In general there are two reasons to replace an aircraft. One is that the mission changes rendering the current aircraft unable to perform the job in an effective manner. The other reason is that the aircraft is no longer cost effective in doing its job.
Mission changes can be obvious. The regional company goes national. Or the company goes global with acquisitions and mergers in different companies. Big changes tend to happen from the top down.
Mission changes may also be subtle. Passenger loads may be increasing at a gradual rate. The users will understand the limit of how many passengers the aircraft can hold. They tend to adjust their requirements to fit the seats, versus asking for more seats. Passengers may avoid the company aircraft due to its lack of range, but if you don't know the travel needs within your company, you may not notice the opportunity.
The aviation manager needs to be on the lookout for unmet travel needs within the company that the business aircraft can serve. This can be done by user survey and spending time in meetings. Make sure the entity responsible for corporate travel is aware of the capabilities of the flight department and that aviation is able to understand the corporate travel needs. There may be a potential for both efficiencies and cost savings by creating a corporate shuttle but if the flight department doesn't know of the need, they can't respond.
The cost effectiveness of the aircraft is measured in terms of dollars and time. Our data shows that aircraft age has a profound impact on maintenance costs. The early years when the aircraft are young and warranties are in effect show very low maintenance costs – less than half of what they are at year five. As the aircraft ages, wear and tear is takes its toll. Maintenance costs can easily be double or triple for the older aircraft. The increased maintenance cost is due to increases in unscheduled maintenance and the cost of major airframe and engine maintenance.
Aircraft age also extracts a toll in the areas of reliability and availability. Availability is defined as the number of days an aircraft is available for flight operations divided by the total number of days in the operating year. Reliability is usually measured as the percentage of departures that leave within a specified number of minutes of the scheduled departure time and is referred to as the “dispatch reliability”. In order to keep dispatch reliability high, older aircraft tend to spend more time in for maintenance. This detracts from the time the aircraft can be made available for flight. Our data suggests that availability drops from the 95% range for aircraft up to 15 to 20 years of age to an average of 70% at age 25 and 55% at age 30. Thus, it typically takes two older aircraft to have the same availability as one newer one!
Spare parts availability can also wreak havoc on aircraft downtime, especially for aircraft with limited production runs or that have components from vendors no longer active in producing spares. At some point, the fleet will be too small to warrant extensive support. This will be due to the lack of a supplier for some critical components and lack of incentive of another supplier to enter a shrinking market. If you fly a lot of hours, the TLC needed for an older aircraft may not be possible with your flying schedule.
Aircraft aging issues can be subtle, like increased downtime. It can be a shock, as in finding corrosion or getting the quote for that second begin overhaul. We recommend that operators keep track of these key parameters:
- Mechanical Dispatch Reliability
- Aircraft Availability
- Maintenance Cost per Flight Hour (parts and labor)
Upgrading your aircraft can help extend its economic useful life. New avionics can keep an aircraft capable of using the air navigation system, as well as increase safety. Some older aircraft models benefit from having a robust airframe but lack modern, fuel-efficient engines. For some, an engine retrofit is a good alternative.
Costs for these turbine aircraft upgrades can run several hundred thousand dollars to several million dollars. Today's resale market does not give much value to older turbine airframes. Upgrading a 20-year old aircraft may not be cost-effective in terms of adding market value, but if it has value to your operation, it may be worth doing just for the operational benefits.
Each case for when to replace the aircraft needs to be evaluated on its own. You need to look at the costs of keeping your aircraft and the costs and benefits of the alternatives. Don't forget to keep in mind the ability to maintain the desired flight schedule. The replacement questions needs to be thought out in advance and not done in an ad hoc manner. Manage your time by managing the time-machine asset that is the aircraft.
What factors do you look at for decing it's time to replace your aircraft ?