Mike Chase has thirty-five year's extensive global managerial experience in marketing, sales and finance working in the corporate, commercial- airline and supplier aerospace industries. He has worked as vp-... Read More
In this month’s Aircraft Comparative Analysis, Mike Chase provides information on a pair of popular used mid-size business jets for the purpose of valuing the Dassault Falcon 2000.
Over the following paragraphs, we’ll analyse the performance of the Dassault Falcon 2000 and Gulfstream G200 to see how they compare in the used jets for sale market. We’ll consider productivity parameters (payload, range, speed and cabin size), and give consideration to their current market values.
Dassault introduced the Falcon 2000 as the Falcon X in 1989. First flight came in 1993, certification was awarded in 1994, and in 1995 the Falcon 2000 entered service.
The Dassault Falcon 2000 offers transcontinental range, featuring a large stand-up cabin, two super-efficient CFE738-1-1B engines and a Collins Pro Line 4 integrated avionics suite.
Today, there are 187 wholly-owned Falcon 2000 aircraft in service. An additional 35 are fractionally-owned, and eight are under shared-ownership, giving a total fleet of 230 in operation worldwide. Twenty-three units (or 10% of the Falcon 2000 fleet) are leased, according to JETNET data. By continent, North America is home to the largest percentage (74%) of Falcon 2000s, followed by Europe (13%) and Asia (8%) accounting for a combined total of 95% of the fleet.
Meanwhile, 13% of the fleet is currently listed ‘For Sale’, with 82% of those under an exclusive broker agreement. The average days on the market before a Falcon 2000 sells is currently 206 days.
Payload & Range
The data contained in Table A are published in the B&CA, May 2016 issue but also sourced from Conklin & de Decker. As we have mentioned previously, a potential operator should focus on payload capability as a key factor. The Falcon 2000 ‘Available Payload with Maximum Fuel’ (1,095 lbs) is significantly more than that offered by the G200 (650 lbs).
Table A also shows the fuel usage of each aircraft (sourced from Aircraft Cost Calculator). There is a small difference of eight gallons per hour (3%) between the fuel usage of the Falcon 2000 (258 GPH) and the Gulfstream G200 (250 GPH).
According to Conklin & de Decker, the Falcon 2000 cabin volume is 1,028 cubic feet, with 31.2 ft. cabin length. The Gulfstream G200 has less cabin volume (869 cu. ft.) and shorter length at 24.5 ft.
Chart A, courtesy of UPCAST JETBOOK, offers a cabin cross-section comparison and shows the Falcon 2000 has more width (7.7 ft. vs 7.2 ft.), but fractionally less height (6.2 ft. vs 6.25 ft.). Note, however, that the Falcon 2000 achieves its height with a flat floor cabin design.
Chart B, using Little Rock, Arkansas as the origin point, shows that the Falcon 2000 offers less range coverage than the Gulfstream G200, per data from Aircraft Cost Calculator (ACC). Nevertheless, both business jets cover all of North America, Central America, and some of South America from Little Rock.
Note: For jets and turboprops, ‘Seats-Full Range’ represents the maximum IFR range of the aircraft at Long-Range Cruise with all passenger seats occupied. ACC assumes NBAA IFR fuel reserve calculation for a 200 nm alternate. The lines depicted do not include winds aloft or any other weather-related obstacles.
Cost Per Mile
As noted above, the Falcon 2000 is powered by two CFE738-1-1B engines, each offering 5,918 lbst. The Gulfstream G200, by contrast, is powered by two Pratt & Whitney PW306A engines with 6,040 lbst each.
Using data published in the May 2016 B&CA Planning and Purchasing Handbook and the August 2016 B&CA Operations Planning Guide we will compare our aircraft. The nationwide average Jet-A fuel cost used from the August 2016 edition was $4.90 per gallon, so for the sake of comparison we’ll chart the numbers as published.
Note: Fuel price used from this source does not represent an average price for the year.
Chart C details ‘Cost per Mile’ and compares the Falcon 2000 to its competition, factoring direct costs and with each aircraft flying a 1,000nm mission with an 800 lbs (four passengers) payload. The Gulfstream G200 shows the lowest cost per nautical mile at $4.30 compared to $5.79 for the Falcon 2000. That’s a difference of 35% in favor of the Gulfstream G200.
Total Variable Cost
The ‘Total Variable Cost’ illustrated in Chart D is defined as Fuel Expense, Maintenance Labor Expense, Scheduled Parts Expense and Miscellaneous Trip Expense. The Total Variable Cost for the Falcon 2000 computes at $2,482 per hour, which is greater than the Gulfstream G200 at $1,796 per hour.
Table B contains the used prices from Vref Pricing Guide for each aircraft. The average speed, cabin volume and maximum payload values are from Conklin & de Decker and Aircraft Cost Calculator, while the number of aircraft in-operation and percentage ‘For Sale’ are as reported by JETNET.
As mentioned, the Falcon 2000 has 13% of its fleet currently ‘For Sale’ while the Gulfstream G200 fleet stands at 14.6% ‘For Sale’. The average number of pre-owned transactions (sold) per month for the Falcon 2000 is two units compared to seven for Gulfstream G200s.
Aircraft that are owned and operated by businesses are often depreciable for income tax purposes under the Modified Accelerated Cost Recovery System (MACRS). Under MACRS, taxpayers are allowed to accelerate the depreciation of assets by taking a greater percentage of the deductions during the first few years of the applicable recovery period (see Table C).
In certain cases, aircraft may not qualify under the MACRS system and must be depreciated under the less favorable Alternative Depreciation System (ADS) where depreciation is based on a straight-line method, meaning that equal deductions are taken during each year of the applicable recovery period. In most cases, recovery periods under ADS are longer than recovery periods available under MACRS.
There are a variety of factors that taxpayers must consider in determining if an aircraft may be depreciated, and if so, the correct depreciation method and recovery period that should be utilized. For example, aircraft used in charter service (i.e. Part 135) are normally depreciated under MACRS over a seven-year recovery period or under ADS using a twelve-year recovery period.
Aircraft used for qualified business purposes, such as Part 91 business use flights, are generally depreciated under MACRS over a period of five years or by using ADS with a six-year recovery period. There are certain uses of the aircraft, such as non-business flights, that may have an impact on the allowable depreciation deduction available in a given year.
Table D depicts an example of using the MACRS schedule for a 2006-model Dassault Falcon 2000 business jet in private (Part 91) and charter (Part 135) operations over five- and seven-year periods, assuming a used retail price of $7.6m, per Vref Pricing guide.
Asking Prices & Quantity
The current used jet market for the Falcon 2000 shows a total of 30 aircraft ‘For Sale’ with fifteen displaying an asking price ranging from $3.495m to $5.995m. We also reviewed the used Gulfstream G200 market, which currently displays asking prices ranging from $2.995m to $5.9m.
While each serial number is unique, the Airframe (AFTT) hours and age/condition will cause great variation in price. Of course, the final negotiated price remains to be established between the seller and buyer before the sale of an aircraft is completed.
The points in Chart E are centered on the same aircraft. Pricing used in the vertical axis is as published in the Vref Pricing Guide. The productivity index requires further discussion in that the factors used can be somewhat arbitrary. Productivity can be defined (as it is here) as the multiple of three factors:
1. Range with full payload and available fuel;
2. The long-range cruise speed flown to achieve that range;
3. The cabin volume available for passengers & amenities.
Others may choose different parameters, but serious business aircraft buyers are usually impressed with Price, Range, Speed and Cabin Size. After consideration of the Price, Range, Speed and Cabin Size, we can conclude that the Falcon 2000 displays a high level of productivity.
The Falcon 2000 shows a higher retail price, but greater productivity compared to the Gulfstream G200. The Gulfstream G200 has an advantage in terms of operating cost and longer range, but the Falcon 2000 offers a larger cabin volume and a greater payload with full fuel capability.
Used Falcon 2000s show good full retail sale transactions averaging two units per month, and it is still a popular model within the fractional ownership sector. Operators should evaluate their mission requirements precisely when picking which option is the best for them.
Maximum Scheduled Maintenance Equity
Exclusive to AvBuyer.com, the chart below displays the Maximum Maintenance Equity available for the Falcon 2000, based on aircraft age. Note: The Maximum Maintenance Equity figure was achieved the day the aircraft came off the production line – since it had not accumulated any utilization toward any maintenance events.
The percent of the Maximum Maintenance Equity that an average aircraft will have available based on its age, assumes: Average annual utilization of 400 Flight Hours; and all maintenance is completed when due.
Within the preceding paragraphs we have touched upon several of the attributes that business aircraft operators value. There are other qualities such as airport performance, terminal area performance and time to climb that might factor in a buying decision.
Those operators in the market should find the preceding comparison useful. Our expectations are that the Dassault Falcon 2000 will continue to do well on the used jet sales market for the foreseeable future.