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Maintenance Budget Planning: No Crystal Ball Required!

By Peter Zeeb | VanAllen

It’s budget season and you can feel the stress in the air.  When it comes to your aviation budget planning, one of the most daunting line items is your maintenance budget.  Yet, with these tips, we can help take some of the mystery and surprises out of your maintenance budget.

 

Maintenance Projections

The first thing most managers do is to run a “due list” for the coming year’s projected usage.  Using your maintenance planning software and your current aircraft’s status, you can easily project which items will be due in the coming year.  A few conversations with your preferred service center and you can quickly plug-in your maintenance budget.  However, consider these additional steps to minimize surprises and refine your budget:

  • Plan for “out the door” cost.  This will include any discrepancies or unplanned items that need to be fixed.  Insist your service center give you accurate out the door pricing on large inspections. Don’t always believe the quoted price.

  • Shop around.  Get a few quotes to be sure you are getting a competitive price.

  • Don’t forget about positioning costs to move the aircraft to/from the facility.  Also, travel expense for your technical team to oversee the process.

  • Read the fine print of your maintenance proposal.  What taxes and fees will apply?

  • Can you combine inspection items with upgrades to leverage the labor access time to reduce cost and overall downtime?

  • Run a due list for a few scenarios to understand the impact.  Perhaps another 50 hours of flying in the coming year triggers a large maintenance event.

Maintenance Programs

A variety of maintenance programs exist to smooth cashflows and eliminate the budget surprises around maintenance.  But don’t get too comfortable that these plans can eliminate all surprises.  The devil is in the details.

  • Read each of your maintenance service agreements in their entirety.  Understand how they work and how you are covered.

  • Identify any exclusions that you need to plan for.  This can include labor, freight/shipping, service bulletins, etc.

  • Are there any minimums or limitations you should understand based on your operation?

  • Make sure the agreement references obsolete component protection.

  • Does the contract accurately reflect your optional equipment list?

  • Are there any escalators or CPI adjustments throughput the contract?

 

 

Unscheduled Maintenance

Let’s face it: planning for unscheduled maintenance is an oxymoron.  However, unscheduled maintenance is a fact of aircraft ownership.  Not fixing the aircraft is not an option.  Yet, one unscheduled maintenance event can blow your maintenance budget.  Consider these strategies to minimize the budget stress around unscheduled maintenance:

  • If you have operated the aircraft for a few years, look at historical data to give you a sound foundation for your unscheduled maintenance expense.

  • Leverage your OEM.  All the OEMs have fleet data to include maintenance cost.  Request data for your specific make, model, and model year.

  • Based on these figures, consider allocating a maintenance reserve for unscheduled maintenance.  This emergency fund will remain untouched until it’s needed for a rainy day.  Caution: your company’s philosophy on rollovers and internal chargebacks may come into play.

Whether it be budget planning or determining if various maintenance plans make sense for you, reach out to VanAllen to help put a sound strategy around your maintenance expense management.

 

Contact VanAllen today to discuss how we can help you navigate this complicated and potentially costly process.