Purchasing a business jet is no small investment. After a company adds maintenance to the cost, even the occasional repair has a substantial impact on a company’s budget — especially if major repairs are necessary.
A guaranteed maintenance program (GMP) eases that burden and provides assurance that your aircraft is ready to take off at virtually any time.
Why you should look at a GMP
According to Conklin & de Decker’s AIReport, all of the major turbine engine manufacturers offer some form of an engine GMP. Also, a major third-party provider of these plans covers most popular business turbine engines. When you employ a GMP through a provider, you pay into an escrow account to cover future engine maintenance. The GMP provider manages the money and pays the bills.
Here are the reasons the AIReport recommends GMPs:
- GMPs cover scheduled maintenance expenses plus all unscheduled maintenance, such as line checks. Depending on the program options selected, some GMPs also cover rental engines and the removal, re-installation and shipping for the overhaul. Except for negligence and acts of God covered by your insurance, GMPs cover nearly everything.
- Accountants love stability in budgeting, and a GMP offers just that by removing all unplanned costs and surprises in the maintenance of the aircraft engine.
- GMP fees can be a business deduction because the money flows to a third party. Cash that’s simply set aside for future expenses is not deductible and can increase the corporation’s tax liability.
- A GMP also offers insurance against rare but costly unscheduled maintenance events. Although turbine engines are reliable, when an unscheduled event occurs, it can result in significant expenses.
- An engine GMP adds value to the aircraft if you are selling it. For example, if the GMP has accrued $350,000, the accrual adds cash value and reduces risk to the buyer because the engine maintenance costs are covered.
Engine GMPs have several benefits. They are a good way to maintain the value of your aircraft, provide stable budgeting and save money over a pay-as-you-go engine maintenance schedule.
Other services to consider
Depending on the GMP provider and options you choose, aircraft management companies offer a plethora of services. Everything from aircraft repair and maintenance to cleaning, insurance, crew costs and training may be included in a GMP. They may also provide additional services such as:
- records management
- discounted parts and labor
- guaranteed aircraft availability from their fleet when yours is in maintenance
- technical audits and inspections
- heavy maintenance and airframe repair
- maintenance predictions and cost modeling
- de-registration/registration process with international authorities
- detailed monthly flight, maintenance tracking and accounting reports
Some companies offer Part 135 aircraft management agreements that allow the provider to charter your aircraft when it is not in use. Such an arrangement lets you earn revenue from your investment and significantly defrays the cost of aircraft ownership with very limited drawbacks.