Program Costs

The cost of the Merlin One Program is about a third that of other shared programs

Since the Merlin series aircraft were manufactured in San Antonio, Lessees reap the resulting cost benefit of local maintenance and expertise. Airlift and its associates have a breadth of knowledge about all things Merlin related. This group designed, manufactured, operated, sold, financed, supported and continues to own a number of the aircraft. The Merlin One concept simply wouldn’t be cost effective in any other state, as all the resources and expertise are located in San Antonio.

Airlift, Merlin One’s parent company’s core business is purchasing, refurbishing and leasing Metro series aircraft. The Metro is simply a stretched, nineteen-seat airliner/freighter, version of the Merlin. Airlift, to support its Metro fleet, has a significant inventory of Metro parts both in San Antonio and in Auckland. This inventory will be used to support Merlin One maintenance at our cost. Additional program costs are minimized due to the following benefits:

• The Merlin One fleet will be maintained in New Braunfels by personnel who built the aircraft, perform Airlift’s Metro fleet refurbishment and know this aircraft inside and out.
• Merlin One’s maintenance labor rate will be passed through at Airlift’s rate, 23 percent below retail.
• Airlift’s infrastructure will manage Merlin One with very little additional overhead.
• The cost of aircraft electronics has dropped dramatically in the past 24 months. This allows Merlin One to retrofit its aircraft with the very latest technology, including: moving map GPS, multi-function displays with weather, traffic, terrain and real-time XM weather.

Due to its limited production run of only 143 aircraft and the complexity of its design, the Merlin III series has a small, but dedicated audience. This results in a fair market value far less than its closest competitor, the Beech King Air B-200. The Merlin IIIB is however, bigger, faster, has more range, more payload and burns 20 percent less fuel than the King Air B-200! The aircraft in the Merlin One fleet have a fair market value of approximately $1.2M as compared to a similarly equipped King Air B-200, of the same vintage, with a current fair market value in excess of $2M. In the aircraft industry, this phenomenon isn’t unique to a comparison of the Merlin and King Air.

The ownership and operational risk of the relatively short production run of the Merlin III series is mitigated by the Metro, its commercial airline equivalent. The Metro had a production run of over 1,000 units and has over 90 percent parts commonality with the Merlin III series. The Metro was the dominant aircraft in the worldwide regional airline fleet from 1982 to 1990 because it carried more payload further, faster and at a lower operating cost than its competitors: the Beech 1900 (stretched King Air B-200) and British Aerospace Jetstream 31. In the airline world, the game is won by the low cost producer as measured in cost per available seat mile (ASM), and the Metro remains head and shoulders above its competition.

There are four Merlin aircraft to be shared by 16 Merlin One Lessees (four per aircraft). Lessees each pay a fixed monthly fee, or dry-lease rate, for the right to access the fleet. Costs are per unit.

Variable Costs

Variable costs include pilots at $500.00 per day and fuel assumes 85 gallons per hour at $3.50 per gallon, or $297.50 per hour. It may be easier to quote pilot charges as hourly, in this case assume $125.00 per hour. Therefore, the variable costs are $422.50 per hour.

No Surprises Or Hidden Costs

Fixed monthly costs include the aircraft, maintenance, insurance, hangar, reserves and management. All scheduled and unscheduled maintenance cost is borne by Merlin One.

Merlin One number tel: 210-366-8766