NBAA Convention News

Not all costs are rising for bizav

 - September 30, 2008, 6:41 AM

It’s true, the price of jet-A has risen steeper than a max-power climb gradient. But the cost of many other business aviation staples has remained relatively stable, and in some cases nosed over in the past five years. Even fuel prices have come down somewhat in recent weeks. These are among the findings of a comparative survey of business aviation costs and operational data compiled by NBAA Convention News.

The survey compared figures for 2003 and 2008 in areas including business aircraft fleet and fractional ownership, as well as costs ranging from crew pay to a catered box lunch. According to the survey, the price of hull insurance for business jets declined more than 57 percent over the past five years. Behind the decline in these rates was, “in a word, competition,” said Stuart Hope of Hope Aviation Insurance, a Columbia, S.C.-based brokerage that provided data for the survey.

Likewise, if you rent a hangar your costs probably held relatively steady during this period. The Consumer Price Index rose about 19 percent from 2003 to 2008. Against this yardstick, the price of hangar rental for all standard-size business jets effectively declined. (However, hangar rental rates for executive-configured airliners rose 26.7 percent.)

Among popular models in the nation’s charter fleet, rates for a Challenger 604 went up the least (a 6.3-percent increase) over the five years, to an average of $4,647 per hour, while the Learjet 35A has bragging rights to the largest pop (a 23.6-percent rise to $2,180 per hour).

Meanwhile, the cost of in-flight catering has remained relatively flat. A catered box lunch, at an average price of $28.04 in 2008, is 16.8 percent above what it cost in 2003, despite the well-publicized spike in food prices.

“We, like many other companies, have put together ways to save money utilizing a national purchasing program for our food and packaging,” said Roger Leemann, executive chef at Air Chef Holdings in Columbus, Ohio, about his company’s cost-containment strategies. “We can maintain the same quality and quantity, but not let the price of the sandwich go out of reach.”

Undercutting anecdotal data regarding a pilot shortage, the costs of crewing an aircraft have changed little over the past five years. The average pay for a charter captain of a heavy business jet rose just 2.6 percent (to $102,600) during this time, according to figures provided by the National Air Transportation Association (NATA).
But the jump in fuel prices has trumped many of these savings, rising almost 600 percent to an average of $5.91 per gallon from 2003 to July 2008. Fortunately, oil prices have retreated from almost $150 to around $100 per barrel since then. At this price level, “most folks expect us to get back to the normal 10 to 15 percent annual growth,” said NATA president James Coyne.

While no one can predict with certainty where business aviation costs and operational activities are headed, it’s nonetheless illuminating to see where they’ve been.