Overview

by Alex Ruehle

Contributing author

There is no getting around the fact that airplanes can be expensive. However, a willingness to confront this reality and examine the true costs of ownership will help prospective pilot/owners select an airplane that fits within their budget. First-time airplane buyers may find the various expenses associated with airplane ownership to be overwhelming in number, difficult to research, and therefore hard to compare between aircraft models.

I created this guide to help prospective airplane buyers map out the expenses they will face, compare costs between models, and provide some tips and best practices for minimizing the cost of ownership. The disclaimer to this is that it is based on my aircraft ownership experience, and other owner/pilots will find items to add, emphasize, or disagree with including the advice to forego certificated aircraft ownership entirely in favor of the experimental category.

Purchase Price

Much is made about the asking price of airplanes. Even similar examples of the same model are offered across a wide range of prices reflecting sellers’ emotional attachment and urgency to sell.

Serious buyers might consider using vRef or the version included with an AOPA membership to ground their understanding of what a given airplane is "worth." Significant drivers of value are engine time, quality and thoroughness of the last engine overhaul, frequency of use, airframe time, paint quality, interior condition, damage history, and avionics. The vRef platform adjusts for some of these factors.

However, vRef is not gospel and says little about the actual price for which an owner will ultimately sell. Thus, it is also helpful to network extensively in order to understand where the market for used airplanes is trending. Join the type club for the aircraft you seek to buy, and ask around to learn what similar airplanes have actually been selling for. Airplane markets are illiquid and non-transparent, so you will find an experienced guide who knows the market and the value of tradeoffs in aircraft condition and equipment to be invaluable.

At the end of the day, clean airframes are few and far between and you might have to set the impartial guidance from vRef aside to arrive at a reasonable value starting point. Separately, a good way to annoy a seller out of the gate is to start negotiating based on vRef (a lesson learned from experience.)

If you can put a price on parking here, maybe you're approaching this the wrong way?

Financing costs

Whether or not you use some debt to help finance an airplane purchase is a personal decision. Nonetheless, if you plan to borrow you will want to make assumptions that include interest expenses. Alternatively, if you plan to pay cash for your airplane you might want to compute your opportunity cost – or investment returns you might lose out on by having your cash tied up in an airplane vs. working in the stock market or in a rental property. It should be noted, there are relatively few banks that offer nationwide aircraft financing, and most that do will require higher down payments (up to 25%) and shorter terms (5-15 years) for aircraft manufactured prior to 1970.

Insurance

Insurance will vary by aircraft based on insured value, your flight experience and ratings, and your accident history. It is good practice to utilize a broker to get quotes from multiple carriers for each aircraft you are considering. Discuss your intended use with your broker and carefully read any policy you buy. Some policies exclude off-airport landings or restrict pay-outs for certain perils, such as hail, and others do not cover operations in Alaska.

Many pilots who are interested in buying a backcountry-capable taildragger are aghast at the high insurance quotes that they receive, especially if they do not have much (or any) time in that make or model. Indeed, because make/model experience has a significant bearing on insurance rates, several options exist to lower insurance premiums:

• If financially able, consider going "naked" for the first 20 hours, then apply
• Request an initial quote that requires 20 hours with a CFI that has make and model time
• Ask for an initial quote that limits the first 20 hours to solo only
• Quote the first 20 hours as liability only, then add "in-motion" coverage later (again, if you can bear the financial risk of damaging your airplane)
• Seek training with a specialty tailwheel instructor in a rented airplane before purchasing an airplane and applying for insurance – with a little searching you will find that it is possible to obtain instruction in a rented Maule or Skywagon if you are willing to travel to one of the few instructors who offer this training

One money-saving option that I do not recommend is underinsuring. Suppose you have a $100,000 airplane but choose an insured value of $75,000 to save a little on premiums. You then drag a wingtip in the dirt causing $5,000 in damage and make a claim for the repairs. In this situation the insurance company will want to total your airplane because they could pay you out at $75,000, make the $5,000 in repairs, and sell the airplane for $100,000 netting $20,000 for the insurance company. (In practice you would have to haggle with the insurance company after the fact for a salvage title.) Along these lines, you should also update your insured value with your carrier as you make upgrades to your airplane to avoid this underinsured condition.

Hangar/Tie-Down

Storage costs will depend on geography and quality of accommodations. On the Front Range of Colorado where I reside, I consider hangar storage a must. In the last year alone, Colorado suffered over $2bn in hail damage. Other parts of the country might be suitable for outdoor storage (or hangar space might be prohibitively expensive), in which case you might budget for a set of protective wing covers.

T-hangars on the Front Range go for between $225 and $350 per month depending on airport and amenities. Shared box hangars range from $200 to $300 per month depending on location and airplane size.

Ask around to learn about hangar costs and availability before you buy an airplane. In this area hangar wait lists run 2-3 years, so whatever airplane you buy might need to be stored outside for a while unless you planned well ahead and have a hangar lined up.

Annual Inspections and Maintenance

The cost of inspections varies widely based on who is performing the work. Moreover, an A&P/IA who is seeing your airplane for the first time is likely to find things that other mechanics have missed. This is a good thing, but it does drive up the cost.

The more involved you are in the process, the more likely you are to get good value for your money. If you are mechanically inclined and can forge a good relationship with an IA, then you should be able to save significant money on maintenance and inspections. Some shops offer fixed-rate inspections for light singles between $800 and $2,000 depending on model. In these situations, this is just for the inspection and repairs are additional. Again, get a good pre-buy inspection to limit the chance for costly surprises in your first annual.

To give you a sense of the variability of inspection costs, here are some details for the last few years for my airplanes:

1946 Piper J-3 Cub (been in my family for decades)

1957 Cessna 180 (bought two years ago)

Moreover, much is made about the cost of new airframe parts from Cessna or others. Truth be told, if you find yourself regularly needing to buy ailerons or rudders or wing ribs, you are doing something wrong! Moreover, if you buy an airplane that has many brethren in the fleet, chances are that you can source most items at reasonable cost from salvage yards. For example, the stall horn on my 180 failed and the Cessna distributors wanted a hysterical $4,000 for a replacement wing-mounted lift detector switch. Skywagon City (a specialty salvage yard) sold me a used serviceable unit for about $400, and I could have gotten one for less from eBay had I wanted to go that route.

Nonetheless, it is important to research in advance common maintenance problems faced by owners of the aircraft types that you are considering and the cost of complying with any applicable airworthiness directives (ADs) and service bulletins (SBs). This will make you a savvier buyer and will help you home in on important items during your pre-purchase evaluation.

Connected to this advice is the importance of obtaining a thorough pre-purchase inspection of the airframe and log books, preferably by a mechanic with extensive experience with the make and model that you are exploring. Deep due diligence of this nature is critical to avoid a devastating financial blow.

Fixed Cost Comparison

The sum of loan payments, insurance, hangar, and inspection/maintenance make up your annual fixed costs – the price of owning and maintaining an airworthy airplane without getting to do any flying. Other incidental costs that you might want to consider in this category are registration fees, relevant sales taxes related to the acquisition, and the fact that you’ll be ordering something or another from Aircraft Spruce at least once a month. Oh, and mods. You are on your own there! You can buy an airplane and put twice the initial purchase price in elective upgrades. STOL cuffs, Bushwheels, titanium landing gear legs, 3-bladed props, avionics and gadgets…the list is endless, and every item on the list is exorbitantly expensive. You can literally spend everything you have on upgrades and end up with a maxed-out credit card and nothing left over to buy gas. Suffice to say, if you are getting into mods you should have the basic cost of ownership well covered first.

Now let’s get into the fun part: the variable costs of flying!

Fuel

If you do things right, you’ll be flying a ton and fuel will be the largest single piece of your budget. Airnav has average fuel prices for different regions of the country and is a useful reference.

Also, since fuel prices fluctuate you might want to stress test your budget. If avgas prices spike to $7.00 a gallon would that price you out of flying?

Comparing Hours Flown and Fuel Prices on Annual Fuel Bill (Cessna 180, assuming 13gph on average)

Engine Reserves

Is there enough in the kitty to solve this issue? Pilots fret about the high cost of engine overhauls, and undoubtedly an engine rebuild is a big-ticket item. However, a well-maintained engine will offer an owner decades of trouble-free service. Nonetheless, a prudent owner should set aside some money with each hour of flight for that eventual overhaul – or at least mentally account for the fact that you will need to do engine work someday. One experienced airplane owner gave me the advice to always have the amount of an engine overhaul set aside as a buffer for large maintenance surprises. Good advice, but hard for many of us to follow…

The overhaul costs that I show for reference are sourced here. While other shops with other reputations will quote differently, this resource allows for quick comparison across numerous engine models. Remember to consider the number of hours remaining on your engine to get an accurate sense of what you need to set aside per hour of flight.

Approximate Engine Overhaul Costs (Excludes the cost of removal and replacement)

Oil changes and preventive maintenance

My preference is to perform my own oil changes and all the other preventive maintenance allowed under FAR Part 43 as elaborated in Appendix A(c). Consistent involvement in the maintenance of my airplanes helps to contain costs and keeps me aware of the condition of my flying machines. Moreover, I believe that a certain level of mechanical competence is necessary should you find yourself needing to make basic repairs while on any trip and certainly in the backcountry.

However, if you are going to have somebody else do these tasks, you will want to add a guess for the cost of those inevitable services to the annual inspection line.

Airframe Value

vRef reduces the value of an airframe by $1 per airframe hour. This is non-cash depreciation. You should keep this in mind if you use vRef as discussed above.

Hours flown

Most pilots on the forum fly 75-100 hours per year.

You can also adjust this assumption to find out how many hours you would need to fly to break-even with renting, if that is of interest to you (or your spouse). In the example below, you will see that you break even with renting if you plan to fly between 100 and 125 hours per year.

Hourly Cost Comparison (Assuming 100 hours per year, $5.00 per gallon 100LL)

Comparing Owning vs. Renting: How Much Will You Fly?

Total Costs

At this point you might be sick of graphs and are suffering from sticker shock at what this hobby costs. You will never justify owning an airplane on economic grounds, but if you can find an airplane that fits in your budget you will not regret the experiences it enables.

Weighing the trade-offs

The adage that "you get what you pay for" is as true in buying and operating an airplane as anywhere. Some airplanes are seemingly overpriced relative to their capabilities. The Cessna 180/185 series and Piper PA-18 are often viewed in this category as they have fanatical ownership bases and private owners are competing with commercial operators for a dwindling pool of airframes. Other models seem like relative bargains. The venerable Piper Pacer, Cessna 120/140 and 182 are regarded by many as "budget bushplanes." Whatever airplane you buy, you will be investing significant dough and emotion throughout your ownership.

Is it better to save for another year or two to be able to afford the airplane of your dreams? Or, is it preferable to buy an airplane that fits in your current budget and hope to upgrade later or modify and improve along the way? Only you can answer that for yourself, and I hope this helps you assess the trade-offs. We'll leave you with one final breakdown and comparison of costs between 2 venerable aircraft types. Good luck!

Annual comparison Cessna 180 vs Piper J-3