Professional Pilot, September 2016

Fig 1 1 To determine the real value of HCMPs compare the cost of a major event scheduled or unscheduled under the programs cost versus the time and material price a facility will charge an uncovered operator walking in off the street The cost assumptions used by HCMP providers to compute the hourly rate paid by their clients is different read lower than the time and material price they will charge which will include a profit That profit is designed in part to recover lost interest value the provider would have earned had your engine been enrolled on their program The cost difference for any specific event will vary depending on engine model and HCMP coverage but the differential is real and can be significant 2 Hourly Cost Maintenance Programs provide additional value by virtue of the maintenance related services they cover These can range from a rental engine while yours is undergoing service to engine removal and reinstallation cost coverage engine health monitoring and alternative lift see Fig 1 Exact services depend on your engine model your service provider and the level of coverage selected but the value is quantifiable To demonstrate what HCMP coverage might be worth Fig 2 examines the additional value that Rolls Royce CorporateCare Additional HCMP value on RR BR710 Fig 2 1000000 900000 Assumptions CorporateCare HCMP coverage BR710 On condition engine 400 annual flight hours 1 2 3 4 5 20 PROFESSIONAL PILOT September 2016 coverage provides for an in service BR710 engine operated On Condition on an aircraft operating 400 annual flight hours If someone purchased an aircraft with a Rolls Royce engine that required major maintenance on the day they bought the asset without ever having flown the airplane their Rolls Royce CorporateCare Program value would be over 700000 Its just simple math However if the operator required maintenance over the next 5 years the chart shows that CorporateCare coverage could be worth over 1 million of additional value And that assumes only 1 engine event Should a 2nd engine event be required during that period the total value would not be double that amount but it could equal a significant portion of that figure There is no question that HCMP coverage has an ongoing cost Additionally a buy in fee is usually due when enrolling an in service aircraft However maintenance expense is an inevitable consequence of aircraft ownership In fact calendar based events create maintenance costs even if you never fly your asset so consider the true value of HCMP before deciding that you would rather retain the funds and pay as you go Lastly pro rata HCMP coverage is available through certain providers Touted by some as the alternative to paying an expensive buy in fee certain operators elect this option thereby securing unscheduled maintenance event coverage on day 1 without incurring an up front cash expense The operator simply agrees to pay for a pro rated portion of certain major maintenance events based on when the events take place and how much of that total time the engine was enrolled on HCMP While not inherently bad some pro rata programs also pro rate the value of the additional services that buy in programs cover such as the cost of a rental engine removal and reinstallation fees and even the cost of freight So check what your HCMP provider is truly agreeing to provide under a pro rata option Remember theres no free lunch BR725 O C BR710 O C BR710 H T AE 3007A1E A1 3 O C AE 3007A2 O C AE 3007C C1 C2 H T Tay 611 8 H T Tay 611 8C H T Tay 611 8C O T Lease engine 725955 557518 287243 287243 215028 397425 Lease engine for mid life 430857 66328 352286 Lease engine for overhaul 557518 92895 397425 R R 105559 78016 78016 42681 42681 34022 48893 48893 48893 Freight per engine per major maintenance event 65850 65850 65850 30282 30282 26332 56332 56332 56332 Training per year 3334 3334 3334 3334 3334 3334 3334 3334 3334 Technical publications per year 12260 14750 14750 22366 22366 22366 14860 12380 12380 Engine health monitoring per year 15000 15000 15000 10000 10000 10000 15000 15000 15000 Electronic engine control warranty per year 17533 15939 15939 Alternate lift 157500 Unscheduled events avg cost per engine flight hour 7300 4800 5000 4387 5029 9002 3500 5200 4800 Line maintenance parts avg cost per engine flight hour 2583 2689 2098 2054 2024 1791 2885 2747 2747 1100000 800000 700000 600000 Day 1 Operating year Source Rolls Royce CorporateCare cost assumptions Asset Insight analytics