When it comes to extended warranties on our cars, a lot of us are very hesitant to purchase. We know that there is a pretty strong chance you will never use it if you take good care of the vehicle. But if you get it, it does buy you some peace of mind and it is certainly a benefit if something does break. The engine service plan for a corporate jet or helicopter is a little different. Different in the sense that if you do buy into one, you will definitely use it. Even if nothing breaks inspections and overhauls are going to come due. When they do, if you are on a service plan, it will be covered.
There are many different factors in deciding whether or not to go with a service plan. First and foremost, you will need to have an understanding of your companies’ financial capabilities. Are you willing and able to incur a large, unexpected expense? If the answer here is yes, then you may not want to purchase a service plan but there are several other factors to consider before you make a final decision. The reality is that a service plan is going to cost you more money over the course of time in direct out of pocket expense but if you do not want to or cannot afford to pay out a large sum all at once the service plans offer you the ability to budget this expense.
Another factor to consider is the make and model of your aircraft. Are the majority of your make and model aircraft on a service plan? If so, then you are going to want to seriously consider going with a plan. If and when you decide to sell your aircraft and you’re not on a plan and most everyone else with your type aircraft is, you are very likely going to have a hard time selling because buyers find the service plans very appealing. It gives them peace of mind that the aircraft was well maintained. If you still decide to go without a plan, then you will need to make sure that you get your aircraft maintained by a very reputable maintenance facility.
Above I mentioned that a service plan will cost you more in the long run in out-of-pocket expense. While this is true it doesn’t necessarily mean you will save money without a plan. One example of this is that if your engines are coming close to overhaul you are going to lose value in your aircraft in relation to the amount of time left. If you are on a plan in this scenario, you are actually adding value to your aircraft because the overhaul is already covered.
So, is a service plan worth it? In my opinion I feel that in most cases it is better to be on a plan. More and more owner/operators are going with plans because of the budget predictability, reduces down time, and the resale appeal. From an appraiser’s view it will almost always reduce the value of the aircraft if it is not on a plan.
