Part One – Buy New
Today’s consumer of Business Aviation is sufficiently sophisticated to explore the spectrum of available aircraft, new and pre-owned. Starting with this article, here is a three-part series on factors to consider when choosing between these options.
Business jets are certified to the same standards as commercial airliners, yet they typically operate a small fraction of the hours flown by the Scheduled Airlines. Airliners remain in service for decades and are commercially viable well beyond 50,000 flight hours. Thus it is understandable that a pre-owned business jet, properly maintained and updated with required avionics and safety features, is a plausible option when a company or entrepreneur is contemplating multi-million dollar purchase of a business aircraft. Certainly the prudent purchaser looks at all possibilities that provide the advantages of Business Aviation.
When evaluating a business aircraft, the best advice is to select equipment that fits your mission and can be acquired as well as operated within your budget. General wisdom also suggests that pre-owned aircraft cost more to operate, and new aircraft cost more to acquire. As always, there is more to the story. In this three-part article, I’ll explore factors to consider when contemplating purchasing new and considerations when evaluating pre-owned. Furthermore, this series will address what the analysis should involve.
One caveat before we begin. Aircraft are not like automobiles. A 15-year old family sedan with 250,000 miles (400,000 km) is probably at or near the end of its useful life. A new set of tires probably doubles the used sedan’s value, so economically it makes little sense to spend much money keeping it available for transportation. Aircraft, by their design and by the fact they are maintained to exacting tolerances, have useful lives well past 50 years. An aircraft’s life is measured in flight-hours and cycles (or landings). The typical life span of an aircraft can be 50,000 or more flight fours. The DC-3 transport ended production at the end of World War II (as the C-47). TransNorthern Aviation still operates DC-3 aircraft in commercial service in Alaska.
For our discussion, we will be considering “pre-owned aircraft” as those models built in the last 15 or so years that have quiet, fuel-efficient engines and modern avionics.
Why buy new?
While the salesperson jokes nothing beats that new airplane smell, there are many reasons why new is the way to go. New aircraft may be more capable than their predecessors. The Gulfstream G650 has a one-third larger cabin and greater range than the Gulfstream GV-SP. It also provides an advanced cabin-pressurization system that makes those 14-hour long trips even more comfortable. If you need that G650 capability, the GV-SP business jet doesn’t suffice.
New aircraft also come with new technologies that make operating them less costly and potentially more versatile than models available a few years ago. Head-up guidance and synthetic vision can give the pilot the equivalent of a daytime view when landing in poor visibility (surely a safety advantage). Navigating in North America, Europe and across the oceans have evolving requirements for more accurate navigation equipment. The US Federal Aviation Administration “NextGen” navigation system requires new avionics that come with new aircraft.
You also get to choose the options you need, along with interior layout, colors, fabrics and other appointments. While somebody may like the colors of that purple and green aircraft, you may not. This situation is also important if your aircraft needs to match the corporation’s colors or if you have several aircraft with a common livery.
Maintenance monitoring systems and computerized features available on today’s models make troubleshooting the new aircraft a matter of looking up an error code. Line replaceable units make swapping out some equipment as easy as swapping a hard drive on your desktop computer. Cabin connectivity such as high-speed internet as well as anti-noise and anti-vibration technologies have evolved with smart cabins. Today’s aircraft are rapidly becoming an extension of the home office.
New aircraft come with full warranties. While new equipment tends to be more reliable, it can be costly to replace. The warranty gives the owner piece of mind that if components fail prematurely; the repair or replacement is covered. New aircraft have reduced maintenance costs. This fact is not just because of warranty and better technology, but also because of the manufacturer’s continuing refinement of required maintenance schedules and reliability centered maintenance practices.
In order to maintain aircraft safety, as aircraft age they tend to require more intense inspections and preventative care. Aircraft that spend a lot of time operating in corrosive environments need more care, for example, and as they age these requirements increase.
The lower required maintenance of new aircraft also mean they can fly more. Aircraft Availability is defined as a percentage of days an aircraft is available for flight in an operating year. (Aircraft Reliability is the percentage of times an available aircraft can be dispatched when available for service. This number is higher, sometimes measurably, than Aircraft Availability.) In order to keep an aircraft reliable (not to mention, safe) requires maintenance. When the aircraft is in for maintenance, it is not available for flight. If an aircraft is down for maintenance three weeks in a year, its availability is 94% (i.e., 49 weeks out of 52-week year).
As aircraft age, unscheduled maintenance increases. More maintenance usually is required to keep a high rate of reliability once the aircraft has been determined to be available. Time in the hanger or maintenance shop detracts from the aircraft’s availability for flight operations. Data researched by Conklin & de Decker show that availability drops from the 95% range for new aircraft, most noticeably after 20 years of age. Average availability is about 70% at age 25 and 55% at age 30.
Aircraft Age Maximum Availability
0 – 20 years up to 95%
25 years up to 70%
30 years up to 55%
For the above reason, we rarely recommend a business aircraft operator keep their aircraft beyond age 20.
Several of our clients replace their business jet aircraft within six years of purchasing new. With that policy, their aircraft are always in warranty and the aircraft’s first time-intensive maintenance check occurs in year six. That practice easily provides for 600 to 700 hours of flight operations per year per aircraft.
In the next article I will address factors to evaluate when considering pre-owned business aircraft.