There are times when it might make sense.

If the price is right, heavily discounted, and there are decent engine hours left, the total cost of the program plus salvage value might exceed the value of the airplane. In other words, you might be ahead if you simply don't overhaul and part it out. You also have to look at the cost of off program engine work and see if that is viable, too. I don't think Pratt penalizes you quite as bad as Williams does for off program work, but maybe so.

Further, with a lower hull value, there is lower insurance premiums and lower taxes, so there are secondary savings.

If you take the engine payments and put them into an SP500 ETF, then compare your value at the moment of overhaul or HSI, you could be way ahead off program.

Without a program, you are at more risk of an unscheduled event, so it will matter how much value you put on the insurance aspect of the program. It doesn't take many years for your investment account to build a decent reserve, though.

Advice to buy an expensive airplane, put it on an expensive engine program, and take it to an expensive shop, and that will all save you money, is only going to work out with some blind spots in accounting.

Mike C.

There are times when it might make sense.

If the price is right, heavily discounted, and there are decent engine hours left, the total cost of the program plus salvage value might exceed the value of the airplane. In other words, you might be ahead if you simply don't overhaul and part it out. You also have to look at the cost of off program engine work and see if that is viable, too. I don't think Pratt penalizes you quite as bad as Williams does for off program work, but maybe so.

Further, with a lower hull value, there is lower insurance premiums and lower taxes, so there are secondary savings.

If you take the engine payments and put them into an SP500 ETF, then compare your value at the moment of overhaul or HSI, you could be way ahead off program.

Without a program, you are at more risk of an unscheduled event, so it will matter how much value you put on the insurance aspect of the program. It doesn't take many years for your investment account to build a decent reserve, though.

Advice to buy an expensive airplane, put it on an expensive engine program, and take it to an expensive shop, and that will all save you money, is only going to work out with some blind spots in accounting.

Mike C.

Oh my. If I understand this…



I think you’re saying the cost of identical repairs will vary depending on whether you’re in the program? How much?

Or is that the cost of repairs which are outside the program coverage anyway and you pay a higher rate as a non-member for that category?

If you are on program, the program pays for the engine work. It costs you nominally $0 for HSI, OH, etc.

If you are off program, you pay for the engine work. That's big money.

So, yes, the cost varies, on or off program, that's the point of the program.


Williams told me that off program engine work is about 30% more than the program payments would have been. Thus they seemingly want to penalize you for not being on program. I don't know if Pratt does the same, it is conceivable they aren't quite as punitive.

Even with that, it could still be the case that staying off program might be better financially. The idea is to compare the program payments with putting that money in an investment like an SP500 ETF and seeing which results in better returns.

I compared Williams TAP costs for 150 hours/year (the contract minimum), versus the SP500, for a plane bought in 2009, using actual TAP program costs and SP500 values. The program payments would have totaled $793K over that period. The SP500 total return, putting the program payments in each year, totaled $2,041K, or 157% more money. So even if the OH cost 30% more than your total payments, you still had money left over doing that approach. This was over 16 years, 2400 hours, so not even a full OH period.

You can clearly see why the OEM wants you on a program. The time value of money increases their return.

If you happen to fly less than 150 hours, you pay more per actual flight hour due to the minimum.

I used to say there is no real alternative to being on program for Williams, but now there is case to be made that off program and investing the money makes more sense.

Another aspect is that your hull value will be less, thus lowering taxes and insurance. That is not accounted for in the above chart. On program, you are paying taxes and insuring value that the plane actually doesn't have, it is based on the program promises to restore your value at some point in the future.

Mike C.

So what's everyone's thoughts on this example: https://www.controller.com/listing/for- ... t-aircraft

Engine options.. Let's say you are not interested in resale. HSI but only option is Pratt?

At $700 that's 501 pricing

Doubt Pratt will let you go past TBO with just a HSI.

You should ask Pratt for typical OH costs per engine, add double that to the price, and see if that's still a good deal. Probably won't be.


Except the 501 can fly past TBO with a HSI making it a lot cheaper to fly despite using more fuel.

So, not 501 pricing, really.

Mike C.

Doubt Pratt will let you go past TBO with just a HSI.

You should ask Pratt for typical OH costs per engine, add double that to the price, and see if that's still a good deal. Probably won't be.


Except the 501 can fly past TBO with a HSI making it a lot cheaper to fly despite using more fuel.

So, not 501 pricing, really.

Mike C.

Mike is right, probably better off with a decent 501, that particular Mustang has everything against it. The only option I could see would be to fly it for the 330 hours, hopefully get an extension from Pratt, maybe 100 more hours? And then scrap it.

It doesn’t make any sense to overhaul, because it’s an early Mustang with all foreign history, and 10,000 hours on the airframe.

If all that isn’t enough, it’s possible you may find other issues such as cosmetic problems from being stored outside, massive amounts of records / trip logs, bio issues in the fuel tanks, etc.

BUT…

330 hours X $1500= $495,000

Surely it would salvage for $100k?

If you were able to get another 100 hours out of it, the math works.

I guess that depends on what you mean by "works".

$699K for 426 hours (100 more than advertised) is $1640 per hour. Now add fuel, maintenance, etc. You are at $2500 per hour, easily. That's a lot for Mustang performance and capability.

The key might be the salvage value. I have no idea what that will run. It could be decently high, you have two engine cores plus avionics, or it could be fairly low. But that's a fickle market so hard to predict.

In any case, who wants to buy an airplane they have to scrap in 326 hours? You are just getting to know it well by that point and you have to start over.

I'd hazard a guess that OH is $500K a side at least, so this is a $1.7M airplane, perhaps $2.0M in reality. But once you do the engines, you have 0 SMOH which is worth something. The condition of the rest of the airframe would need to validate as well. At the 10,000 hour point, need to start looking at life limited parts, too. What big expense is on the horizon?

Mike C.

It doesn’t matter because you can buy a really nice Mustang on program for $2M and if you are patient you can probably buy a 3500 hour airplane with fresh motors for that.

Also, by the time you invest into the 510 type, you either need to go and get another Mustang or buy something else (and get typed). That's a lot of extra expense for 425 potential hours.

(I did look into this exact scenario with this exact plane. Couldn't make the numbers work)

The Mustang will always be a niche airplane with its own type rating and parts. It has its own little ecosystem that doesn't share hardly anything with other types. It turned out to be more expensive to make than a 525 which is why it was dropped and the M2 was created as a marketing ploy.

Mike C.

The Mustang will always be a niche airplane with its own type rating and parts. It has its own little ecosystem that doesn't share hardly anything with other types. It turned out to be more expensive to make than a 525 which is why it was dropped and the M2 was created as a marketing ploy.

Mike C.

I've started learning about pricing for Mustangs, and it's a lot like Bonanzas. Some are priced appropriately, some are not. First off, tip of the hat to the brokers who deal with owner-operator sellers. Just like Bonanza owners, there are many delusional owner-operators who think their Mustang is special, and should be priced at X. Even if the broker says, "we're probably not going to be able to sell it for X, but we could easily sell it for Y", stubborn owners will insist on X. So don't blame the brokers!

Second thing, just like Bonanzas, if you're willing to go with an airplane with some warts (non-US based, bad paint scheme, run out engines) you can get a deal.

Third thing, there are definitely some aircraft on the market right now with buyers who called a broker and said "I'd really like to move to a <fill in the blank> M2, CJ3+, etc. If you could sell my Mustang for X, then I can move up. Good luck!" They're only selling if it helps them move up. Meanwhile, they're doing ok.

Just a couple of points.

Like all markets, you always see the overpriced airplanes, it may be an unrealistic seller or it may be that a broker promised him the moon to get the listing. A common problem we run into looks like this; broker calls the owner, "hey, I have a buyer for your airplane, would you sell for $2.6M?" The owner who had no intention of selling says "Sure!" and then the broker sends him some type of limited listing agreement, the supposed buyer backs out, and the broker markets the airplane. He can't be realistic about the price, because he himself set the unreasonable expectation.

You are correct, a Mustang with foreign history, damage history, or weak cosmetics will sell cheap, but remember you aren't actually getting a deal because you will be the seller at some point in the future and you'll have to give that discount back. So, other than slightly lower capital cost, you haven't accomplished much and if the market is soft when you sell, you may take a worse hit.

As far as engines, I would avoid buying a Mustang with any engine event coming soon. I'll let you guys know when it is "safe" again.

One thing we like about the Mustang market is the possibility of finding an owner who has an M2 or CJ3 on order, as long as our client is flexible and can wait until the new airplane delivers in a month or two, we can put a solid deal in place so that the owner knows he won't own two airplanes at once. Win-win for both parties!