So how do you end up spending more than a million dollars on your Air Taxi business? Right, you start with two million dollars in your air taxi business. That adage has been used about many business types for a long time, but it certainly rings true with many folks in this industry.
Recently I saw some comments on a social media post that indicated that my prices were very high for a specific flightseeing opportunity in Alaska. I want to acknowledge that these types of flights are costly, and I want to share some reasons why that is the case.
First, let’s look at the cost of the aircraft and equipment. Everyone knows that airplanes are expensive, but like most things, we’ve seen a huge increase in the purchase price for all aircraft types and the support equipment an air taxi operation requires. The de Havilland Beaver is one of the predominant aircraft for bush operations because they were explicitly designed for this type of work. Their ability to carry a significant payload on floats, wheels, or skis, in and out of very short lakes or unimproved airstrips, make them truly unique aircraft. On the used aircraft market, Beavers are selling for between $450,000 and $700,000, depending on condition, approved modifications, avionics, and availability at the time you might need one. The manufacturer discontinued the Beaver in 1966, and no new aircraft available are better suited for many of the missions we use here in Alaska. That means that the cost of maintenance and upkeep on these airplanes is high. Parts are hard to find and costly, so damaged or worn-out parts can take weeks to replace and take time away from an already short operational season. It is not unusual for the annual inspection for a Beaver to cost more than $50,000 (which usually involves some cosmetic and functional upgrades). Then there are inspections every 100 hours of flight time, which is a significant and costly inspection that can’t be delayed and frequently requires that the mechanic be flown to a remote location because the 100-hour threshold is reached in the thick of the season, possibly in that remote location. Aircraft mechanics are in short supply, and the good ones charge $125 an hour or more for their work. I certainly hope that your takeaway from this is NOT that these airplanes are old, finicky, and unreliable. While there’s no denying that they are pretty old, they are amazingly robust, incredibly reliable, and tried and tested. My point here is that it takes a lot of money to keep them in the tip-top condition that professional operators demand from their aircraft.
Second, the continuously increasing amount of gas! The Beaver burns 25 gallons of 100LL avgas per hour. I recently topped off my tanks in Port Alsworth for $11.95 per gallon. That’s a whopping $298.75 an hour just in gas! Ouch! Even in Anchorage it’s over $8.00 per gallon, so it’s a high operating cost that directly impacts the cost of flights. Other direct operating costs of the aircraft include engine oil (more or less $2,000 a season per Beaver) and the replacement costs of time-limited components like the engine and propeller. Beaver engines must be overhauled every 1,600 hours, and it’ll cost roughly $75,000 to get that accomplished, so that’s a little north of $45 an hour (and most engines don’t make it to 1,600 hours because the last thing you can afford to do is run out of time in the middle of the season and have to replace it then)
Oh yeah, did I mention insurance? Whew! Alaska has the highest aircraft insurance rates in the country, with many insurance carriers refusing to offer coverage in the 49th State. As a result, ensuring a Beaver in Alaska to carry six passengers for an FAA Part 135 air taxi operation costs a lot. I’ve got good insurance, which costs approximately $50,000 a year! Yup, you heard that right, $50,000 per year.
OK, I know you are starting to understand that all this is expensive, but let’s consider one more HUGE consideration. The majority (if not the entirety) of business for most operations occurs within four months. How many of you are planning on coming to Alaska for a fishing excursion, flightseeing adventure, bear tour, or Denali flight tour in January when it’s -20 and dark outside? Exactly! Most of our business happens between June 1st and September 30th. That provides precious few weeks to make enough money to sustain an operation for the entire year when expenses like hanger/tie down rent, maintenance, marketing, business development, equipment leases, etc., keep coming!
Oh yeah, one last thing to consider, what about the pilot? A significant pilot shortage is affecting every segment of air travel. Bush pilots are hard to come by, and experienced bush pilots are even harder to find. Since I do the flying at my operation, this isn’t as big of a challenge for me, but it does beg the question of how much you want your bush pilot to be compensated. I recommend that you don’t go in for the cheapest bidder on this part of your vacation. Professional pilots must be paid reasonably, and it’s a factor included in the hourly rate of any operation.
So, hopefully, I’ve introduced you to a few essential considerations that you may not have been familiar with and shed a little light on the dollars and cents of flying in Alaska.
Hoping to fly with you soon!