Over the years, calculating the cost to own an airplane is one of the most frequently asked questions I receive. There are a lot of different cost factors that go into owning an airplane. The purchase price is just one piece of the entire cost of the airplane ownership pie. Other pieces include taxes, hangar or tie down costs, fuel, oil, insurance, ramp fees, engine reserves, routine maintenance, inspection items and subscriptions to name a few. The following article will help you determine what costs are involved in owning an airplane and how to plan your finances accordingly. Keep in mind the following article offers a generic estimate on how to calculate the ownership costs of most piston airplanes.
First, we will divide the total cost of ownership into two sections; the first section will be the indirect cost, and second section direct cost.
INDIRECT COSTS
Indirect costs are the costs that you will pay whether or not the airplane flies. These expenses include the purchase price of the airplane (or monthly payments), insurance, tie down or hangar fees, subscription fees, taxes, and tax benefits.
Let’s start with the first indirect cost I mentioned, purchase price or capital cost. This is one of easiest expenses to calculate. If you finance the airplane, get a quote from the bank on the down payment required and interest rate. Currently, rates are approximately 6% with a minimum of 15% down and 20 year financing. As an example, if you put 20% down on a new DA40XLS priced at $350,000, your monthly payment would be just over $2,000 a month over 20 years.
To calculate insurance fees, call your insurance agent and obtain a quote for the airplane you are considering purchasing with your experience level.
Hangar fees and tie downs are self explanatory. Call the airport or FBO where you want to base your airplane and ask what options are available. Usually there are about four choices: tie down (leaving your airplane outside in the elements), covered (airplane is outside in the elements but has a shade covering), hangar in common (airplane is constantly moved around in a large hangar shared with several other airplanes), and finally an individual or T hangar. At many airports hangar space is scarce so don’t be surprised if you end up on a waiting list. Hangar prices vary according to your location. My T hangar in Concord, NC costs just north of $300/month while that same hangar in Fort Lauderdale would cost well over $1,000/month. If you keep your airplane outside, please be sure to at least cover it. It will protect the interior and the avionics. Also, keep in mind that some insurance companies will lower your premium if you can hangar your airplane rather than keep it on tie downs.
Subscription services may not apply to you. If you own a J-3 cub, you can skip to the