It's the committee meeting, the insurance renewal has just landed, and someone asks whether the hire rate still covers the aircraft. Nobody's quite sure. The rate was last set a few years ago, borrowed from the club down the road and nudged up a bit.
Here's how to work it out properly. Take the aircraft's fixed costs for the year and divide them by the hours it will really fly. Add what each hour costs to run, with a reserve for the engine overhaul, then put a margin on top. For the four-seat trainer we work through below, flying 150 hours a year, that comes to 133 in fixed costs and 157 in running costs. So 290 an hour, and a wet rate of 335 with a 15% margin.
Nothing moves the rate as much as the hours flown a year. And for an aircraft that doesn't fly much, the engine's 12-year calendar limit moves it again. The borrowed rate allows for neither.
We've used plain numbers with no currency, so the sums work the same in pounds, euros or dollars.
Fixed costs#
These are the bills that turn up whether the aircraft flies 50 hours or 300. List each one for a full year, from last year's accounts if you have them:
- Insurance, hull and liability.
- Hangarage or parking, including any airfield fees charged by the year.
- The annual inspection and airworthiness paperwork, plus anything else your maintenance programme schedules by the calendar rather than by hours.
- Finance or depreciation. If the club borrowed to buy the aircraft, put the repayments in. If it owns the aircraft outright, put in a sum towards replacing it. Leave this at zero and one day the replacement will have to come from an appeal or a loan (and nobody enjoys that meeting).
- Subscriptions and other costs, such as navigation data, radio and equipment licences, the cleaning budget and whatever share of club overheads you choose to put on the aircraft.
Our example is a four-seat trainer with a Lycoming O-320 engine:
| Fixed cost | A year |
|---|---|
| Insurance | 6,000 |
| Hangarage | 4,800 |
| Annual inspection and airworthiness | 5,000 |
| Finance or depreciation | 3,000 |
| Subscriptions and other | 1,200 |
| Total | 20,000 |
Running costs per hour#
Running costs go up with every hour flown, so work each one out per hour:
- Fuel. Take what the aircraft burns an hour from your own fuel records (not the brochure, which is always a little hopeful) and multiply by what you pay for fuel. Our example burns 30 litres an hour (about 8 US gallons an hour) at 3.00 a litre, which is 90 an hour.
- Oil. Divide the cost of top-ups and oil changes by the hours between them. Our example: 3.
- Routine maintenance. The checks that fall due by flying hours, plus a fair allowance for the defects that turn up in between. The best source we know is the last two or three years of maintenance invoices divided by the hours flown in those years. Our example: 40.
- Engine reserve. More on this in the next section. Our example: 18 by the manufacturer's hours, 20 at 150 hours a year.
- Propeller reserve. Lycoming's service instruction on overhaul intervals points out that propellers and engine accessories can need overhaul before the engine does, on their own manufacturer's schedule. Divide the expected propeller overhaul cost by its interval. Our example: 4.
That's 155 an hour in running costs by the manufacturer's hours, or 157 with the engine reserve at 150 hours a year. Take the engine reserve out and the rest come to 137.
The engine reserve and the 12-year limit#
The engine reserve is money you put aside every hour so the overhaul is already paid for when it arrives. At its simplest it's the expected overhaul cost divided by the hours to overhaul. Get a current quote for that cost, covering removal, refitting and the parts that always need replacing. The price of the last one is no guide.
The hours come from the engine manufacturer. Continental and Rotax publish their own schedules, and they differ, so use the one for your engine. Our example uses Lycoming, which publishes its figures in Service Instruction 1009, revised to 1009BF on 20 July 2026. For an O-320 (except the O-320-H) it lists 2,000 hours after an overhaul, and 2,600 hours for the first run of a factory new or factory rebuilt engine. The same table gives 2,400 hours for the O-235 (except the -F, -G and -J) and 2,000 hours after overhaul for the O-360 (except the O-360-E). Check the exact model and the notes against your own engine, because some models and conditions change the figure.
Those notes can move the figure either way:
- Note 1 limits O-320s with the older 7/16 inch exhaust valve stems to 1,200 hours.
- Note 15 adds 200 hours if the overhaul was done at the Lycoming factory, or in the field with only genuine Lycoming parts and approved procedures and the release certificate says so.
- Note 11 adds 200 hours for engines in frequent use, which it defines as at least 120 hours in every rolling 90-day period since entering service, with no 30-day period under 20 hours. That's a busy school's aircraft. Most club aircraft don't come close.
- Note 16 lets the two extensions be added together.
We'd budget on the base figure unless your engineer confirms the engine qualifies.
In our example, an overhaul quoted at 36,000, spread over 2,000 hours, is 18 an hour.
Then there's the calendar, which is the bit that catches quieter aircraft out. The same instruction says every Lycoming engine model is to be overhauled within 12 calendar years of entering service or of its last overhaul. Engines deteriorate with age as well as use, through internal corrosion and the breakdown of seals, hoses and gaskets. It also warns that long spells of inactivity, storage and local climate can shorten that time. So the aircraft that sits in the hangar all winter isn't saving its engine. If your engine isn't a Lycoming, check whether its manufacturer sets a calendar limit too.
For non-commercial flying, the instruction lets you go past 12 years if a qualified engineer inspects the engine for corrosion and wear, the aviation authority agrees and the inspection is repeated every year. Whether the manufacturer's limits apply to your aircraft at all depends on your country's rules and your maintenance programme, so ask your engineer. Either way, we'd budget for the overhaul at the manufacturer's limit. An engine kept going on inspection can be stopped at any annual, and you don't want to find the money that week.
For an aircraft that flies little, the calendar gets there first. An engine fresh from overhaul flying 150 hours a year reaches 12 years at 1,800 hours, not 2,000. At 100 hours a year it's 1,200. So spread the reserve over the hours the engine will really fly before the overhaul is due:
| Hours flown a year | Hours to overhaul | Engine reserve an hour |
|---|---|---|
| 100 | 1,200 (calendar first) | 30 |
| 150 | 1,800 (calendar first) | 20 |
| 200 | 2,000 | 18 |
| 300 | 2,000 | 18 |
For an engine part way through its life, start from where it is now. Say it has run 800 hours, was overhauled five years ago, flies 150 hours a year and the reserve already holds 10,000. By hours it has 1,200 to go. By the calendar it has seven years, which at 150 hours a year is 1,050 hours. Use the smaller figure. The 26,000 still needed, over 1,050 hours, is about 25 an hour.
How utilisation changes the cost of an hour#
Fixed costs are shared across the hours flown, so utilisation drives the rate more than any other number. Here's the example aircraft again, with fixed costs of 20,000, other running costs of 137 an hour and the engine reserve from the table above:
| Hours flown a year | Fixed costs an hour | Engine reserve an hour | Cost of an hour |
|---|---|---|---|
| 100 | 200 | 30 | 367 |
| 150 | 133 | 20 | 290 |
| 200 | 100 | 18 | 255 |
| 300 | 67 | 18 | 222 |
Doubling the flying from 100 to 200 hours takes 112 off the cost of every hour. That's why it's tempting to set the rate on the hours you hope for. Don't. When the aircraft flies fewer, you lose money on every one.
Use the hours the aircraft actually flew over the last two or three years instead, and adjust only for changes you know about, such as a new instructor starting, a second aircraft taking some of the flying or a long maintenance input that's planned. Count completed flights, not bookings. The Sunday slot booked by three people in turn and then rained off doesn't pay for anything.
In Volanti, flights export to CSV for the spreadsheet and a report shows the transactions against each aircraft. The booking utilisation heatmap is a separate view of how fully the aircraft are used, handy when you're working out where more hours could come from. Our guide to reading a utilisation heatmap covers it.
Charging by the same clock as the tech log#
The engine reserve and hourly maintenance build up by the hours your maintenance records count. Charge members by a different clock from the tech log's (airborne time against a tacho, say) and the two won't match. When the charged clock reads less, the club quietly pays the difference. Our guide to billing flight time compares the clocks.
Measure the ratio from a few months of your own records. Say 100 engine hours in the tech log come out as 85 charged hours. Divide every cost per engine hour by 0.85 to get a cost per charged hour, and count the hours flown a year in charged hours too. For the example aircraft at 150 hours a year, that's 127.5 charged hours. Fixed costs become 157 a charged hour (20,000 divided by 127.5) and running costs, engine reserve included, 185 (157 divided by 0.85). An hour then costs about 342 on the charged clock, against 290 on the tech log clock.
The rest of this guide assumes the club charges by the same clock as its tech log. Whether to charge wet or dry is a separate choice, and our guide to wet and dry hire rates covers it.
Setting the rate from the cost#
The cost of an hour is the least you can charge. The rate needs a margin on top for the hours the aircraft doesn't fly when you'd planned it would, for repairs nobody budgeted for and, if you're a business, for a profit.
We'd choose the margin from your worst realistic year. The example aircraft costs 290 an hour at 150 hours a year. Now say a wet summer and an instructor leaving mean it settles at 120 hours a year instead. Its cost rises to about 329 an hour. Fixed costs are 167, the engine reserve is 25 because the calendar now gives it only 1,440 hours, and other running costs are still 137.
A 15% margin on 290 gives 333.50, rounded up to a wet rate of 335, which still covers that year. Charge the bare cost of 290 and you'd lose about 39 on each of those 120 hours, about 4,600 a year. Without fuel the cost is 200, and the dry rate at the same margin is 230.
A few things to check before the committee signs the rate off:
- Block hours. A block discount comes out of the margin, so the discounted rate still has to sit above cost at realistic hours. Our guide to block-hour packages prices one from these numbers.
- Member and non-member rates. If you charge two rates, the lower one still has to cover the cost. The gap between them belongs in the margin.
- Fuel price. If fuel prices swing a lot, review the wet rate when they do, or charge dry with fuel on top so the rate doesn't change every month. Our guide to wet and dry hire rates works through both.
- Annual review. Rerun the numbers when the insurance renews and when the year's maintenance invoices are in, using the hours the aircraft actually flew that year.
Run your own numbers#
You don't have to do all this on the back of the committee agenda. The aircraft cost per hour calculator takes your fixed costs, fuel burn and price, oil, maintenance, overhaul cost and propeller reserve. It gives you the cost of an hour, the wet and dry rates at your margin, and a chart of how the cost falls as the aircraft flies more. For a low-hours aircraft, put the hours it will really fly before the 12-year limit in the time between overhauls box, not the manufacturer's hours. You can print the result for the committee or have it emailed.
Once the rate is set, it has to be charged on every hour flown. In Volanti, each completed flight is priced at your rates and charged to the pilot's account automatically, so no flight sits waiting to be billed by hand. Members see their balance, charges and monthly statements in the pilot portal and can pay by card there, and a block of hours sold as a package funds a prepayment account that pays for the flights. See billing and payments, or for a fleet hired to qualified pilots, the aircraft hire page.