Insights Blog

Budgeting For Your Business Jet? Here Is How To Plan.

January 4, 2022

Your annual business operating budget requires careful consideration. Here are some guidelines to help you accurately plan for the year ahead.

1. Establish Data-Based Assumptions

Jet fuel. This is one of the largest line items in any aircraft budget. Fuel prices have increased significantly over the past year and may continue to do so.

The locations you are flying to will help determine the average fuel price you want to forecast for. Will you be flying into Aspen (KASE), Teterboro (KTEB) or other locations with a higher cost per gallon? Or are you mostly flying from your home base to lower density airports?

Flight hours. How much do you plan on flying this year? The mission and frequency are important to understand so you can factor these numbers in your variable cost estimate.

2. Estimate Variable Expenses

Fuel costs. Unless you have specific details on your flight profile for the next year, you must estimate the average fuel costs you’ll encounter. This will be multiplied by the hours flown and fuel burn of your jet.

Program expenses. Engine and APU programs are calculated at an hourly cost. Multiplied by your estimated number of hours, this will provide you with an accurate estimate. Be sure to account for the minimum flight hours set by your program administrator.

Owner flight expenses. Use this line item to allocate costs associated with expenses related to travel with the aircraft. This includes landing fees, permits, deicing, catering, crew expenses, ground transportation, etc. Extensive international travel will increase this line item significantly, often by two-to-three times.

3. Detail Fixed Costs

Management oversight. Do you utilize an aircraft management company? The monthly cost is typically outweighed by the fleet discounts and purchasing power you receive. This is seen by substantial savings on fuel, insurance, programs, subscriptions and training costs.

Facilities. Hangar, storage and fees associated with basing your jet at its home airport.

Crew costs. Here, you will want to include salaries, benefits and taxes related to the employment of your crew. This can consist of pilots, a director of maintenance, and flight attendants.

Will you be utilizing supplemental crew throughout the year? If necessary for your operation, that can be included here.

Maintenance. You want to budget for both scheduled and unscheduled maintenance costs.

Scheduled maintenance can be predictable by forecasting the inspections you have coming due. A management company or your maintenance shop can give you an idea of how much to budget for.

Unscheduled maintenance is a line item you want to include for when the unexpected happens. This is harder to budget for. Most OEMs and management companies can help assist in giving you an idea of what to set aside.

Wi-Fi. High-speed internet, specifically streaming Wi-Fi, is more and more common on aircraft and is expected by most charter clients for Part 135 operations. Depending on the equipment installed and the subscription plan, this can vary by tens of thousands of dollars.

Insurance. Don’t cut costs here. You will want to find a good insurance agent or pair up with a management company for their buying power.

Charts, manuals, subscriptions. This is a catch-all for the miscellaneous line items that can add up fast to significant amounts. Again, this will vary by the size and type of aircraft. If you have been in operation for a few years, you can use the previous year to get a good idea of what this will cost you.

Sustainable Aviation Fuel (SAF) and Carbon Offsets. Sustainable Aviation Fuel or SAF is now available at 21 airports in the United States and growing.  SAF is produced from various sources including animal fats or recycled materials and can reduce the carbon footprint of your aircraft by about 20%.  Currently the green premium is $1.50 to $2.00 more per gallon of Jet-A.  Include this in your annual budget if you plan to incorporate SAF into your carbon reduction strategy.  Also Carbon Offsets are becoming a common purchase and average around $0.10/gallon.  Inquire with your Aircraft Management company or fuel provider for more information.

Final thoughts to consider.

There is a lot to take in here. Take this step by step and understand what all goes into operating the aircraft. Speak with your pilots, maintenance tech or management company to understand the costs. If this is your first year in operation, you may find a large spike in the budget right off the bat. This is due to the startup costs associated with pilot training, tooling and insurance.

Need help creating a yearly budget for your business jet? Reach out to the aircraft management professionals at Clay Lacy Aviation. We are at your service.