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include scheduled and
unscheduled engine
maintenance in their
operating costs, which can be
reduced or eliminated with
this type of insurance (does
not cover ingestion or
external impact damage
normally covered under the
Hull or Deductible Policy).
· Loss of Use/Delay Insurance—
for strikes, riots or industrial
action, adverse weather
conditions, crew incapacity,
accidental damage,
mechanical breakdown, type
grounding by manufacturer
or government agencies and
political risks.
· Total Loss Only—completely
separate to Hull All Risks,
designed to pay an agreed
amount on top of the Hull
Agreed value in the event of
a Total Loss of an aircraft.
· This aspect is often
overlooked, but when you're
leasing, the owner gets all the
money if something happens,
and you've got to fork out to
get another.
· Spares—spare parts holdings
and engines can be insured
while in store or in transit.
· Breach of Warranty. Under the
terms of lease or finance, it's
common for the Lessor or
finance house to seek to
protect their asset, over
which they have no
operational control, by way
of Breach of Warranty
Insurance which must be
purchased by the operators.
This insurance indemnifies
the owner to the extent of his
financial interest in the event
of a breach of insurance
conditions resulting in the
denial of a claim.
Coverage is arranged as an
extension to Hull insurance.
Note: Policies above are
known as contracts of indemnity,
meaning the insurer must
restore your position as
before the loss. Watch out
for clauses that void your
coverage if rules are broken.
· Salaries. If you're an owner-pilot,
you coul ignore this, but you may
have management, operations,
mechanics and pilots to pay.
· Storage. Outdoor storage is less
expensive than hangarage, but
storms and damage do happen,
as do vandals. The average
annual costs of hangarage to be
allowed should be roughly one
per cent of the equipped price of
the new cost of your aircraft.
· Training, such as anti-terrorist
training.
· Services. Manuals, trade
subscriptions, airways manuals
and maps. Association
Memberships.
· Tax. Best left to the experts, this,
but there are ways of obtaining
an asset on a mortgage offsetting
Corporation Tax.
Setting Up A Company 299
A corporate machine will average
200-300 hours per year, so the total
of Fixed Costs divided by that will
give you an amount per hour.
Incidental Costs
Hotels, taxis, landing, hangarage,
handling, tips, oxygen, uniforms,
cleaning, office costs (computers,
telephone, fax) and freelancers. 25%
of the sum of Direct Operating
Costs, Fixed Costs and Crew Costs
is normally added on top as a
contribution to running the business.
The total will give the Cost Per
Flying Hour. Divide that by seats
available to get the Cost Per Seat.
Further dividing Seat Cost by the
speed will give you the Cost per
Seat/Mile.
Obtaining An AOC
Now if you still think you'll be some
sort of success, you will need your
Air Operator's Certificate, which is
required by all operators engaged in
Commercial Air Transport (but
watch for crop spraying, where a
similar scheme is in force). It's
applied for on a form together with
a CLM (Cheque for Lots of Money)
made payable to the CAA, which
will cover all types you wish to
include initially. However,
subsequent additions will cost the
same again, so if you know you'll be
adding a new machine later, it makes
sense to try and include it from the
start. Unfortunately, this will cause
its own trouble in the form of
additions to the Ops Manual and
further training costs, as pilots must
be qualified on the new type as well.
Beware of having too many types in
different performance groups.
You can only hold one AOC in one
State, and your office and aircraft
must also be registered there.
The application form itself is quite
easy to fill out. If the Operator is an
incorporated body, you will need to
know the directors' names, addresses
and nationalities, and, if not, the
same information with regard to the
partners. If there is a trading name
separate from the Company name,
that will need to be given as well.
This bit is quite important, because
　
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