With all this talk about BT'ers considering moving up to a jet, I though I would post my observations for discussion. It seems to me, the best options for lower utilization owner/operators are airplanes with hours based inspections vs. calendar based inspections. The inspections will come up less often.

Premier: Hours based
Beechjet: Hours based 200/400/1200/2400
Phenom 300: Hours based (?)
CJ's: Hours based (?)


Lears: Calendar based
Citation 500 series: Calendar Based

Let's add more airframes and discuss whether this is a realistic statement.

Perhaps, but you need to consider that engine programs and airframe programs sometimes establish minimum hours per year. If you fly less than those hours, you pay as if you did fly those hours.

So the low hour per year user may still get dinged pretty hard even if the inspections don't come due.

My understanding is that Williams is 150 hours/year minimum. For a Premier 1, a pair of FJ44-2A engines, this works out to almost $50,000/year minimum!

Mike C.

The information is about impossible to come by, but I found a pretty good breakdown of the Cessna Citation's inspections on Sierra's website. It details Cessna's inspection schedule and Sierra's prices. It's 2013ish, but the info is there...

http://www.sijet.com/maintenance-inspections

Jason

I have had no trouble getting the info. I call the shops that maintain them and ask.

Perhaps, but you need to consider that engine programs and airframe programs sometimes establish minimum hours per year. If you fly less than those hours, you pay as if you did fly those hours.

So the low hour per year user may still get dinged pretty hard even if the inspections don't come due.

My understanding is that Williams is 150 hours/year minimum. For a Premier 1, a pair of FJ44-2A engines, this works out to almost $50,000/year minimum!

Mike C.

Citation 500/550/560 and CJ's are all calendar based every 36 months major inspection.

The Bacon Low Utilization Program extends 500/550 2 year inspections to 3 years, and 3 year inspection to 6 years if aircraft is used less then 200 hours a year and is hangared. http://www.baconaviation.com/citation-luip.html

Tom, are you on MSP or Propulsion International?

Tom, are you on MSP or Propulsion International?

I have had no trouble getting the info. I call the shops that maintain them and ask.

My previous owner was on MSP and had a 150 hour minimum. I switched to Propulsion Int and am paying about $52 an hour per engine with a 75 hour minimum.

Works out to $612K per 5000 hour overhaul period per engine.

Are you sure this is per engine, $245/hour for the pair?

That's more than I spend in fuel. It would be the largest single line item in my budget.

I'm certain your market value is not increased by anywhere near the sum of payments made under this program. When I was a buyer, I saw planes on programs as less desirable because I paid a premium to acquire them (program value priced in) and then I inherited a program which costs me some transfer fee to keep and some hourly fee (usually increased when ownership changed) to maintain. If I paid, I was losing money over what it really costs to fly. If I didn't pay, I was losing the value of the program money already paid in. So either way, it was a loss.

The captured nature of these programs means they can raise the rates without losing customers. And so they do. The rates for these programs is increasing by multiples of inflation.

A good number of the engines now being paid for will never see an overhaul. This is particularly true because once on the program, they increase the HSI and OH intervals, yielding a 7000 TBO. Funny how the engine knows to lasts longer if they pay for it. The average owner operator putting on 100-150 hours/year, it will be decades before an overhaul engine event is due.

I believe these programs also allow them to swap in time remaining engines instead of overhauling yours. You may never get zero time engines out of the deal.

In other words, they are being paid 3X the cost of the engine service and then have to do it hardly ever. Now that's a business model!

Mike C.

No doubt Mike! I am a bit captive in MSP. I do believe my 5400 hrs. OH is still in place, which may account for the price disparity with other programs.

How many years away is that?

I will be interested to know what happens when you get there. Do they OH at 5400? Or do they find time remaining engines for your plane? Or do they time continue your engines with some SB sleight of hand?


I've heard stories that when reaching an overhaul event, they force a contract on you for some number of years AFTER the OH so you can't go off program and run away with zero time engines. One story I heard even involved a lien on the aircraft. I've also heard that your costs go up as you approach OH, as you seem to be experiencing.

There is a lot of fine print in these programs and it is all slanted to the program provider. You can be on the program and STILL suffer an expensive engine event.

Mike C.

I am about 1/2 way to the 2nd HSI, so I will probably never see it through to OH, depending on how soon I upgrade.

That would make it half TBO, or about 2700 hours?

I could make a strong case you should stop paying MSP now and come out ahead. The remaining payments until OH equal your entire hull value, if not more, and when you get there, you may not even get an OH out of the deal.

Half an HSI interval, 900 hours, is $220K. Your HSI+GBI on both engines won't cost that much when you get there, probably half that.

Assuming an unscheduled HSI would cost about $60K, you will bank that amount in the next 250 hours, or perhaps 2 years of flying. If you take the MSP money and put it into investments, you will be way ahead of that potentially.

Somewhere around $150-200K, you can buy an entire spare engine with about the same time left as yours. That is 600 to 800 hours of payments to MSP, 5 to 7 years. Now you have "insurance" against some event, plus a valuable core that can be sold if desired.

If a new owner wants MSP, and you stopped payment, I believe they do get the hours paid in until you quit, so they can restart by making up the lost payments from you. I don't think it is a restart from zero time again.

Mike C.