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Cost Saving Methods

by David Wyndham 1. June 2006 00:00
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Fuel costs are rising once again. Insurance costs never seem to fall. Even if business is good, those bills seem to be increasing faster than revenues. (If business is poor, that's fodder for a different article). How do you fly the same and not spend more?

One thing is to look at your current flying schedule. Can several trips be combined into one? Can the Monday trip to Des Moines be combined with the Tuesday trip to Cedar Rapids? If Kansas City is on the way to Omaha, maybe you can drop off someone? While technically this is flying less, you are still accomplishing the same mission. This will require the folks who use the aircraft to agree to some schedule adjustment. If the "big boss" dictates this, others will follow along.

Save in fuel costs. All operators have a choice in where they purchase fuel. While choosing an FBO based solely on fuel price (or any other single requirement) isn't necessarily the best, work with the FBO's you frequent most often to negotiate the best prices. When traveling to new destinations, make use of fuel surveys and handling agents to see where the savings are. Ask for a discount - if you don't ask you'll never get one. Go to https://www.globalair.com/airport/ and get up to date fuel prices for your destination airport. Call the FBO to confirm the price and other fees before leaving home.

In addition to negotiating with the FBO's directly, investigate fuel discount programs. It may be by using a fuel card or a professional association discount. These programs and discounts change, so it is best to review these on some sort of scheduled basis, at least annually.

Maintenance is one of your biggest cost areas and one where you do have the most control. Evaluate how you do your repairs and overhauls. Using loaner parts while yours are repaired may be less costly than exchanging for new. As you get your own part returned, you'll know the history of that part.

Maintenance tracking software is a valuable aid in determining where your maintenance expenses are and in managing your maintenance. You can't manage what you can't see. What about warranty? On a new aircraft, we all keep very careful track of what repairs are in warranty. But even older aircraft have many new parts installed. Those parts typically carry some sort of warranty. Tracking their ages/hours/cycles can result in savings should they need replacement and is something ready made for automation.

Guaranteed Maintenance Programs can be both a savings and an increased expense. They can be an effective way to manage your costs and avoid high expense years such as when the engine(s) are due for an overhaul. The also offer an insurance against unexpected expenses and may add value to the aircraft at resale. Still, the programs do have you pay now for future expected expenses. They warrant careful consideration, especially if acquiring a new aircraft.

Replace your aircraft with a newer one. OK, I know we are talking of saving money so how can getting a new aircraft save money? If the newer aircraft requires a lot less time in maintenance than your current one, then you (a) save in maintenance costs and (b) get increased utilization due to increased availability.

We've done numerous aircraft replacement studies and over time, newer aircraft tend to cost less to own and operate than older ones. There are always exceptions, but when you take into account how much time is lost by having your older aircraft in for maintenance, the numbers favor newer aircraft. This can be a tough sell, so you'd better have your reliability and availability data together, plus do your homework on costs before even bringing it up.

One last item is to make sure to communicate to management what you are doing and how to interpret your costs correctly. Paying out for a major phase inspection or an engine overhaul may make it look like your costs are too high. Educate the CFO as to the nature of aircraft costs. That $250,000 overhaul might have taken eight year's worth of flight hours to accrue. Don't assume they realize that. Let them know you are concerned about managing costs and keep them informed as to what you are doing to minimize costs while maintaining the highest levels of safety and service.

This is an interactive article and we would appreciate you adding any of your cost savings tips no matter how large or small, corporate operator or piston owner. Your suggestions on cost saving could possibly save enough for another owner/operator to keep their aircraft!

Work SMARTER, not harder. You already work hard!


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