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... k of a turbo prop is the noise that the props make because of the placement of the engines to the fuselage. The range is not a problem here, the longest trip would be to New York and the pilot could refuel there. The runway needed to operate the airplane is 3000 feet. This is good because a fair amount of runways are opened to this model. The overall cost would be $ 3. 3 million dollars.
The Beechjet 400 -A is an 8 passenger 2 pilot aircraft. It also is a great starter aircraft with growth potential. It has a cruising speed of 460 knots and a range of 1, 560 miles. The interior cabin is 4. 9 feet wide and a height of 4. 75 feet. The length of the cabin is 15. 6 feet. The length of runway needed to operate the jet is 4, 500 feet.
The length of field to operate this aircraft inhibits its possibilities. The maximum load weight is 2, 490 pounds and that includes 950 pounds of baggage. The main bragging right of this aircraft is its interior options. It offers a wet bar and fully reclining seats. The cost of this aircraft $ 5. 9 million dollars. Both aircraft offer similar options and are relatively close in operational distance.
The choosing of an aircraft by price is not the only driving factor for aircraft selection. For example the amount of work that can be done on a turbo prop plane is less productive than on a jet. This is due to the noise and the lower altitudes that the turboprop must fly. The time saved by using the jet is more cost effective. However, the jet needs more runway length for take off compared to the King Air thus making the jet more restricted to which airports it can land at, making the propeller plane more effective. The King Air has smaller interior space which can make the passengers cramped and will not be as forgiving as the Beechjet.
The overall opinion within the company is to purchase the Beechjet. It has more potential for growth considering the rapidly expanding company that it will support. The overall ride and safety of the jet far outweighs the necessity for a longer runway. The flying speed of 460 knots gives the Beech jet the capability to be anywhere at a moments notice. Thus making the it a more feasible choice for this business. Even though the Beechjet is $ 1. 5 million more expensive, the cruise speed will make up the money in travel time by getting passengers to the destination sooner.
Since the business has decided that the Beechjet 400 will suit their needs the best, the company now needs to decide on how to purchase this aircraft. They can either use conventional financing, as you would with a vehicle, or by using a number of other options to cover its new investment. For example the use of joint ownership, wet leasing, or dry leasing. The company decides on sole ownership of the corporate jet and is going to finance the entire venture. They based their decision on the profit that could be made through the selling of the used aircraft in the future and also deducting the maintenance costs of the aircraft from taxes. The following chart depicts the financing schedule that the finance company has shown them.
The financing is based on a 120 month loan with 10 % down payment. Financing terms Aircraft Purchase Price $ 5, 900, 000 Annual Usage 400 Aircraft resale value (% of purchase price) 80 %Sales Tax 6 %Basis for Depreciation $ 6, 254, 000 Down Payment 10 %Aircraft Loan (including sales tax) $ 5, 628, 600 Monthly payments (120 months @ 7. 00 %) $ 46, 905 By deciding to go with a corporate jet the company is now paying $ 47, 000 in ownership costs per month. By using a corporate aircraft the company will show an initial savings of $ 117, 480 dollars a month by way of the commercial aviation routes cost. The benefit of owning this aircraft is a definite improvement for the business and the financial strength for this corporation. Financing costs are not the only debit that the company will incur. The other two major areas that need to be covered are insurance and fixed base operation costs.
Both are two very important bills that are required in order to own and operate an airplane safely and efficiently. Insurance for the aircraft is very similar to what an individual would need for a vehicle. However, one major difference in the decision for insurance between a vehicle and a corporate jet is a value of several million dollars. Insurance is broken into three main areas; physical damage, sometimes referred to as hull insurance, aircraft liability insurance, and airport liability insurance.
Hull insurance is basically what it sounds like. It covers the aircraft against any physical damage that it might incur. Aircraft liability insurance covers third parties that are associated with the aircraft. This type of insurance protects the owner of the aircraft from any liability suits that occur during flight operations.
For example, any unforeseen accidents which may occur while passengers are on board the aircraft. Finally, airport liability insurance is used to cover the owner who rents or owns a hanger at an airport. The insured is covered against any accidents that might occur at any of the ground locations around the aircraft. Insurance is very complicated and should be approached carefully with sound mind and a good lawyer. To make insurance as simple as possible, the insurance will be approximately 6 % of the cost of the aircraft. In this scenario the insurance will be $ 30, 087 per month.
Now that the aircraft has been purchased, who will run the day to day maintenance of this aircraft? This company does not have the experience to handle all the maintenance schedules and employment that this aircraft demands. The company has decided to contract out to a fixed base of operations firm. This firm will basically run the everyday flight operations, hanger fees, refueling, inspection and safety schedules, and all general maintenance. The price of this service, for example, would be dependent on the aircraft usage. About 10 % of the initial investment of the aircraft will suffice as the operational costs.
Finally making the monthly operations cost $ 49, 166. This study has shown a number of different areas that must be considered to purchase an aircraft. One might ask if the whole investment was worth this companys attention. When the company was using strictly commercial schedules, it was losing very valuable time which cost the company $ 164, 480 dollars per month. Now, by utilizing the corporate aircraft, operating costs would be $ 126, 158 dollars a month. Using the jet aircraft instead of commercial aviation not only saves the company $ 38, 000 dollars per month but it has the flexibility to go anywhere at anytime.
Bibliography: Works Cited Flint, Perry and Henderson, Danna K. (March 1997). American at Bay. Air Transport World, 28 (September 1998). American Airlines Homepage (online). Available: web (October 1997).
History of American Airlines (online). Available: web (June 1998). Oneworld Alliance (online). Available: web
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