CALCULATING THE VALUE OF THE RIGHT AIRCRAFT MAINTENANCE PROGAM
The right Pay per Hour (PpH) maintenance program can add millions to the value of your aircraft, experts say. In this article, find out the key considerations when shopping for a PpH plan.
Maintenance of an aircraft engine has a significant impact on overall operating costs.
Many aircraft owners and operators choose to enrol their engines in a Pay per Hour (PpH) maintenance program. In this arrangement, an hourly fee is paid for every hour flown on a monthly basis so maintenance costs are fully budgeted and there are no surprises.
To understand the full potential of a PpH maintenance program owners/operators should ask a number of questions to ensure what they’re signing for is what they actually need.
Different PpH Plans for Different Needs
“Flexibility is perhaps the most significant factor to consider when selecting a PpH program,” says Laura Babbitt, Pph Product Manager, P&WC, based in Little Rock, Arkansas.
She says that for a PpH plan to be effective, the supplier must be willing to assume the risk, based on their knowledge of the engine and its performance. The last thing you want is to have your PpH supplier ask for more money when something unexpected happens to the engine.
Stéfanie Corriveau is Customer Service Marketing Manager at P&WC located in Longueuil, Quebec. She is also an expert on PpH programs. “Beyond the type of missions flown, which destinations you fly to is also important ” she advises. “If you have long-range capabilities that might take you to far-flung regions, you need a PpH supplier who can provide AOG relief anywhere in the world, including remote locales.”
Consider your PpH Program Carefully
Laura says a recently completed study indicates that being on the right PpH program can increase the residual value of your aircraft by more than $2 million after five years. The study, conducted by Asset Insight, involved an Embraer Phenom 300 jet powered by two PW535 engines and P&WC’s Eagle Service™ (ESP® Program) PpH offering. It assumed the purchase price of the new aircraft was $8,950,000. After five years, the value of the Phenom 300 with engines enrolled in ESP® was $6,607,986 compared to a value of just $4,189,227 had the engines not been enrolled in ESP®. With that sort of capital at stake, you really want to have the right plan for your aircraft.
She says there are a number of administrative questions to ask when shopping around for a PpH plan. For example, is the enrolment fee merely an incremental cost with absolutely no value-added? Is there a “minimal hours flown” clause? This is contrary to the hourly concept; why pay for hours that you don’t fly?
For Stefanie, another element to consider is how well the PpH program can be integrated with DPHM (Diagnostics, Prognostics and Health Management) products. “DPHM products help create a planned maintenance environment and can be used to guide on-condition maintenance,” she says, “which can extend TBO (Time Between Overhaul) intervals. Properly integrated, PpH plans and DPHM products are a powerful duo which bring long-term benefits.” She notes that the ESP® program includes engine trend monitoring, leveraging its fit with DPHM products.
Concludes Laura: “Bottom line, a good PpH program should simplify your life, not complicate it. You need to shop around and find the plan that provides that simplicity and peace of mind. After the cost of aircraft acquisition, your maintenance costs are your biggest ticket item. You want to make sure you’re getting value for every dollar you spend.”