Intricacies of costing private aircraft.

Much has been written on the benefits of using private aircraft versus the commercial airlines. So unless you've not seen an issue of Robb Report, Fortune, or The Wall Street Journal in the last five years you already know about the considerable advantages that modern business aircraft offer.

But on the cost side of the equation your knowledge is probably more limited and about the only thing you really know is that they are expensive--really expensive.

To make any sense of the information presented here, one must be grounded in a few terms and phrases. These are:

Variable Costs:

Expenses that are incurred while the aircraft is flying

Fixed Costs:

Expenses that are incurred whether the aircraft is flying or not

Capital Costs:

Opportunity cost on the aircraft purchase money or interest on debt or lease payments on the purchase

Occupied Flight Time:

Flight time used with paying passengers on board

Unoccupied Flight Time:

Flight time used in repositioning the airplane back to its base or the point of passenger enplanement

The chart below depicts the costs-in terms of cost per flight-hour, cost per mile, and cost per seat-mile-for the most commonly found categories of turbine-powered business aircraft. These costs are in rough order of magnitude and include all fixed and variable operating costs as well as an allowance for capital costs. For the purposes of accounting for fixed and capital costs, it is assumed that the aircraft in question see an average utilization rate of 500 hours per year.

Most conversations about aircraft costs will center around the cost per hour, since this is the most readily recognized metric and serves as a quick determinant of affordability. But the savvy consumer will look closely at cost per mile or cost per trip to comparison shop the various offerings. The ultimate metric however, is cost per seat-mile-the universal pricing measurement used by commercial airlines to determine efficiency and cost.

A few key insights can be gleaned from the chart. Firstly, the value proposition afforded by private aircraft is greatest when you fill the aircraft to capacity and weakest when you travel alone. The comparative rates given above are based upon filling 75% of the airplane's seating capacity. Anything less will drive your cost per seat-mile up and cause a precipitous drop in the value proposition.

But take a close look at the relative costs of the various aircraft categories and you'll see that the costs fall into a surprisingly narrow range. For this reason the second best thing you can do to bring the desired efficiencies into play is to make an intelligent choice on which aircraft to use--in other words choose the right aircraft for the mission.

Lastly, the pricing plan you choose should fit your flight plan. For those whose travel patterns require aircraft to be repositioned to and from the origination points and/or destinations, the resulting inefficiencies can almost double the costs given above for occupied flight time. The good news is that there are several flight programs now being offered that can help you achieve excellent efficiency even on your one-way travels.

Mark Schmaltz is president of Sprit Aviation. For more information, please visit www.FlySprit.com

Aircraft                                   Cost/Mile   Cost/Seat-
Category        75% Pax Load   Cost/Hour    (s.m.)        Mile

Prop-Jet        6 Passengers    $1,500       $5.17       $0.86
Light Jet       6 Passengers    $2,500       $6.10       $1.02
Mid-Sized Jet   6 Passengers    $3,300       $8.05       $1.34
Heavy Jet       9 Passengers    $5,800      $14.14       $1.57