About $1.60 per nm assuming a block speed of about 300 knots.

That's more than the fuel, just to put it in perspective.

For the 501 owner thinking about switching to a Mustang, something to think about. There's nothing the Mustang does that exceeds what the 501 does, it doesn't go faster, further, higher, or carry more.

It is fine to pay for newer, but have realistic expectations about what that will cost for what you are getting.

Mike C.

About $1.60 per nm assuming a block speed of about 300 knots.

That's more than the fuel, just to put it in perspective.

For the 501 owner thinking about switching to a Mustang, something to think about. There's nothing the Mustang does that exceeds what the 501 does, it doesn't go faster, further, higher, or carry more.

It is fine to pay for newer, but have realistic expectations about what that will cost for what you are getting.

Mike C.

Mostly.

There are a long list of exclusions. For example, a starter/gen bearing going out and trashing a gear case is not covered in most plans since the starter/gen are "airframe" parts. So it isn't a 100% all "engine related" things are covered.


Could be, but this is fairly rare and not every problem is expensive to fix. FOD is usually covered by insurance policies, so non program folks do have some coverage for some events.


That is not without complications, though. For example, your insurance limits may have to be increased to cover the rental engine value. Also, R&R may not be covered in some plans. Read the fine print.

There also have been supply problems with loaner engines. Pratt had a shortage of Mustang engines at one time, not sure if this has abated or not, but some folks who wanted a loaner engine couldn't get one. In other words, it is not assured you aren't down during engine work.


It really doesn't. You are sinking money into the asset all the time which doesn't return dollar for dollar. Yes, the asset retains value, but your total return here is a huge loss.

Over the PW615F OH cycle, you are spending $1.7M. That's often more than the Mustang is worth in total. So if someone advises a Mustang owner to buy the engine program to retain hull value, that's bad advice.

Your insurance is also higher since you are covering a "0 time" engine hull value, even though the engines ma actually be quite high time. In a hull loss scenario, you get your hull amount, but really the big winner is Pratt since that's two engines they no longer have to HSI or OH despite being paid for that already. Essentially, you are insuring your "balance" at Pratt more than the actual airplane itself. This could also affect property taxes.

Mike C.

Mostly.

There are a long list of exclusions. For example, a starter/gen bearing going out and trashing a gear case is not covered in most plans since the starter/gen are "airframe" parts. So it isn't a 100% all "engine related" things are covered.


Could be, but this is fairly rare and not every problem is expensive to fix. FOD is usually covered by insurance policies, so non program folks do have some coverage for some events.


That is not without complications, though. For example, your insurance limits may have to be increased to cover the rental engine value. Also, R&R may not be covered in some plans. Read the fine print.

There also have been supply problems with loaner engines. Pratt had a shortage of Mustang engines at one time, not sure if this has abated or not, but some folks who wanted a loaner engine couldn't get one. In other words, it is not assured you aren't down during engine work.


It really doesn't. You are sinking money into the asset all the time which doesn't return dollar for dollar. Yes, the asset retains value, but your total return here is a huge loss.

Over the PW615F OH cycle, you are spending $1.7M. That's often more than the Mustang is worth in total. So if someone advises a Mustang owner to buy the engine program to retain hull value, that's bad advice.

Your insurance is also higher since you are covering a "0 time" engine hull value, even though the engines ma actually be quite high time. In a hull loss scenario, you get your hull amount, but really the big winner is Pratt since that's two engines they no longer have to HSI or OH despite being paid for that already. Essentially, you are insuring your "balance" at Pratt more than the actual airplane itself. This could also affect property taxes.

Mike C.

Depends on how you do it.

If you put it on a program, it will be expensive.

If you run past TBO with HSI, it will be cheap.

For the JT15D owner, he has the choice. For the PW615F owner, they really don't.

Running 3 HSI cycles per OH is reasonable on the JT15D, there are programs to do that (such as TBO Extension) which allows part 135 operators to do that. Part 91 doesn't need the STC to do that, we are already enabled by rule to run past TBO if we want.

The other choice JT15D operators get is the shop to do the work. There are a number of independent shops so we have competition and choice which helps control the costs. I don't believe there is any choice when it comes to HSI and OH for PW615F. It is either Pratt or a shop Pratt controls.

For example, ITI last year told me base price for JT15D-5A was $420K and engines typically get out for around $500K if there are no life limited parts that have cycled out. That's no guarantee, but it gives some data on what an OH will cost. HSI runs around $50K per engine and there are a number of shops that do that work. A friend's V did both HSI recently, going past TBO, $35K average per engine.

Choice equals lower cost. Lack of choice equals higher cost. It will always be that way.

Mike C.

Depends on how you do it.

If you put it on a program, it will be expensive.

If you run past TBO with HSI, it will be cheap.

For the JT15D owner, he has the choice. For the PW615F owner, they really don't.

Running 3 HSI cycles per OH is reasonable on the JT15D, there are programs to do that (such as TBO Extension) which allows part 135 operators to do that. Part 91 doesn't need the STC to do that, we are already enabled by rule to run past TBO if we want.

The other choice JT15D operators get is the shop to do the work. There are a number of independent shops so we have competition and choice which helps control the costs. I don't believe there is any choice when it comes to HSI and OH for PW615F. It is either Pratt or a shop Pratt controls.

For example, ITI last year told me base price for JT15D-5A was $420K and engines typically get out for around $500K if there are no life limited parts that have cycled out. That's no guarantee, but it gives some data on what an OH will cost. HSI runs around $50K per engine and there are a number of shops that do that work. A friend's V did both HSI recently, going past TBO, $35K average per engine.

Choice equals lower cost. Lack of choice equals higher cost. It will always be that way.

Mike C.

And yet most buyers choose newer jets with engine programs.

It would be interesting to see how the market would react if the manufacturers offered parts and services on a “normal” basis. Ie where they produced replacement parts, had prices that were not purely extortionate, allowed overhaul shops to exist. Currently the market capture via regulation is such that you can’t buy a newer jet off programs, they have eliminated those options. And the cost trend shows it.

NIL: I just surveyed 4 Phenom 100s: all were bought new and owned & managed by the same charter outfit. Average age 14 years, average TIS 6,000H .

All 4 were on full engine & airframe Gold level programs.

The total hourly cost in 2024 for the 3 programs was @ $800/hr .

Simple math : 6,000 H @ $800 = $4,800,000, very close to the cost of a NEW Phenom 100 and more than twice the present value of these aircraft.

There were no program covered un-scheduled events & repairs to the engines and next to nil for the airframe.

Clearly, theses programs are very profitable for the purveyors .

Mike C, as always your numbers are skewed. The engine program at today's prices will be $1.75M for the 3,500 hours. That doesn't mean how much as been put into the engine program. Example: Our Mustang was $240/hr combined for the first 3 years of our contract until it reached 1000 hours. Our current 3 year contract with PA+ is $404/hr.

It's nearly impossible to figure out what the 3,500 hours will actually cost as it depends when those hours were mainly accumulated and at what rate. If a Mustang was overhauled last year it could be in the $1.0 - $1.25M all in range factoring in the first 1000 hour reduced rated and the lower rates of years past which also includes the HSI.

It's possible that 3,000 hours were accumulated and paid for at the low rates a few years ago and the remaining 500 hours will be at today's rate of $500/hr.

Why aren't newer jet owners happy with sticking what they got? Why is there so much churn in that market?

You can't have most of the transactions being newer jets without that meaning the average length of ownership is shorter.

If you end up not flying the newer jet as much as you thought, the costs become unbearable due to program minimums, capital costs, and inspection intervals. So you are under pressure to use it or sell it. Hence the market churn.

Meanwhile, a legacy jet under is not under such financial pressures so they can happily operate at less use per year and not be economically stressed. Most of my cost is related to use so that scales with usage nicely.

Mike C.

Something that I have never understood with these jet conversations is how most disregard age or hours on the airframe. Not picking on Mike C I respect the guy, just using his example, comparing a Cessna 501 (production ended in '85) to a Mustang is like comparing a W116 Mercedes 450SEL to a five year old E-class.

At some point age has to matter and I suspect that will be reflected in the depreciation.

Back to your regularly scheduled debate. Have a nice weekend.

If you had put all your payments into an SP500 ETF at the time you made them, what would your balance be now? You should run that calculation and it will be a shockingly high number. Give us a list of years and rates and we can compute that for you. I think that would be highly instructive as to the real cost of these programs.

You have to account for the time value of money. You just added up the numbers straight over the years. That's not how economics work.

You also have to account for engine programs rising faster than inflation, and the fact there is NO incentive to reduce engine program prices. They have you by the balls and they know it. So the FUTURE program costs could be quite a bit higher than what we compute today.

If you take today's price times 3500 hours, that's the BEST net present value cost of the program for an OH cycle. Once you add in inflation and lost investment return, it gets worse.

Mike C.

I've never owned a plane younger than 30 years old.

Every one of them increased in value while I owned them, with the exception of the MU2 which I flew for 1600 hours and sold for 85% of what I paid. No upgrades, no engine work.

The only meaningful upgrade I did on them was my Garmin panel in the jet which the market values highly.

The most market depreciation of a plane happens in the first 10 years. Buy new, and you get killed with depreciation, it is a huge cost factor that is mostly unaccounted for in owner's minds.

Mike C.

If you had put all your payments into an SP500 ETF at the time you made them, what would your balance be now? You should run that calculation and it will be a shockingly high number. Give us a list of years and rates and we can compute that for you. I think that would be highly instructive as to the real cost of these programs.

You have to account for the time value of money. You just added up the numbers straight over the years. That's not how economics work.

You also have to account for engine programs rising faster than inflation, and the fact there is NO incentive to reduce engine program prices. They have you by the balls and they know it. So the FUTURE program costs could be quite a bit higher than what we compute today.

If you take today's price times 3500 hours, that's the BEST net present value cost of the program for an OH cycle. Once you add in inflation and lost investment return, it gets worse.

Mike C.