Actual cost of C210
I have a rather accurate costing spreadsheet for any type of aircraft. Plugging a simple 210 into the spreadsheet with a capital cost of $300000, and insured amount of $400000 and an interest rate of 11% with a 40% residual after 5 years and taking into account refurbishment, hangarage and insurance comes out to round fixed costs of... wait for it... $122,000 per year. (If the aircraft is bought outright with cash, the interest rate would equate to a return on the money invested in the aircraft of 11% which would be the minimum you would want as you could invest the money elsewhere quite easily for this return, so the interest remains valid regardless of whether you have borrowed or not)
Variable costs (direct operating costs) come to $175 per hour assuming engine and prop are full life on purchase.
So lets say the aircraft is fully utilised doing 1000 hours per year means the hourly cost to break even for this aircraft is~$300
Now lets say a pilot does his full 900 hours per year flying a 210. We want him to be on the average wage of $56,000 flying this aircraft. Working out an hourly wage means he is paid $62.22 per flying hour, lets be generous and say $65.
So the hourly cost to the operator of the aircraft is currently ~$365 per hour. Now the operator has office staff he has to pay, himself etc etc. Just taking into account the following:
Office/building/shop front rent $25,000 per year (very very generous!!!)
Secretary $40,000 per year
Himself $110,000 per year
Electricity/telephone/internet/booking system etc $50,000 per year
Obviously not all expenses but lets just work with this.
Total other expenses = 200,000 per year.
Lets assume he has five 210's. 40,000 per aircraft doing 1000 hours per year each extra $40 per hour per aircraft. Aircraft now $405 per hour.
lets say company should make 30% profit per year, so aircraft now $526.50 per hour. (Company making ~$500,000 per year) (which is spot on for capitalisation of $1.5M for five x 300k 210's.)
Now this is very simple with many holes in it. Is someone going to pay $526.50 per hour charter for a 210? Add in GST to the punter and it is $580. Can you get people to pay this for 5,000 hours utilisation per year? Until the answer is Yes to those questions then as Chimbu Chuckles says supply is way too high and demand to low. Remember this is for a 210 and is very very conservative.
If we have ten operators with 5 x 210's each so 50,000 hours of 210 utilisation needed all charging around $350-450 per hour. You can easily see where the easiest costs are to be cut from in order for the operator to try and get 1000 hours utilisation and still make a profit. He can't stop repayments on his aircraft, he has to insure them, he has to do maintenance (sic) he has to park/hangar them. Mind you in the scheme of things, $65 per hour is only 11% of the cost of the aircraft to operate (assuming 100ohrs per year). Almost what the Government takes!!!!!!! So here is the solution, get rid of GST on aircraft operations and pilots can be paid a half decent wage!!!! Who wants to lobby the govt? There is an election coming!!!!!!!
BTW if the aircraft only does 500 hours per year the hourly cost of the aircraft itself is ~$430 per hour, for 300 hours ~$600 per hour and for 100 hours ~$1500 per hour.
Nice cheap things these aircraft!!!
Cheers
CB