functioned perfectly.
However I thought taking those out and replacing them with something more modern would enhance the rental appeal of the airplane. So I had a Garmin 430W installed. That was a significant expense that I intended to recruit from flying club revenues. Long story short, the flying club didn’t last. Then I owned a Piper Warrior with a Garmin 430W in it which I had to pay for out of my own pocket. As it turned out, I went and got my instrument rating in that airplane and obviously used the 430 as part of my training. It certainly makes the navigating a little bit easier days.
Had I not intended to put the airplane into a [revenue] service, I probably would have just gone with something like a portable Garmin 396. I think you’ll find that it’s pretty much the case with anything you do to your airplane. If you add an Autogas STC or some speed mods, you might end up reducing the cost of ownership through improved efficiency. But don’t count on these things to increase the resale value of your airplane to any significant degree.
Engine Overhaul. Our last topic today is going to be setting aside money to cover the cost of an engine overhaul. Airplane engines come with a suggested service life, for example, 2,000 hours, at which time the manufacturer recommends an engine overhaul.
Now this is a pretty significant expense even on a small plane like mine. You’re looking at upwards of $22,000. Aircraft owners approach this expenditure in a couple of ways. One of them is to divide the cost of the overhaul by the time remaining until the overhaul.
For example, if you get a brand new engine that costs $22,000 and the time between the overhaul is 2,000 hours, 22,000 divided by 2,000 comes out as $11 an hour to set aside to meet that expense when it comes due. This is typically done in airplane partnerships so that both partners know that the money would in fact be there when the bill comes due.
Another option is to decide how many hours you’re going to fly the airplane then sell it as it gets up towards TBO to avoid that expense altogether. For example, you might purchase an airplane with 4 or 500 hours on the engine then decide to operate it until the airplane has 1400 or 1500 hours on the engine then put it up for sale.
Of course, the closer you get to TBO, the more that diminishes the sale price of the airplane because the buyer understands that he’s going to be responsible for the full cost of an overhaul.
The third option is to just keep running the engine right past TBO. TBO is a manufacturer’s suggestion; it’s not a legal requirement. If the engine is running strong and the airplane owner/operator is confident in its ability to continue flying safely, then it’s perfectly acceptable to run the engine past TBO.
Then we come full circle back to the beginning where I stated that we own an airplane for the flexibility that it gives us to go where we want to go, when we want to go and to equip it to our own personal taste and standards. There is no getting around the fact that airplane ownership can be expensive but we can keep that expense under control by following a process that protects all parties involved.
Now it’s your turn. Do you own a small airplane? Please share your experiences, wisdom, and advice with us via a comment below.
Aviation jargon and abbreviations used in this episode/post
- TBO – Time Between Overhaul
- AD – Airworthiness Directive
- Named Insured – Pilots named (thus, covered) on an aircraft insurance policy
- AOPA – Aircraft Owners & Pilots Association
- Avemco – An aviation insurance company
- EAA – Experimental Aircraft Association
- 172 – The Cessna 172