The Costs of Buying and Operating an Embraer Phenom

300
Published: 02 July 2013

Brazilian manufacturer Embraer introduced the Phenom 300 in 2009. Sales have grown each
year, with a total of 117 aircraft delivered through the end of 2012. Overall Embraer has built a
reputation for excellent performance and low operational costs. This article looks through the
various costs of ownership.

For those looking to purchase a light jet outright, the Embraer Phenom 300 is a competitive
option. Reviewers including Kevin O'Leary at Forbes Business Aviation Voice have given the
aircraft positive reviews, specifically praising the size of the jet's cabin. The Embraer Phenom
300 boasts the largest space in the light jet class, and offers a large rear baggage compartment of
85 cu.ft, that can accommodate golf bags or skis. Couple this with a range of 1,971 nm (3,650
km) and you start to see why this aircraft has built a solid following.

The SherpaReport has already reviewed the Fractional Ownership Costs of the Embraer Phenom
300, but if you are looking to make an outright purchase, here are the overall costs you should
expect to encounter over the ownership lifetime. Conklin and de Decker provided the figures
used in this article.

Cost of Ownership

A new Embraer Phenom 300 has a list price of $8.76m. The cost of a used plane ranges between
$7.0m and $8.7m.

The total cost of ownership per year of the Phenom 300 is $1,505,487, including market
depreciation of $350,200 or $2,030,787 including book depreciation of $875,500. Both figures
include fixed costs per year of $343,380.
Compare that to a 1/16th (50 hours) fractional ownership purchase price of $562,500 through
FlightOptions and $580,000 for a share through Executive AirShare. The monthly management
fee at FlightOptions is $7,532 and the occupied hourly rate is $1,566, which gives an annual cost
of $168,684 (or $3,374 per hour) plus fuel surcharges and taxes. NetJets also offers the Phenom
300 in its fractional fleet.

Fixed Costs per Year

The fixed costs of the Phenom 300 primarily consist of crewmember salaries and benefits
($208,000), hangar costs ($29,700), insurance (hull $21,888, single limit liability $11,000),
recurrent training ($26,200), and aircraft modernization ($20,000). Other costs in the fixed cost
figure of $343,380 include refurbishing, computer maintenance program, navigation chart
service and weather service. The details are shown in the table below:

 Item   Costs 
 Crew Salaries - Captain  $100,000  
 Crew Salaries - Co Pilot  $60,000  
 Crew Salaries - Benefits  $48,000  
 Hangar - Typical  $29,700  
 Insurance - Hull  $21,888  
 Insurance - Single Limit Liability  $11,000  
 Recurrent Training  $26,200  
 Aircraft Modernization  $20,000  
 Navigation Chart Service  $3,742  
 Refurbishing  $18,900  
 Computer Maintenance Program  $3,250  
 Weather Service  $700  
 Total Fixed Cost per Year  $343,380  

Assuming you fly 438 hours per year, this is equivalent to $784 per hour.

Variable Costs per Year

The variable costs of operating the Phenom 300 are dependent upon hours operated and nautical
miles traveled. Assuming 175,000 nautical miles and 438 hours per year, owners should
anticipate variable expenses of $811,907 annually. The largest of these expenses (almost 70% of
the total variable cost) is fuel costs, which are estimated at $1,292 per hour out of a total variable
cost of $1,854 per hour.

The table below shows the breakdown of the variable costs per hour:
  Item   Costs 
 Fuel  $1,292  
 Maintenance Labor  $68  
 Parts Airframe/Engine/Avionics  $82  
 Engine Restoration  $288  
 Miscellaneous Expenses - Landing/Parking  $20  
 Crew Expenses  $70  
 Supplies/Catering  $33  
 Total Variable Cost per Hour  $1,854  

Using the above assumptions, the total hourly cost of fixed and variable would be

$2,638 (= $784 + $1,854).

The decision to purchase a jet outright rather than a jet card or fractional ownership is one that
should be made carefully after considering not only the costs, but also how you will use the jet
and whether it will meet most of your flying requirements.

(The annual and fixed cost estimates are from Conklin & de Decker of Orleans, MA)