Saturday, May 06, 2006

Eclipse Charter Rates

Want to charter an Eclipse, be prepared to pay about $3.00 per mile for the privilege. Vern Raburn has promoted the idea of jet charter and I quote..."to bring "personal" into aviation, making it possible for commercial air passengers to move directly between cities on a quick, affordable and convenient basis...unquote.

The implication here is that Eclipse operating costs are so low they approach commercial airfares. Let's look at the costs a charter operator would face and the fares needed to sustain a profit and continue in business.

Fixed Costs:

Lease/Finance $ 147,244 per year
Insurance $ 38,000 per year
Administrative $ 40,000 per year
Total $225,244 per year

With 600 hours per year utilization - $375 per hour
With 800 hours per year utilization - $282 per hour
With 1,000 hours per year utilization - $225 per hour

Variable Costs:

Fuel $296 per hour
Maintenance $125 per hour
Engine Reserve $113 per hour
Pilot Expense $140 per hour
Total $674 per hour

Then let's give the charter company a modest 10% mark-up on costs for profit and another 10% allowance to cover non-revenue flights i.e. training, pilot check-outs, maintenance, dead-heading for positioning, communications etc.

Speed and fuel flows based on 380 mph block speed and high speed cruise.

600 hours of utilization $1,049/hour plus 20% = $1,259/hour or $3.31/mile
800 hours of utilization $ 956/hour plus 20% = $1,147/hour or $3.02/mile
1,000 hours of utilization $899/hour plus 20% = $1,078/hour or $2.84/mile

NOTE: The basis for these costs are provided at the end of this post.

Now let's look at a typical charter between a couple of random cities:

Columbus, Ohio to Tampa, Florida. 829 miles one-way, 2.2 hours by Eclipse charter. 4.4 hours round trip. Charter costs $5,007 round trip (800 hours per year utilization).

Comparable commercial air fares:

- Full fare coach around $500 round trip
- Full fare business class $1,300 round trip

There are added benefits to charter flights:

- More convenient than commercial flights, go when you want to go.
- Overnight expenses can often be avoided.
- Less time is wasted in airports.
- A charter can go where the airlines don't.
- Two or three can travel for the same cost as one.

For some, the added benefits may offset the extra cost, but will Eclipse provide any great breakthrough in the way America travels? You be the judge.

Basis for charter cost of operation estimates:

Cost of the Eclipse at time of delivery $1,500,000 (check the numbers, the Eclipse is no longer a million dollar jet).

Lease, 8 year term at 7% simple interest and a 40% buyout at end of lease.

Insurance numbers from Eclipse web site.

Administrative allowance assumes multi-plane operation and would include contributions to advertising, sales, scheduling, hangar, management and other overhead items.

Fuel based on 66 gallons per hour at high speed cruise with fuel at $4.50 per gallon, an average price at the date of this post.

Maintenance - Eclipse numbers based on a pay-as-you-fly program, and the numbers start at delivery (so much for a warranty program).

Engine Reserve - Eclipse/Pratt numbers posted on Eclipse web site.

Pilot and expenses - Somewhat based on the Eclipse model of a single pilot operation and using retired airline pilots who might like to supplement their pensions and do contract flying. The pilots would logically expect at least 3 hours of revenue flying per day. Some charter operators like DayJet will opt for a two pilot operation and pilot expenses may even be higher.

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