The Value of Hourly Cost Maintenance Programs
Training Level : Advanced
Hourly Cost Maintenance Programs (HCMP) were originally introduced by the engine and airframe OEMs to demonstrate their confidence in the cost to maintain their product. Today, these Programs have become a near staple for many aircraft, to the point where the value for many assets is negatively impacted absent HCMP coverage.
The cost to maintain an aircraft varies by make / model and age, and its maintenance program is based on three parameters: flight hours; landings (what is also referred to as cycles); and the passage of time (due to calendar-based maintenance events). Scheduled maintenance will include "cost spikes," such as major airframe maintenance, and engine or Auxiliary Power Unit (APU) overhaul. Additionally, scheduled maintenance costs become less predictable as an aircraft ages, and unscheduled maintenance events can occur at any time and be very expensive.
Hourly Cost Maintenance Programs remove cost uncertainty by providing predictability for scheduled maintenance budgeting while concurrently eliminating unexpected repair costs. An operator pays a set fee, based on defined utilization parameters, for coverage of certain major components (e.g., engines; avionics; APU) or virtually the entire aircraft
HCMP coverage can be very valuable in addressing an operator’s (or owner’s) maintenance-related financial exposure. Additionally, in certain circumstances, HCMP can even make some aging aircraft marketable. However, these Programs create a monthly expense based on hours flown, and HCMP enrollment of a used aircraft may require a substantial "Buy-In Fee."
This webinar will help you understand the different types of HCMP coverage options and level of coverage, common exclusion, their potential cost, how to measure HCMP value, as well when it might make sense to pay the enrollment Buy-In Fee when selling a used aircraft not enrolled on a Program.
Why should you Attend:
A brand-new aircraft comes with a warranty that will cover the operator’s unscheduled maintenance costs. Warranty coverage intervals vary by aircraft sector (e.g., airframe, Engines, Avionics) and, over time, aircraft maintenance will account for as much as 35% of your aircraft’s annual operating budget. The cost to maintain an aircraft varies by make / model and age, and its maintenance program is based on three parameters: flight hours; landings (what is also referred to as cycles); and the passage of time (due to calendar-based maintenance events). Scheduled maintenance will include "cost spikes," such as major airframe maintenance, and engine or Auxiliary Power Unit (APU) overhaul. Additionally, scheduled maintenance costs become less predictable as an aircraft ages, and unscheduled maintenance events can occur at any time and be very expensive.For example, it can cost millions of dollars to remove an engine at some rural location, transport the engine to a facility where the necessary maintenance can be conducted, transport and install a loaner engine for the aircraft to continue operating while maintenance is being completed, and reinstall the repaired engine.
Hourly Cost Maintenance Programs (HCMP) remove cost uncertainty by providing predictability for scheduled maintenance budgeting while concurrently eliminating unexpected repair costs. While assuring that adequate maintenance funds will be readily available when needed, HCMPs can also enhance an aircraft’s resale price (or residual value), as well as leasing and finance terms.
Areas Covered in the Session:
- Hourly Cost Maintenance Programs - how do they work?
- What are the benefits of HCMP aircraft enrollment?
- What companies offer Hourly Cost Maintenance Program coverage?
- What maintenance events do Hourly Cost Maintenance Program cover?
- What are the common HCMP coverage exclusions?
- What are common HCMP Enrollment or other Indoctrination Fees?
- What is a Program "Buy-In Fee" and when is it required?
- What is the common Program term length?
- Is the Program renewable?
- Does Program coverage cease past a certain aircraft age?
- Is the Program transferable and are there any restrictions?
- What options are available when you decide to sell the aircraft?
- When might it make sense to pay any Enrollment, Indoctrination or Buy-In Fee when selling a used aircraft not enrolled on HCMP?
- How do you determine if the HCMP Enrollment costs are reasonable?
- How can you determine / prove your aircraft’s "actual" Hourly Cost Maintenance Program "value."
- How can you use HCMP valuation information to "optimize" your aircraft’s value?
Who Will Benefit:
- Aircraft Owners, Operators, Buyers, Sellers, Financiers, Appraisers, and Insurers.
- Senior corporate executives involved in the aircraft acquisition, operation and/or disposition process.
- Flight Department Managers, including Directors of Aviation and Chief Pilots.
- Aircraft Maintenance Managers.
- Personnel involved in aircraft financing, including Credit Officers, Risk Officers, and Asset Managers
Prior to Asset Insight, he served as VP, Strategic Marketing with GE Capital's Corporate Aircraft Finance group, joining GE after serving as VP - Aircraft Sales for Jet Aviation Business Jets, Inc.
Following a ten-year tenure with British Aerospace, Inc., where he became VP - Sales, for JSX Capital, the company's aircraft remarketing subsidiary, Tony founded The K Group, Ltd., providing Marketing, Sales, and Financial Services consulting to companies headquartered in the Americas and Europe.
He later joined Jet Support Services, Inc., as Sales Director - Airframe Programs, and developed "Tip-to-Tail", JSSI's Airframe Hourly Cost Maintenance Program.
Tony is a published author and active industry association member, serving as Board Secretary for the National Aircraft Finance Association (NAFA); Vice Chairman on the Products and Services Member Board of the National Aircraft Resale Association (NARA); and, as a Member of the Transportation Research Board's (TRB) Business Aviation Subcommittee.
He holds a Bachelor of Science Degree from Florida Institute of Technology's College of Aeronautics, has completed graduate studies at New York's Pace University toward a MBA in Finance, and is a licensed pilot.