What needs to be done/sign of things to come?-merged
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What needs to be done/sign of things to come?-merged
I've been reading other threads regarding the viability/profitability of GA with interest... at least until they descend into little more than a slanging match.
It seems to me that there must be quite a few ideas out there of how GA could become a profitable and attractive proposition for both operators and staff... so that's my query. What are current GA operators getting right? What are they getting wrong? Where do you see room for improving the bottom-line to the benefit of all? How would you go about implementing/achieving your improvement?
Seems probably necessary to lay a few ground-rules for this discussion to proceed:
For my part, I see the likes of the Cessna 208 Caravan and sub-variants having a strong role in the future of GA as it currently exists, perhaps supported by Pilatus PC-12 in the longer legs/IFR environment. DOC (C208) running at around USD$440ph according to the latest information I have to hand here from Cessna. Obviously both are gas-turbines, considerably younger aircraft than existing (hence lower anticipated maintenance costs, due less-likely unexpected maintenance issues), quieter which is a relatively major consideration in noise-sensitive areas and able to lift larger pax/freight loads on broadly similar DOC.
Where I see things going wrong at present; operators' attention to and concentration on what their direct competitors are charging for the same service. Wrong kiddies. Concentrate on your own knitting. Sure, it's about bums-on-seats, but what about how you are cutting your own throat to save the punters $5??? What about how you are creating/participating in a system that eventually winds up massively undervaluing the service you are offering??? Your staff are subsidising you and your punters!!! Why? Is there another industry you can point to within which this is a common accepted practice? At the end of the day, no matter what is being (realistically) charged, the punters will still be coming through the door. Perhaps it would be better to form a marketing association or some such and sell our products off-shore? Have the punters 'in our door' before they even reach our shores? Bye and large, our products sell themselves. The desire to take advantage of our offerings already exists before the opportunity does. We should be making the most of that!
The glaringly obvious exception to this in GA is to me the meat-bombers. Sure, many of them still run poorly maintained, very old piston airframes; but have a look at the top end of that segment... basically brand new gas-turbine gear in mint condition, works hard all day and makes damn good money for the operator. I've known jump-masters in the past that were on 3-4 times what I was earning!!! The pilots were on similar money to me, but again if the jump-masters are worth that much coin, surely so are the pilots.
OK, enough from me. Looking forward to how this discussion develops!
It seems to me that there must be quite a few ideas out there of how GA could become a profitable and attractive proposition for both operators and staff... so that's my query. What are current GA operators getting right? What are they getting wrong? Where do you see room for improving the bottom-line to the benefit of all? How would you go about implementing/achieving your improvement?
Seems probably necessary to lay a few ground-rules for this discussion to proceed:
- We're talking GA -piston and gas-turbine light singles & twins; not the White Rat, anything that starts with V or any of their ilk.
- Wages/conditions (for all involved) whilst an important part of this discussion are not the be-all, end-all of the discussion. Keep in mind that these will come to an appropriate level as we get everything else right!
- When talking costs, lets assume Direct Operating costs as our point of common ground, rather than charter/hire rates. For added commonality, let's further assume USD$ as our currency.
- We all know that the current GA fleet is at/nearing it's 'use-by' date. What would you like to see the current fleet replaced with? In broad terms, what airframe types do you see as potential replacements for the current fleet?
- What opportunities do you see out there that are not currently being pursued? In what way could existing services be improved?
For my part, I see the likes of the Cessna 208 Caravan and sub-variants having a strong role in the future of GA as it currently exists, perhaps supported by Pilatus PC-12 in the longer legs/IFR environment. DOC (C208) running at around USD$440ph according to the latest information I have to hand here from Cessna. Obviously both are gas-turbines, considerably younger aircraft than existing (hence lower anticipated maintenance costs, due less-likely unexpected maintenance issues), quieter which is a relatively major consideration in noise-sensitive areas and able to lift larger pax/freight loads on broadly similar DOC.
Where I see things going wrong at present; operators' attention to and concentration on what their direct competitors are charging for the same service. Wrong kiddies. Concentrate on your own knitting. Sure, it's about bums-on-seats, but what about how you are cutting your own throat to save the punters $5??? What about how you are creating/participating in a system that eventually winds up massively undervaluing the service you are offering??? Your staff are subsidising you and your punters!!! Why? Is there another industry you can point to within which this is a common accepted practice? At the end of the day, no matter what is being (realistically) charged, the punters will still be coming through the door. Perhaps it would be better to form a marketing association or some such and sell our products off-shore? Have the punters 'in our door' before they even reach our shores? Bye and large, our products sell themselves. The desire to take advantage of our offerings already exists before the opportunity does. We should be making the most of that!
The glaringly obvious exception to this in GA is to me the meat-bombers. Sure, many of them still run poorly maintained, very old piston airframes; but have a look at the top end of that segment... basically brand new gas-turbine gear in mint condition, works hard all day and makes damn good money for the operator. I've known jump-masters in the past that were on 3-4 times what I was earning!!! The pilots were on similar money to me, but again if the jump-masters are worth that much coin, surely so are the pilots.
OK, enough from me. Looking forward to how this discussion develops!
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kiwiblue
As you point out there are many threads currently running, and in the past, which have looked at this issue.
Rather than recapitulate what has been said there (many which you have identified) I think the single most important thing that could be done to make GA work properly is for nearly every owner/manager to undergo some form of business training. Only then will they see that the business practices they currently use are worse than useless and can only have one result, failure.
GA is the most dysfunctional industry I have ever come across and its mostly because owner/pilots are looking for someone to support their addiction. Hence the discounting, the lack of proper pricing and the abusive work practices.
The recent upsurge in pilot requirements by the airlines will have an effect on GA (see the excellent article in Australian Financial Review 20/07/07 on the introduction of regional jets and especially the sidebar piece on pilot numbers) which will put a lot of operators under stress. Only the better ones will survive the next few years and then only if they are very very smart.
As you point out there are many threads currently running, and in the past, which have looked at this issue.
Rather than recapitulate what has been said there (many which you have identified) I think the single most important thing that could be done to make GA work properly is for nearly every owner/manager to undergo some form of business training. Only then will they see that the business practices they currently use are worse than useless and can only have one result, failure.
GA is the most dysfunctional industry I have ever come across and its mostly because owner/pilots are looking for someone to support their addiction. Hence the discounting, the lack of proper pricing and the abusive work practices.
The recent upsurge in pilot requirements by the airlines will have an effect on GA (see the excellent article in Australian Financial Review 20/07/07 on the introduction of regional jets and especially the sidebar piece on pilot numbers) which will put a lot of operators under stress. Only the better ones will survive the next few years and then only if they are very very smart.
Whispering "T" Jet
Only the better ones will survive the next few years and then only if they are very very smart.
There is another thread running which mentions the fact it wouldn't matter how much pilots were paid in GA, they would still move onto the Majors. This is true, however, if the GA Company pays award wages, has a good working environment (doesn't expect pilots to break/bend regulations, aircraft well maintained etc,.) and rosters that allow the pilot a life outside his work then that Company can expect no problems recruiting pilots when time comes for the incumbents to move on.
The airline jobs are improving now with the current pilot shortage and even one of the "majors" is having problems recruiting because of unsatisfactory T&Cs.
The solution is pretty simple and not costly.
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just a question, i was instrumental in another thread running at the moment, and yes i am an operator and yes i am a big advocate of paying the award or more and lets keep this thread away from the amount of money company directors earn
Why, if an operator is not paying the award, are they still in operation? Why have fair trading, ASIC, CASA and so, on allowed that to go on.
IN my last industry if someone wasnt paid the award, they get jumped on. Simple
Why is aviation so different?
Rules are rules
Bizz
Why, if an operator is not paying the award, are they still in operation? Why have fair trading, ASIC, CASA and so, on allowed that to go on.
IN my last industry if someone wasnt paid the award, they get jumped on. Simple
Why is aviation so different?
Rules are rules
Bizz
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I have done number crunching on an operation I think would be fairly profitable given the following occurred:
- I'd have to convince a rather large mining company and contractors than single engine turbine is safer than piston twin
- I'd have to find funds (a lot of) for my operation
- CASA granted an AOC with ASETPA
So. Not too many hurdles....
If successful, I foresee rapid growth.
While most dream of the business end of a jet, I'd settle for my own GA operation. One that is integral to the community and enjoys a solid reputation amongst staff and pax alike.
For an established GA operator, making beneficial changes should be simple and not costly, like you said. But for a new starter, I think the equation is more like pretty difficult and very costly.
What do you think?
- I'd have to convince a rather large mining company and contractors than single engine turbine is safer than piston twin
- I'd have to find funds (a lot of) for my operation
- CASA granted an AOC with ASETPA
So. Not too many hurdles....
If successful, I foresee rapid growth.
While most dream of the business end of a jet, I'd settle for my own GA operation. One that is integral to the community and enjoys a solid reputation amongst staff and pax alike.
The solution is pretty simple and not costly.
For an established GA operator, making beneficial changes should be simple and not costly, like you said. But for a new starter, I think the equation is more like pretty difficult and very costly.
What do you think?
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I was looking at ASETPA approval but i ( my own thoughs only) think its really worth it but it would depend on what you are looking for and what you operation is.
I was up untill last week getting a caravan and started looking in SE IFR and for a caravan, its not worth it (for my operation) its slow. not pressurised, sure it can stop on a short piece of dirt but there is not alot of call for that in the city.. The approval and procedures needed for the approval was massive and the time it takes is lengthy. PC-12 well one has to find one for startes. the only one i new that was available was just sold at auction. Quick, Flys high in great comfort.
I agree about the safety factor in a lot of respects. Chieftain cant fly into known icing conditions BUT they are cheaper than a caravan, hold the same amount of people (generally ) uses less fuel....flys ABOUT the same speeds. Single pilot.
We do some small mining contracts and they are great. Trying to take the bigger ones off the bigger operators is not that easy ut doable
I was up untill last week getting a caravan and started looking in SE IFR and for a caravan, its not worth it (for my operation) its slow. not pressurised, sure it can stop on a short piece of dirt but there is not alot of call for that in the city.. The approval and procedures needed for the approval was massive and the time it takes is lengthy. PC-12 well one has to find one for startes. the only one i new that was available was just sold at auction. Quick, Flys high in great comfort.
I agree about the safety factor in a lot of respects. Chieftain cant fly into known icing conditions BUT they are cheaper than a caravan, hold the same amount of people (generally ) uses less fuel....flys ABOUT the same speeds. Single pilot.
We do some small mining contracts and they are great. Trying to take the bigger ones off the bigger operators is not that easy ut doable
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The only real way to make real money in GA is to take on millions of O/S cadets from Asia. Negotiate a per cadet figure for the completion of each cadet's training and flick the conveyor belt on, churn through a few groups every 6 months or so.
I don't need to take you on a guided tour around MB or BK to show you the successful schools/operators, and where they're getting their money from.
I don't need to take you on a guided tour around MB or BK to show you the successful schools/operators, and where they're getting their money from.
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there is a saying that an operator at Bankstown said to me..... we no longer speak by the way and ive heard this many times. The only way to make millions in Aviation is to start with millions.
Or
as you said OS students could also help
Bizz
Or
as you said OS students could also help
Bizz
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OK, at last some movement in this thread! After 27 hours and not a nibble I thought perhaps people were finding it too scary to offer their thoughts on improvements. At the back of my mind always is the wisdom: "If you are not part of the solution, then you are part of the problem". And yeah bizzybody, we've all heard the best way to make a small fortune out of aviation is to start with a large one. Read a couple of lines up. That's the very thinking that is a part of the problem. What you think consistently becomes your reality. I've read your previous posts in this & other threads and it appears to me that you are a more proactive operator than we usually hear about here, particularly in regard your crews' T&C's. Good for ya! The whole point of this thread however is to brainstorm the possibilities that exist in what should be a lucrative industry -to identify where as an industry we are going wrong and what may be a solution; and to identify possibilities and opportunities both operationally and in a business practice sense that are not currently a part of our repertoire!
Superbly spoken.
Likewise, I believe the C208 is best suited to taking the VFR role in pax/freight GA rather than the IFR environment. Whilst they do dress up very nicely in the Grand Caravan exec config, I think there would be pax resistance to the lack of space and the noise levels when talking of a flight much over an hour. A brilliant machine in the appropriate role, but for the IFR/exec transport role I would definitely be looking more towards the PC12/TBM stables.
I would like to think that the new-start operator has a unique opportunity to 'get things right' from the get-go, rather than an existing operator trying to stamp out the brush-fires of an existing operation with old gear and attitudes. Get the regulatory stuff out of the way nice and tidy, everything else should flow from there quite nicely!
Originally Posted by strim
One that is integral to the community and enjoys a solid reputation amongst staff and pax alike
Superbly spoken.
Likewise, I believe the C208 is best suited to taking the VFR role in pax/freight GA rather than the IFR environment. Whilst they do dress up very nicely in the Grand Caravan exec config, I think there would be pax resistance to the lack of space and the noise levels when talking of a flight much over an hour. A brilliant machine in the appropriate role, but for the IFR/exec transport role I would definitely be looking more towards the PC12/TBM stables.
I would like to think that the new-start operator has a unique opportunity to 'get things right' from the get-go, rather than an existing operator trying to stamp out the brush-fires of an existing operation with old gear and attitudes. Get the regulatory stuff out of the way nice and tidy, everything else should flow from there quite nicely!
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Have to agree with previous posts that business training should be mandatory. But then it should be for anyone who wants to start a business.
Getting the respective departments of Industrial Relations or the Workplace Ombudsman to investigate and prosecute underpaying employers would be a huge start. Although if some of the shonks can't compete by paying low wages they might try and compete by not maintaining aircraft... What's that? They already are??
;lkjasdid .... nonsense, I refuse to believe such a thing. ...lsadfhdsos.ls...
Sorry I just had to retake control of my keyboard from a rogue CASA officer.
But seriously, prosecution of those who breach the rules for profit (or just to stay viable) is the only way to start the improvement of the GA industry. There can be no shortcuts. You can throw money at things like business training and other niceties but as long as some feel there is a way to make an extra buck by taking shortcuts with their statutory responsibilities, they always will.
Oh and free rectinol for GA pilots. That might take away the burning pain of being screwed in the meantime.
Getting the respective departments of Industrial Relations or the Workplace Ombudsman to investigate and prosecute underpaying employers would be a huge start. Although if some of the shonks can't compete by paying low wages they might try and compete by not maintaining aircraft... What's that? They already are??
;lkjasdid .... nonsense, I refuse to believe such a thing. ...lsadfhdsos.ls...
Sorry I just had to retake control of my keyboard from a rogue CASA officer.
But seriously, prosecution of those who breach the rules for profit (or just to stay viable) is the only way to start the improvement of the GA industry. There can be no shortcuts. You can throw money at things like business training and other niceties but as long as some feel there is a way to make an extra buck by taking shortcuts with their statutory responsibilities, they always will.
Oh and free rectinol for GA pilots. That might take away the burning pain of being screwed in the meantime.
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yeah thanks kiwiblue i wont disagree with you about the the statement. Very true mate.
We are in the middle of expanding with some new "ideas" and need approvals to do so and i think this could be a grea time to really start thinking about what, within the legislation, could be done thats different and better for the general public....
By the sounds and looks of it i am very out o the loop re wages... maybe its because i dont really pay much attention to the competition but i honestly cant seeany GENUINE operator paying less than award!!!!..... i mean in my eyes thats uncomprihensable... in any business / industry....
Bizz
We are in the middle of expanding with some new "ideas" and need approvals to do so and i think this could be a grea time to really start thinking about what, within the legislation, could be done thats different and better for the general public....
By the sounds and looks of it i am very out o the loop re wages... maybe its because i dont really pay much attention to the competition but i honestly cant seeany GENUINE operator paying less than award!!!!..... i mean in my eyes thats uncomprihensable... in any business / industry....
Bizz
Grandpa Aerotart
The reason many, if not most, GA companies are financially marginal is EXACTLY the same reason why most GA pilots are paid so little...supply and demand.
Too many companies chasing too little work.
It is that simple and everything else follows that one basic premise...supply and demand.
It is the reason why second hand aircraft values are so low...why GA pilot wages are so low....why charter rates are so low....because the supply of each out-strips demand by orders of magnitude....the supply of experienced pilots seems to be reducing below demand for the first time in living memory. For the last several years the supply of experienced airline pilots has been dwindling...that is now starting to flow through to Regionals and that flows onto GA...and in an interesting twist Flying Schools are hurting probably more than GA charter. Highly qualified and experienced Grade 1s are moving into the rhs of regional turboprops and and will be Training Captains in a few short years...because most, but not all, are too old to make it to the majors.
The very people needed to address the pilot shortage are in shortest supply...CFIs and experienced Grade 2s...most off to regionals or majors depending on their age.
What will a CFI at a decent size school be worth soon...what will one be worth at the Asian cadet factories in WA...$150k? When the only other option is shutting down your cadet system I would suggest $150/annum plus company car will be money VERY well spent to retain the services of an experienced, talented and qualified CFI. They can't move offshore...the problem is worse everywhere else.
What about experienced Grade 2s?
What is an experienced RFDS pilot worth to keep him forever, or attract in the first place?
100K plus a stable roster you can plan your life around?
Too much?
I am certain any beancounter/manager from RFDS reading this probably just experienced his hair stand on end and a chill sweep down his spine...because deep down he knows this is not rubbish.
To own a home, educate/feed/clothe a few children, run a car or two (that are not 15 years old), have the odd holiday and fund old age this is what is required....or are pilots not allowed to have such expectations in life?
Managers certainly have them.
The attraction of airlines is only partly shiny jets...the shine wears off real quick btw...the real attraction, actually more like financial imperative, of airlines is to be able to achieve a financial state that facilitates all ones normal life aims...children, a house in the burbs and a few toys with which to enjoy life....not to mention an old age that is above the poverty line.
What is an IFR Baron/Chieftain pilot in one of the major regional centers worth?
Given that most of these operations exist around the mining industry and that mining boom has driven cost of living in these towns through the roof I'd say there is a need for some improvement in the terms and conditions if you want any hope of retaining staff. A mate in Mt Isa tells me basic accomadation starts at $400/week IF you can find it in the first place...demand for services like accom outstrips supply in these places enormously.
I would guess that puts minimum wages around $1000/week...75K/annum gross...more for key staff like CPs and Training pilots and perhaps a retention bonus/profit share too.
What is a VFR C210 pilot living in a community worth?
I can gaurantee you it is more than the current award + free decent accomadation as a starting point. It probably includes a cash inducement to stay for 12 mths...maybe a months wages.
So if your business model/reality cannot sustain the above plus maintain your aircraft, be they C210/Baron/Chieftain/Kingair/C208/PC12 in first class condition then I respectfully suggest you will not be in business in the longer term.
Too many companies chasing too little work.
It is that simple and everything else follows that one basic premise...supply and demand.
It is the reason why second hand aircraft values are so low...why GA pilot wages are so low....why charter rates are so low....because the supply of each out-strips demand by orders of magnitude....the supply of experienced pilots seems to be reducing below demand for the first time in living memory. For the last several years the supply of experienced airline pilots has been dwindling...that is now starting to flow through to Regionals and that flows onto GA...and in an interesting twist Flying Schools are hurting probably more than GA charter. Highly qualified and experienced Grade 1s are moving into the rhs of regional turboprops and and will be Training Captains in a few short years...because most, but not all, are too old to make it to the majors.
The very people needed to address the pilot shortage are in shortest supply...CFIs and experienced Grade 2s...most off to regionals or majors depending on their age.
What will a CFI at a decent size school be worth soon...what will one be worth at the Asian cadet factories in WA...$150k? When the only other option is shutting down your cadet system I would suggest $150/annum plus company car will be money VERY well spent to retain the services of an experienced, talented and qualified CFI. They can't move offshore...the problem is worse everywhere else.
What about experienced Grade 2s?
What is an experienced RFDS pilot worth to keep him forever, or attract in the first place?
100K plus a stable roster you can plan your life around?
Too much?
I am certain any beancounter/manager from RFDS reading this probably just experienced his hair stand on end and a chill sweep down his spine...because deep down he knows this is not rubbish.
To own a home, educate/feed/clothe a few children, run a car or two (that are not 15 years old), have the odd holiday and fund old age this is what is required....or are pilots not allowed to have such expectations in life?
Managers certainly have them.
The attraction of airlines is only partly shiny jets...the shine wears off real quick btw...the real attraction, actually more like financial imperative, of airlines is to be able to achieve a financial state that facilitates all ones normal life aims...children, a house in the burbs and a few toys with which to enjoy life....not to mention an old age that is above the poverty line.
What is an IFR Baron/Chieftain pilot in one of the major regional centers worth?
Given that most of these operations exist around the mining industry and that mining boom has driven cost of living in these towns through the roof I'd say there is a need for some improvement in the terms and conditions if you want any hope of retaining staff. A mate in Mt Isa tells me basic accomadation starts at $400/week IF you can find it in the first place...demand for services like accom outstrips supply in these places enormously.
I would guess that puts minimum wages around $1000/week...75K/annum gross...more for key staff like CPs and Training pilots and perhaps a retention bonus/profit share too.
What is a VFR C210 pilot living in a community worth?
I can gaurantee you it is more than the current award + free decent accomadation as a starting point. It probably includes a cash inducement to stay for 12 mths...maybe a months wages.
So if your business model/reality cannot sustain the above plus maintain your aircraft, be they C210/Baron/Chieftain/Kingair/C208/PC12 in first class condition then I respectfully suggest you will not be in business in the longer term.
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Chimbu is on the money, the Best GA operators I've seen kept their aircraft in top condition and they kept customers and staff. Another small one and I'll no doubt get hammered for it but both of the operators I'm thinking of were ginger beers. They paid award, accomodation was expensive but the aircraft were nice and no "you must do this" attitude.
Another idea would be to diversify, don't just concentrate on flying punters. Look at all the options and try to find niche markets . Be creative with your company and take care of your customers and staff. I remember hiring heli's from one operator who always had 100 hrs to run on the machine and at the first sign of problems would have someone on the ground. He was a touch more expensive than others but his pilots were good who stayed with him and the support meant no costly delays.
Another idea would be to diversify, don't just concentrate on flying punters. Look at all the options and try to find niche markets . Be creative with your company and take care of your customers and staff. I remember hiring heli's from one operator who always had 100 hrs to run on the machine and at the first sign of problems would have someone on the ground. He was a touch more expensive than others but his pilots were good who stayed with him and the support meant no costly delays.
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Sign of things to come?
Found this while having a dig around. Could be a wind up but I think not....
Possibly what needs to be done here to attract and retain people
http://www.avcanada.ca/forums2/viewtopic.php?t=33291
Possibly what needs to be done here to attract and retain people
http://www.avcanada.ca/forums2/viewtopic.php?t=33291
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I have to admit, I had no idea until just now what ASETPA stood for. The trusty Google search soon fixed that gap in my education! The ASETPA Checklist on CASA's site... seems a worthwhile document, and certainly covers what a new turbine operator should be aiming for -as a minimum! I have to admit though my eyebrows raised a tad at the Proving Flight| Engine failure during take off, including turnback procedures. (my emphasis)
Are CASA now advocating the turnback in EFATO as a valid procedure??? And checking to see that you do it??? I hope not! Please, someone tell me I'm looking at this in the wrong way!!!
Otherwise it seems that the process would give any new turbine operator/start-up a very good basis upon which to build, whilst maintaining their aircraft in mint condition! To be applauded!
Are CASA now advocating the turnback in EFATO as a valid procedure??? And checking to see that you do it??? I hope not! Please, someone tell me I'm looking at this in the wrong way!!!
Otherwise it seems that the process would give any new turbine operator/start-up a very good basis upon which to build, whilst maintaining their aircraft in mint condition! To be applauded!
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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
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
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ahhh... that's better. Just had to drop the family off at the pool. Got my 2nd wind now 
I'm certain there are people reading this thread that haven't yet tossed their ideas in for fear of ridicule... whilst I can't promise that won't happen, it won't from me here and I'm sure not from most of those who have posted in this thread so far. Go hard people! You could provide the impetus for some robust discussion and perhaps shift a few perspectives to the betterment of us all!!!
Whilst down in Sydney a couple of weeks ago, I was taking an amble around YSBK. Found something that really blew my hair back... let's see if I can post a pic.
OK, that wasn't so hard -took longer to resize than to get it there!
Now, this wee lady (and the idea behind her!) really floats my boat!
It seems she'll be running from Rose Bay in SYD to Cessnock airport with punters doing the whole winery thing for the weekend! A classic bit of niche marketing/opportunity exploitation if ever there was one! This guy has a huge urban population as his potential market, a classic machine well suited to its task (and damn sexy too) with an established clientele already fond of their vino, comforts and luxuries going to the place best able to meet their needs! I would be surprised if his round-trip time was much over an hour, so for the money he's likely to charge even as part of a weekend package deal, it looks to me like he's on a winner!
THAT's the sort of thinking we need more of! Any other thoughts/possibilities out there?
I'm certain there are people reading this thread that haven't yet tossed their ideas in for fear of ridicule... whilst I can't promise that won't happen, it won't from me here and I'm sure not from most of those who have posted in this thread so far. Go hard people! You could provide the impetus for some robust discussion and perhaps shift a few perspectives to the betterment of us all!!!
Whilst down in Sydney a couple of weeks ago, I was taking an amble around YSBK. Found something that really blew my hair back... let's see if I can post a pic.
OK, that wasn't so hard -took longer to resize than to get it there!
Now, this wee lady (and the idea behind her!) really floats my boat!
It seems she'll be running from Rose Bay in SYD to Cessnock airport with punters doing the whole winery thing for the weekend! A classic bit of niche marketing/opportunity exploitation if ever there was one! This guy has a huge urban population as his potential market, a classic machine well suited to its task (and damn sexy too
) with an established clientele already fond of their vino, comforts and luxuries going to the place best able to meet their needs! I would be surprised if his round-trip time was much over an hour, so for the money he's likely to charge even as part of a weekend package deal, it looks to me like he's on a winner!THAT's the sort of thinking we need more of! Any other thoughts/possibilities out there?
Last edited by kiwiblue; 31st Jul 2007 at 10:22. Reason: re-size the resized image!