Friday, 18 November 2016

Aviation industries - Buying and maintain a passenger flight

In this post we are going to see about buying and maintain a passenger flight and there cost, Normally buying and maintain a passenger flight is like buying a Elephant and feed that 10 times a day, Yes it is 100% Risk Job, to buy a Aircraft and maintain it, Buying a flight is easy , but maintain that is some times resulted in biggest loss. Now we can see the list of maintaince cost happening for aircraft in day basis.

Buying is easy, but if the flight is not flying , then it is a biggest loss for them, you know why , expense for landing is more high than flying hours, it is only revenue if it is fly, if it is landed in some airport for sometime, then they will charge for 1 hour in lakhs, Now say Flying is expensive or landing is expensive

India's biggest loss by a Aircraft company is Kingfisher, that company make a loss of 6000 crores to 17 banks for  Aviation industry

Take a example of buying a Airbus A380 or modern Beoing B747 in typical 3-class configuration Full Occupancy 12 hours flight time (or more) Here are the Cost position to maintain that flight

1.     Fuel
2.     Aircraft amortisation
3.     In-flight crew salaries
4.     Ground crew salaries (boarding crew, aircraft preparation and cleaning, luggage loading,etc.)
5.     Catering
6.     Various insurances
7.     Airport fees (landing tax, etc.)
8.     Over flight fees
9.     Administrative cost (managing/issuing tickets, etc.)


1.     Fuel

The fuel consumption of the A380 is about 11 metric tonnes per hour. With a fuel price of $1000 per metric tonne, this results in $11000 per flight hour.

2.     Amortization

An A380 will cost about $350M. The aircraft will be used for about 25 to 30 years, but let's assume the amortization period is about 20 years with a residual value of $50M. With an interest rate of 5%, you would pay about $24M per year. That is about $2740 per hour or $0.76 per second, flying or not. Assuming a usage of 60%, taking into account turnaround times at the gate and maintenance downtime, it boils down to $3915 per flight hour.

3.     Crew

Captain costs $160K per year, the F/O $90000. Let's assume they fly about 60 hours per month, the combined flight deck crew cost is about $350 per flight hour for the base salary. Another $80 needs to be added for allowances bringing the total to $430 per flight hour. Cabin crew rate would be around $40 per hour, so for 20 crew the cost will be \$800 per flight hour. Also allowances for overnight stays and hotel costs need to be taken into account

4.     Airport charges

These vary extremely between airports. You can basically break the costs down into costs related to the aircraft, the passengers and various taxes by the government. Aircraft cost usually are related to the Maximum Take-off Mass (MTOM) of the aircraft and the noise category. A Boeing 747-400, while less heavy than an A380, will in some cases be more expensive due to the higher noise level. Many airports differentiate between peak and off-peak hour landings. I can't find accurate data for the A380 but an old table that I have for the Boeing 747-400 suggest that total the cost vary between about $6000 to $25000.

5.     Over flight charges

Fees are levied by countries whose territory is flown over, mainly to cover ATC cost. The cost is typically based on the distance flown and the MTOW. For a 747-400ER over Europe, the fee is on average 145EUR per 100km. assuming an average speed of about 900km/h, the hourly cost is about 1300EUR/h. These costs are lower over the high seas and over the US.

Now Let we see the biggest loss for banks because of Kingfisher. which are given loan to them.,Here is the list