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When to Replace an Aircraft

by David Wyndham 1. June 2005 00:00
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Airline pilots have for years questioned the age 60 retirement rule. There is much data suggesting that the age 60 rule is purely arbitrary and that a healthy pilot aged 60 does not pose any sort of safety risk in terms of sudden incapacitation, decreased reflexes or slowing down of the thought process. Many professional pilots in corporate aviation continue to fly well into their sixties will no "ill" effects. While an aging pilot may require medical monitoring, there is no need to assign a set retirement. Aircraft, like some of those who fly them, also require more maintenance as they get older. This increased maintenance has a major impact on operating cost, reliability, and availability.

So when do you replace an aircraft because of age? As with pilots, there no set answer. However, our data suggests some guidelines. In my company's operating costs databases we use an aging curve for the cost of parts and labor. It is based on several studies of aging aircraft, fleet data, and a lot of anecdotal evidence. Some research we've seen was only for parts and some for labor. Regardless, there is a clear trend. We've even cross-checked that data with the published costs of parts for two business aircraft guaranteed maintenance cost programs.

The data, when plotted together, shows that aging 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 5. However, when the aircraft is 30 years old and wear and tear is taking its toll, the maintenance costs are typically more than double what they were at year 5. As with any mechanical device, this makes sense. The increased maintenance (parts and labor) is primarily due to unscheduled maintenance. Much of the unscheduled maintenance occurs as part of the scheduled inspections – i.e. during the scheduled maintenance check an item is found out of tolerance and is repaired, replaced or overhauled.

Aging extracts an even greater 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".

As the aircraft ages, the increase in unscheduled maintenance associated with scheduled inspections means an increase in maintenance down time – the number of days the aircraft is in for maintenance. 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. Looking at it another way, it typically takes two older aircraft to have the same availability as one newer one!

The in-service rate of older aircraft parallels the availability rate. We looked at a number of popular business jet and turboprop models. We looked at the number produced in any given year and how many were still listed as "actively in use" after a number of years. Up to age 20, almost 100% of the aircraft produced are in service. At age 25, the average in-service rate is 90% but can be as low as 75% for some makes/models of aircraft. At age 30, the average in-service rate is just under 80% and below 50% for some makes/models. And at age 35, the average rate is just about 50%.

Spare parts availability also plays a part in the aircraft availability equation. For aircraft with limited production runs, as they age and are withdrawn from service, the small fleet size offers little incentives for many suppliers to continue to make the parts. At some point, the fleet, due to retirements, 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.

My favorite anecdote (which may even be true) is when ordering a part for their 20+ year old aircraft, the mechanic was told the part was on "back order." The mechanic asked when it would be restocked and he was told that the machinist who makes the part was ice fishing for three weeks and would get to it as soon as he returned. Small fleets + limited utilization = little incentive to invest in spares by most suppliers.

Unfortunately, there is no clear formula that spells out when an aircraft should be withdrawn from service. Instead, what you need to do is to keep track of these key parameters:

Mechanical Dispatch Reliability
Aircraft Availability
Maintenance Cost per Flight Hour (both parts and labor)

At some point, these issues will indicate that it is time to replace the aircraft. The "lost opportunity cost" will outweigh the cost of acquisition for the new(er) aircraft. For the charter operator, the lost opportunity cost is the lost revenue. For the corporate operator, the lost opportunity cost means that you can't do your job effectively, and even for the recreational flyer, the frustration of a cancelled vacation or other trip. Depending on your aircraft's mission and how much you use it, your answer of "when" will be different from others.

How many of you track reliability, availability or maintenance costs? Drop me an e-mail and let me know.


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