Steve VarsanoFounder at The Jet Business

Not many people know what the real value in a jet is - Let me tell you!

Name: Not many people know what the real value in a jet is - Let me tell you!
Uploaded: 2025-03-25T17:18:25+00:00
Duration: 59 s
Channel: Steve Varsano
Description: In this concise monologue, Steve Varsano explains that for corporate jets, the engines become the dominant component of an aircraft’s value as it ages…

25 Mar 2025 · 1 min

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In this concise monologue, Steve Varsano explains that for corporate jets, the engines become the dominant component of an aircraft’s value as it ages. He notes that once a jet reaches roughly 15‑20 years, engine overhauls can cost $2‑$4 million each. To manage this expense, manufacturers or third‑party vendors offer engine insurance policies that charge operators $500‑$2,000 per flight hour. Over several years these payments accumulate to $5‑$7 million, effectively pre‑paying the overhaul cost. Varsano emphasizes that the profitability of these policies hinges on when the engine reaches its overhaul point in its life cycle, making the insurance program a “secret” financial mechanism for jet owners.

Chapters

One thing that people don't know about a corporate jet is that the older the airplane gets, the more the value of the engines are a percentage of the total value of the airplane. What do I mean by that? Engines are really, really the nuts and bolts of the airplane. It's the real value. And as the airplane gets 15, 20 years old or so, the engines cost $2, $3, $4 million to overhaul. So what happens is the engine manufacturer or a third-party vendor, they actually insure these engines. So every hour you fly the airplane on a monthly basis, you pay into their insurance program called the engine insurance policy. And in those policies, you're paying between $500 and $2,000 per hour, every hour that airplane flies. Over the course of a number of years, you're going to be paying $5, $6, $7 million into those programs. When the engine comes due for an overhaul, it's all paid for. That's the real secret of having these policies. Sort of like having a prepaid debit card, if you want to really dumb it down. The engine manufacturer could make a lot of money on it, or they could lose a lot of money on them, because it depends on where in the life cycle of the engine that overhaul comes due.