One of the easiest and in my opinion most enjoyable ways to customize your flight sim experience is to create unique and individual repaints for your favorite aircraft. Whether you want to recreate a real world paint scheme or your very own charter company, painting aircraft can be achieved with relative ease using free tools and a little imagination. Software and Tools
There are a few basic tools you will need to get started. For this guide we will be working with two variations of MSFS; Flight Simulator 9 (FS2004) and Flight Simulator 10 (FSX), the basic difference between the two is the format that the aircraft textures will be saved as. FS9 uses bitmap (.bmp) and FSX primarily uses direct draw surfaces (.dds).
It's also worthwhile to note that many aircraft developed for FS9 are compatible with FSX as are the bitmap texture files.
Image Editor
This is one of the most essential tools you are going to need, this will be your workspace for painting your schemes.
Adobe Photoshop
http://www.adobe.com
Personally I use Adobe Photoshop but any image editing software can be used in much the same way to achieve similar results.
GIMP
www.gimp.org
GIMP is a fantastic free ware alternative to Adobe Photoshop and has many similar features making it a great option if budget is an issue.
Image Conversion
Image conversion tools are needed to compile your edited images into usable formats for the flight simulator.
DXTBmp
http://www.brothersoft.com/dxtbmp-71327.html
DXTBmp is a simple conversion tool used when working with bitmap (.bmp) and direct draw surface (.dds) textures.
Aircraft textures will be a combination of a master image with an alpha channel, the alpha channel is a layer of information embedded into the texture. More on alpha channels will be explained in greater detail later on.
Locating the aircraft texture files
The texture folders contain the images we are going to be working with and are located in the main folder of the aircraft you want to repaint.
We will use the default Boeing 747 for this example.
For FSX the folder path for the default location of the 747 aircraft folder is:
C:\Program Files\Microsoft Games\Microsoft flight Simulator X\Simobjects\Airplanes\b747_400
For FS9 the Boeing 747 aircraft folder can be found here:
C:\Program Files\Microsoft Games\Microsoft flight Simulator 9\Aircraft\b747_400
Within the aircrafts main folder you will find the separate texture folders labeled Texture, texture.1, texture.2 etc. each one of these folders will contain the images used by flight simulator for each variation/paint scheme of that aircraft.
You may notice that some aircraft have many more texture files than others, these extra textures may include specular (for creating shine and reflections), bump (used for adding extra detail to an aircraft such as raised rivets) as well as separate night and day textures. These extra files are only found in more complex models, for the purpose of this tutorial we will be focusing on the basic texture files only.
Let's get started
For this tutorial I will be doing a repaint of Tim “piglet” Conrads OV-10A Bronco for FSX.

Repainting it with a modern livery used by The California Department of Forestry and Fire Protection.

First let's navigate to the OV-10A aircraft folder using windows explorer (C:\Program...\Airplanes\OV-10A) we are now going to want to create a copy of the main Texture folder (the first one) to be used for our CALFIRE repaint, this is essential as each repaint requires it's own texture folder.

Rename the “Texture – copy” to something like “texture.calfire” or “texture.cdf” it's really up to you what you name the folder, as long as it begins with “texture.”
Now let's open the texture.calfire folder and have a look at the textures we will be repainting.

The two texture files circled in red (ov10a_01_T and ov10a_02_T) are of the outer fuselage and therefore the ones we are interested in for our repaint. Since this model was originally made for FS2004 all of the textures are in bitmap format but the same techniques can be applied for aircraft with DDS textures.
Using DXTBmp
Now you have located the files you want to work with, go ahead and open DXTBmp. Once DXTBmp has opened go to the File menu and then select Open, navigate to the texture.calfire folder, find the first texture we are going to be working with (ov10a_01_T) and open it.

After DXTBmp has finished loading the image you will see the master image in the main window and a smaller window in the top right hand corner displaying the alpha channel.

The alpha channel is used to convey different information about the master image and is usually an 8bit black and white Indexed color bitmap. In the case of aircraft fuselage textures, the alpha will relate to how reflective the surface appears in the simulator, white being completely unreflective and black having an almost chrome like appearance, differing shades of gray will produce results within the two extremes. We don't need to worry about the alpha channel just yet.
Choose your Editor
DXTBmp will automatically choose a default editor for your images and a corresponding logo will appear just below the MipMaps options on the right hand side. To change the editor DXTBmp uses simply click on the logo or use the preferences menu.

Now we are going to go to the Image menu and select Send to Editor this will open up the master image in photoshop. It is important to leave DXTBmp open in the background as it will be needed later on.

Creating Paint Kits
A paint kit consists of a master image of the aircraft texture and one or two other layers such as rivets and/or other details. Paint kits allow you to work with separate layers giving you not only more options for custom paint jobs but a better finished product.
Some aircraft will have paint kits available to download, if this is the case then you are in luck, but making your own paint kits is not as hard as it may seem.
More information about Creating your own paint kits can be found here
The Finer Points of Repainting
There are so many different methods and techniques to creating unique repaints and really what you can achieve is limited only by your imagination.
Tips for creating aircraft repaints.
Once you are happy with the repaint you have created simply Save it and exit the editor, you can now return to DXTBmp and under the Image menu select Reload after Edit.

Essentially this will refresh the master image with the repaint you have just created in the editor.
You will also notice a MipMaps section on the right hand side just under the Alpha Channel window. Make sure both the [Include when saving] and [Use 16 bit Dither] boxes are unchecked before saving.
Compiling Your finished Repaint
We can now go ahead and use DXTBmp to save/compile our repainted texture.
Go to File then Save as and we are going to want to save it as an Extended bitmap.
note: when working with direct draw surface textures you will be flipping the image (dds format images are inverted for increased video card performance, failing to flip the image before saving will make the textures appear upside down) and saving as DDS.

This will bring up the Save Extended Bitmap window and from the Save as type drop down menu Select Extended 32 bit 888-8.

(The type you save as can be experimented with, Extended 32 bit 888-8 gives me the best results so this is what I use.)
Make sure you are saving your texture into the folder you created for your new repaint (in this case texture.calfire) and overwrite the original texture (ov10a_01_T).
You may ask yourself why not just open, edit and save the bitmap/dds image directly using Adobe Photoshop? The basic answer comes down to the alpha channel, as I pointed out earlier the alpha channel will reference where and how intense the image will be reflective. DXTBmp allows us to work with the master image and alpha separately. Saving the image directly with photoshop will compile the bitmap with a completely black alpha channel, giving us a plane that appears completely chrome in the simulator.
Adding New Repaints to the Aircraft CFG
This is the final step to creating your new repaint, this process is the same for adding aircraft repaints you may download from the Internet. The aircraft CFG file can be found in the main folder of each aircraft, without adding your new repaint to the CFG it wont show up in the simulator.

You can open the aircraft CFG with notepad or a similar text program.
Open the CFG and scroll down to the [fltsim.x] sections, there will be one of these for each variation/repaint of the aircraft, it will look something like this:

Each variation will have a number, for example [fltsim.0] [fltsim.1] [fltsim.2] and so on.
We are going to want to add our own section for our new variation/repaint that we just created.
To do this simply copy the first [fltsim.0] section (circled in red above) and paste it after the last [fltsim.x] in the CFG (in this case there are five variations already, the last being [fltsim.5] our new section will be [fltsim.6])
now let's take a look at the [fltsim] section we just pasted and see what we need to change.
[fltsim.0] change the number here to the next corresponding number. (in this case [fltsim.6])
title=OV-10A the title of your new variation. (for this example I am going to change it to OV-10A_CDF)
sim=OV-10A
model= this may be different if the same aircraft has more than one model
panel=
sound=
texture= here we will add the name of our new texture folder. (in this case calfire)
kb_checklists=
kb_reference=
atc_id_color=0x00ffffff
atc_id=14649 the id/tail number used by air traffic control to identify your aircraft (in this case N414DF)
ui_manufacturer=North American Rockwell
ui_type=OV-10A
ui_variation=20thTASS,Danang,South Viet Nam1969 description of the variation (California Fire Department)
visual_damage=1
ui_createdby="Piglet's Peculiar Planes"
description=Twin Turboprop FAC\/COIN aircraft designed in late '60's for USAF, and also USMC and Navy. Also used by Morocco, Thailand, Columbia, Indonesia, Venezuela, and the Philippines.
atc_heavy=0
atc_airline=
atc_flight_number=
atc_id_font=Verdana,-11,1,600,0
prop_anim_ratio = 1.72
Everything else which has not been noted above can remain the same.
Your new section in the CFG should look something like this:

Save the CFG and that's it!
Open the flight simulator and Enjoy the fruits of your creation.