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True Operating Costs

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Well-known member
Jan 30, 2002
I need to get the aircraft and flight department costs that people use to budget and for tax purposes. There have been arguements in our company from day one between the accounting/management people and those who fly and run the flight department. We have a single aircraft. A BE-200. The purpose for the aircraft has typically has been for the corporate owners mostly on pleasure flights - some business. This was his first aircraft (not counting former and present enrollment in a fractional - he likes being flexible). They established the aircraft in our own 135 operation to get some tax advantages and hopes of offsetting some costs. They have never revealed their accounting formulas and considerations and have never offered a budget. I inherited the status quo. Now with the stock market in the toilet they are making noise about getting more charter (they will use their fractional if a conflict comes up). My feeling has always been that a 135 charter for a one aircraft flight department - 2 pilots will never even break even and most likely "loose" money. Aircraft was bought basically new in 1997. I know our approxiamate direct operating cost using fuel burn, engine reserve based on engine TBO and a maintenance reserve. This basically comes to about $600.00/hr. What are the other expenses that can legitamately be accounted for operating cost. They are coming up with a $1500/hr figure. Our aircraft utilization this year is close to 400hr. Last year was a little less as was the year before that. Where and when are expenses like aircraft insurance, pilot salaries and insurance, pilot training, misc aircraft expense (stores, equipment upgrades, interior and paint, cleaning equipment, etc), hanger rent, office rent, 135 expeditures like drug program enrollment, other training, etc. - how are these factored in. Obviously a department with multiple aircraft and more people flying more hours per year can spread the hourly and some fixed cost over more aircraft. I'm sure if an owner wanted to justify (which I believe corporate and personal aircraft can't be) every expense a flight department had, then the per hr cost would be astronomical.

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