Piston power

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dselder1962
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Piston power

Post by dselder1962 »

Diamond as you know has announced a collaboration with Piston Power, like the jet maintenance programs but for our lowly pistons. Has anyone experience with them?


https://pistonpower.com/diamond-aircraf ... stonpower/
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Re: Piston power

Post by CFIDave »

It's a brand new program (for Diamonds or many piston planes) so nobody here has any experience with it.
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Re: Piston power

Post by dselder1962 »

Thanks Dave
I knew it was new for Diamonds, but thought it was previously available for other aircraft. I actually spoke to Ron Zilberbrand (the MD and Founder) this morning about the program. He is emailing me specific details on my aircraft, so I can post some general information when I get that. He is very engaging and put himself to the trouble of phoning me in Oz from Chicago with all the time zones that entails. Lovely guy.
Interestingly, I am also still on COPA and there were a couple of postings about it there, so perhaps there has been a big ad push somewhere.
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Boatguy
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Re: Piston power

Post by Boatguy »

I've also been in contact with Ron, received quotes and have the contracts.

I think the operative question is: What is a reasonable expectation for hourly maintenance cost for engine and airframe (separate and/or together) when out of warranty? This is clearly specific to model (180 vs NG).

If we could arrive at anything approaching a consensus on the answer to that question, it's pretty simple to compute the cost of this insurance policy. Or for the more computationally minded, if there were a bunch of data points we could compute the stdev and thus the expected value range for the cost of the insurance policy for our aircraft. Then it's simply a matter of each owner deciding where they fall on the risk curve; insurance or self insured?

Of course, this is exactly what PP has presumably done already, we're just trying to reverse engineer the numbers! We all buy insurance of various kinds, this is just one more.

I ran the numbers for the DA40 NG based on the Diamond supplied maintenance cost for each svc level (i.e., 100, 300, 600, etc.), 250 service hours (aka tach hours) per year, $15/hr for an overhaul ($30,000 / 2,000hrs - yes I know NG is currently at 1,800hrs), and $5,000/yr of unscheduled expenses after out of warranty, and came up with $50/hr. So that's one data point (if I did the match correctly)

I know there are very few DA40 NG owners here, but maybe some 42/62 owners with NG engines can chime in and we'll figure out how to translate the numbers between single and twin.
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Re: Piston power

Post by shorton »

Zilberbrand is also the founder of JSSI, the turbine focused hourly maintenance program that’s been around for a few decades. So they no doubt know what they are doing.

I’m in the process of moving my planes from a flight school to a club-like program at KSNA, so I was interested in what the numbers would look like with my projected utilization.

As with JSSI, there are various programs with options for just engine coverage or engine and airframe. The quote I received was based on 250 hours per year on my 2007 DA40 XL with 2700 hours total time and 700 hours on the engine.i was quoted both engine and airframe. The exact costs will vary to some degree for everyone, but the quote I got was as follows:

A one time enrollment fee of $5,600, 1/2 of which goes into the trust fund. Presumably the other 1/2 is business income to JSSI.

Then, I would have to pay to “zero out” my plane. In other words, I have to make the hourly payments for the time now on the plane. The rate is $17/hr for the engine, $4/hr for the airframe. 17 x 700 = 11,900. 2700 x 4 = 10,800. Total = $22,700.

Now, going forward I would pay $109/hr, due monthly. Each month I would report the hours flown online and make payment.

The $109 per hour is based on an estimate of 250 hours per year. Less hours flown per year would be a greater hourly rate.

This quoted program is very comprehensive. As far as I can tell, I’d never pay another maintenance bill. Covers about everything I could imagine, including payment for alternate tranportation for AOG situations.

The money in the trust fund is transferable, so when the plane is sold the buyer inherits the funds, adding value to the plane. I was told if I got out of aviation totally and the buyer did not want the program, I would be refunded my share of the trust fund.

The service sounds good, but I can’t get my head around $109/hour for a DA40. I kept a close eye on maintenance expenses the past 4+ years of ownership while my plane was a flight school plane. I was paying $65/hour for maintenance, which I thought was crazy high. Add $20 per hour for engine and prop reserve and that’s $85/hour.

Having said that, the money in the trust fund not spent on maintenance belongs to the aircraft owner. It either leads to a dollar for dollar increase in value on sale or the owner gets the money back. So the “cost”, other than 1/2 the enrollment fee, seems to be time value of money.
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Re: Piston power

Post by Boatguy »

shorton wrote: Sat Mar 30, 2019 3:59 am The service sounds good, but I can’t get my head around $109/hour for a DA40. I kept a close eye on maintenance expenses the past 4+ years of ownership while my plane was a flight school plane. I was paying $65/hour for maintenance, which I thought was crazy high. Add $20 per hour for engine and prop reserve and that’s $85/hour.

Having said that, the money in the trust fund not spent on maintenance belongs to the aircraft owner. It either leads to a dollar for dollar increase in value on sale or the owner gets the money back. So the “cost”, other than 1/2 the enrollment fee, seems to be time value of money.
I have the contract, but haven't read it yet. Did the "zero out" money go in the trust fund? So you pay in X, then Y gets spent on maintenance and when you leave the program if X > Y, then you get X-Y in cash (or credit to new owner)? If X < Y then PP covers the shortfall?

If that's correct, then there is clearly one way for them to lose money, and I only see two ways for them to make money:

- they pay less for the maintenance than they charge us; though it's difficult so see how volume purchasing power could be applied to piston aircraft mechanics who border on being a cottage industry.

- they're investing the money in the trust fund and keeping the interest, though Ron told me they were earning < 1% which he positioned as "conservative" management of the trust fund, but sounds like just bad investing since risk free treasuries pay more than 1%.

I'm always intrigued by discovering a new business model, but it's going to take some reading to determine if this is a new model, or just another version of OPM (other people's money).
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Re: Piston power

Post by TimS »

I think they are basing the model on a couple of factors.
1. Hedge model. They are charging just above the median costs among the fleet. Since the plans are focused more engines; it since a fair number of planes share the engine basics, it is likely possible to calculate the odds.
2. 200 hours a year; based on how much most planes fly, they are betting on the unused hours.

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Re: Piston power

Post by shorton »

Boatguy wrote: Sun Mar 31, 2019 4:02 am
shorton wrote: Sat Mar 30, 2019 3:59 am Having said that, the money in the trust fund not spent on maintenance belongs to the aircraft owner. It either leads to a dollar for dollar increase in value on sale or the owner gets the money back. So the “cost”, other than 1/2 the enrollment fee, seems to be time value of money.
I don’t know that the aircraft owner literally “owns” the funds. I don’t know who the trustee or beneficiary of the trust is, perhaps the contract will shed some light on this. I don’t have the contract.

I made the statement above in reference to what I was told. The person I spoke with relayed a story about an older guy who had a Cirrus and died. His wife sold the plane and the buyer did not want the program, so the funds went back to her. I questioned if I had to die for a return of the funds. He said no, if I got out of aviation totally, which I understood to mean no ownership of a plane and no intent to buy, then I could get the funds back. From that I made the statement above. I’d be interested to see the language in the contract.

I assume the “zero out” funds go into the trust. So, the $17/hr engine time, for example, is used to pay for the engine overhaul.
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Re: Piston power

Post by MackAttack »

Anybody have any updates on this? Diamond dealers in the US (e.g., Premier) seem to be pushing this pretty hard. I assume that the engine rates for a twin would be about twice that quoted for a DA40NG, for example. Just curious about whether anyone has gotten any recent quotes. As I understand it, the full program (including airframe) is a 5-year commitment while at least some of the lesser programs are only a 3-year commitment. And you select your annual hours - 50, 100, 150, 200 or 250. not sure what happens if you exceed what you estimated (e.g., flew 130 on a 100 program) but I assume you can adjust. Also not sure how the price differs between aircraft being sold new or still under warranty vs. aircraft off warranty (other than the "make whole" terms discussed above). One might think that the cost for an initial 5-year program on a new airplane would be less because of the warranty coverage but I really have no idea.

Thanks in advance!
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Re: Piston power

Post by TimS »

Call Ron and ask. He is a good guy, we have had multiple chats about the program.

Tim
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