Charter vs. Ownership – What Are the Costs?

There are so many variables in aircraft ownership that it’s difficult to accurately predict how much it will cost you to own a plane. What does your credit look like? How many hours are you flying every year? Will you allow others to charter it on a Part 135 certificate? If so, for how many hours? What are the tax implications for your aircraft purchase? How much are you spending on maintenance? It’s definitely a complex question, and one that we examine on a regular basis for our clients or potential clients.

We’ll walk you through the cost differences between buying on-demand charter flights and owning your own aircraft. Does it make sense for you to buy a plane, or should you stick with charter? You’ll likely find that chartering an aircraft is cheaper when you simply look at hourly cost.

However, you also need to consider the non-monetary benefits of having your own aircraft—the status symbol it may provide, security, a consistent crew, and the ability to have your own personal preferences or specifications accommodated.  If you have a pet or family member who doesn’t respond well to change, the consistent environment is ideal. And if you’re particular about who has been in the seat before you, ownership is also a plus.

Additionally, there are some tax benefits with depreciating such a large asset. But here, we are just talking dollars to dollars.

For consistency’s sake, we’re going to use the following parameters for aircraft ownership costs, under the assumption that each plane is being financed for 80% of its retail value:

  • Miles Flown: 100,000
  • Annual Value Depreciation: 5%
  • Term of Ownership (Years): 4
  • Interest Rate: 3.5%
  • Term of Loan (Months): 180
  • Fuel Cost Per Gallon: $5.00

 

Citation CJ2

VREF has the 2005 model of Cessna’s Citation CJ2 listed with a retail value of $2.75 million. The CJ2 has a normal cruise speed of 463 mph, meaning it would take right around 225 hours to fly 100,000 miles. Taking into account the loan value of $2.2 million with a 3.5% interest rate over 180 months, direct operating costs and fixed annual costs, you’re looking at spending $3,856.93 every hour you fly in the CJ2, and $867,808.55 annually.

However, if you own the aircraft you open up the opportunity to charter it out and make some of that money back. Our research shows that the going rate to charter a CJ2 is between $2,200 and $2,500 an hour. If you charter your CJ2 out for $2,200 an hour for 100 hours in a year, your hourly costs decrease to $3,405.82 and your annual costs decrease to $766,308.55. If you were able to charter your aircraft out for 200 hours, hourly costs are reduced to $2,954.70 and annual costs are reduced to $664,808.55.

To buy on-demand charter flights on a CJ2 for a total of 225 hours in a year (100,000 miles) at $2,200 an hour, you’re looking at spending $495,000 for the year.

Annual Costs

Charter: $495,000
Ownership: $664,808 – $867,808

cj2-acc

 

Pilatus PC-12NG

Now let’s take a look at a 2008 PC-12NG. VREF has its retail value listed at $3.1 million. We’ll take out a loan fir $2.48 million. At its 300 mph cruise speed, it would take the PC-12NG somewhere around 325 hours to fly 100,000 miles. With that in mind, plus depreciation, interest, and operational costs, you should expect to spend $852,163.17 in a year with no charter, which comes out to $2,622.04 every hour.

Once again, let’s look at the numbers with charter in mind. Our research shows that you’ll likely pay between $1,300 and $1,700 to charter a PC-12NG. $1,500 is our happy medium. If you’re flying for 325 hours in your Pilatus and chartering it out 100 hours a year for $1,500 an hour, you’ll spend $772,863.17 in a year, or $2,378.04 every hour.

To fly on-demand charter in a PC-12NG for 325 hours at $1,500 an hour, you’re going to spend about $487,500.

Annual Costs

Charter: $487,500
Ownership: $772,863 – $852,163

pc12ng-acc

 

Learjet 60XR

A 2008 Learjet 60XR is listed in VREF with a retail value of $3.4 million, so we’ll take out a loan of $2.72 million. To fly 100,000 miles in a Lear 60XR, you’re only looking at flying about 200 hours. Without chartering the aircraft out at all, you’re looking at spending $1,127,637.91 annually, or $5,638.19 per hour.

Charter flights on a Lear 60XR are currently going for around $3,400 an hour. Let’s charter yours out at that price. If you fly your plane 200 hours and charter it out for 200 hours, as well, your hourly costs are reduced to $4,167.60, and your annual costs are reduced to $833,519.91.

To pay for charter flights in a Lear 60XR at $3,400 an hour for 200 hours, you’d spend $680,000.

Annual Costs

Charter: $680,000
Ownership: $833,519 – $1,127,637

lear-60xr-acc

 

Global 5000

Now for the heavy stuff. Let’s check out a 2008 Global 5000. VREF has the retail value of the Global listed at $16.75 million. Let’s take out a loan for $13.4 million. To fly the Global 5000 100,000 miles at 548 miles per hour, you’ll fly it about 175 hours. Considering all of your costs, you’ll spend about $3,110,293.44, which comes out to $17,773.11 every hour.

Charter rates for a Global 5000 are about $7,200 an hour, on average. Let’s say you charter it out for 200 hours a year at $7,200 an hour. In that case, your hourly costs drop to $13,874.31 and your annual costs drop to $2,428,003.44.

To charter a similar Global 5000 for 175 hours at $7,200 an hour, you’d have to spend $1,260,000.

Annual Costs

Charter: $1,260,000
Ownership: $2,428,003 – $3,110,293

global-5000-acc

 

Costs and performance specifications provided by Aircraft Cost Calculator.

By | 2017-01-23T09:57:41+00:00 January 19th, 2017|0 Comments

Leave a Reply

Be the First to Comment!

Notify of
avatar
Want to know the latest secrets from Charlie Bravo on private aircraft?
Get Updates
We’re so glad you are ready for an adventure. By joining our list of Charlie Bravo Insiders, you’ll learn about aircraft before they come to the market and have insight that can save you thousands of dollars when you decide to buy or sell.
        
We value your privacy and will not share your information.
Before You Go
Sign up below to receive a complete list of aircraft that can be flown by a single pilot – including the type of aircraft, passenger configuration, average range, fuel burn and cruise speed.
Buyers' Guide
For Single-Pilot Planes
Get access to operating costs, specs, photos, and insider information on the most popular single-pilot planes in the world. Sign up below to join our list and receive a sample of Charlie Bravo’s Buyers’ Guide for Single-Pilot Planes.