How to Make Aircraft Maintenance Costs More Predictable
Francisco Zozaya, Chief Revenue Officer, explains how JSSI’s pro rata option is helping business aircraft owners and operators worldwide stabilize maintenance costs and avoid large buy-in fees.
With uncertainty playing such a dominant role in today’s global business economy, many aircraft owners and operators are looking for ways to bring more stability to their day-to-day operations and protect themselves against costly maintenance events. Considering that maintenance can account for as much as 35% of an aircraft’s annual operating budget, it has become more important than ever to ensure you have the right support and product expertise in your corner of the hangar.
At JSSI, we’re providing the financial tools and services aircraft owners and operators need to reduce maintenance costs and make the unpredictable more predictable. JSSI’s Hourly Cost Maintenance (HCM) Programs provide operators with comprehensive, flexible and affordable ways to manage the unexpected and scheduled costs of maintaining virtually every make and model of business aircraft.
Prepare for the unexpected with an aircraft maintenance program
JSSI provides independent maintenance programs for the three main assets on an aircraft: its engines, auxiliary power unit (APU) and airframe. These programs not only help owners and operators to stabilize their aircraft maintenance budget but also enhance residual value and provide peace of mind when navigating unexpected maintenance issues.
In the simplest terms, an aircraft maintenance program estimates the cost of maintenance over a period of time and divides that cost into a simple hourly rate, which is paid on a monthly basis. This ensures the owner accrues sufficient reserves for predictable, scheduled maintenance on their aircraft for both calendar- and utilization-based inspections. It also allows for the build up of an “insurance” component for unforeseen mechanical failures, also known as unscheduled events.
Is an upfront payment required to enroll on an aircraft maintenance program?
In the case where an airframe, engine or APU is enrolled on a maintenance program from new and continues uninterrupted on that program throughout its life, it’s safe to assume that any maintenance event will be 100% covered without requiring an upfront payment.
However, the situation changes if an owner or operator is looking to enroll an in-service engine. Let’s assume an aircraft is at 5,000 hours TSN (time since new) and the hourly rate for a program on this engine type is $200. Broadly speaking, it would be reasonable to anticipate a $1 million upfront payment (5,000 hrs x $200) for such an engine, also known as a buy-in, to ensure the operator has 100% coverage moving forward. This is where the pro rata approach comes into play.
How can I avoid a high upfront payment but still get maintenance protection?
JSSI introduced the pro rata option to allow customers to enroll on an HCM Program and protect their investment at any stage in the aircraft’s life cycle with zero upfront payment. The aircraft owner or operator can choose to enroll at any given time and pay the agreed hourly rate. At the time of a maintenance event the customer will cover their pro rata portion, which would be equivalent to the hours flown prior to enrollment, and JSSI is responsible for the portion from enrollment up to the event.
Additional benefits a JSSI pro rata maintenance program brings to an operation include:
Economies of scale
JSSI oversees 10,000+ maintenance events each year across virtually every make and model of business aircraft and our clients benefit from this global purchasing power and independent network throughout every maintenance event.
Maintenance event oversight
A team of 70+ highly experienced technical advisors, comprised of some of the world’s foremost experts in their specific product line, is available to oversee the entire maintenance event for our customers from start to finish.
Required maintenance protection
The lending community often requires a maintenance program as a condition of aircraft financing. Not only does the pro rata approach avoid a significant buy-in expense for the owner but the financial institution also benefits from a moderate depreciation rate while being protected against unforeseen costs.
Protection against unforeseen maintenance expenses
When enrolling on a pro rata engine program, your engine is protected against unscheduled events. If there is a mechanical failure outside of a scheduled maintenance event, you are covered.
Learn more about JSSI Hourly Cost Maintenance Programs
For more than 33 years, JSSI has been the leading independent provider of maintenance support and financial services to the business aviation industry, overseeing more than 10,000 aircraft maintenance events each year. For more information on an independent maintenance program for your turbine-powered business aircraft, visit jetsupport.com/maintenance-programs.
About the author
As Chief Revenue Officer, Francisco Zozaya provides leadership to JSSI’s global business development organization. Additionally, he oversees the suite of Conklin & de Decker digital and consulting solutions.
Prior to joining JSSI, Francisco served as Pre-Owned Director at Aerolineas Ejecutivas, managing its pre-owned aircraft sales and acquisitions business unit. He facilitated several key industry alliances and memberships for Latin America’s largest business aviation company and has established an extensive network with the global broker community, financial institutions, OEMs and MROs. Francisco graduated from Universidad Iberoamericana in Mexico City as an industrial engineer.