In this month’s Aircraft Comparative Analysis, Mike Chase provides information on two popular business jets for the purpose of valuing the Gulfstream G280.
How do the Gulfstream G280 and Bombardier Challenger 350 compare in the market today? Over the following paragraphs, we’ll consider productivity parameters (payload, range, speed, and cabin size) and cover current market values.
When General Dynamics (GD) announced the acquisition of Galaxy Aerospace Company from Israel Aerospace Industries in 2001, it aligned the entire family of Galaxy aircraft with Gulfstream, which it had acquired in 1999. GD also chose to rename the Astra and Galaxy models the Gulfstream G100 and G200 respectively.
The final G200 rolled off the production line on December 19, 2011 and a total 250 units had been built over the years. In 2005, Gulfstream began designing a follow-on aircraft. The new model, known as the G250 was launched in 2008. It was later renamed the Gulfstream G280 and began delivering in 2012.
The Gulfstream G280 has many new features including four more side windows than the G200 and acoustical insulation improvements to provide a very quiet cabin environment. The G280 has inflight access to the aft baggage compartment, and it has standard auto-throttles and autobrakes not available on competing aircraft.
Today, there are 106 wholly-owned Gulfstream G280s and two in shared ownership, giving a total fleet of 108 in operation worldwide. The percentage for sale is 2.8%, with 33% under an exclusive broker agreement. The average ‘days on the market’ is 226 days. At present, 16.7% of the Gulfstream G280 fleet is leased, according to JETNET.
By continent, North America is home to the largest Gulfstream G280 fleet percentage (77%) followed by Asia (11%), accounting for a combined total of 88% of the worldwide fleet.
Payload & Range
The data contained in Table A are sourced from Conklin & de Decker and B&CA’s Purchase Planning Handbook. As we have mentioned in past articles, a potential operator should focus on payload capability as a key factor. The Gulfstream G280 ‘Available Payload with Maximum Fuel’ (1,000 lbs) is less than that offered by the Challenger 350 (1,800 lbs).
Also worthy of note is the fuel consumption of each aircraft. According to Conklin & de Decker, the Gulfstream G280 is the more frugal jet in this field, burning 284 gallons per hour (GPH), versus 297 GPH for the Bombardier Challenger 350.
Chart A, courtesy of UPCAST JETBOOK, offers a cabin cross-section comparison. The Gulfstream G280 has the same width (7.2ft) as the Challenger 350, but offers marginally more height (6.3ft vs 6.1ft). Note, however, that the Bombardier Challenger 350 cabin has a flat floor.
At this point it’s worth taking a little more time to discuss cabin interior dimensions. Interior height is measured at the center of the cross-section. It may be based on an aisle that is dropped several inches below the main cabin floor that supports the passenger seats, as is the case for the Gulfstream G280.
Two width dimensions can be used – one for the widest part of the cabin and the other at floor level. We have used the maximum interior width measurement at the widest part of the cabin. The aisle width of the Gulfstream G280 is reported at 21 inches compared to the Challenger 350 at 16 inches.
Cabin length can be measured in three different ways, each yielding differing cabin volumes. For example, the Main Seating includes all passenger seats but not the lavatory area. Due diligence by an owner/operator is required to understand comparative aircraft interior measurements. The different length measurements for the aircraft in our comparative field are presented in Table B.
The cabin volume will depend on the interior cabin length measurement selected from the above table. More important, however, is the measurement of personal space when comparing cabins. The goal is to determine comfort levels for each potential passenger.
The personal space per passenger calculated for the Gulfstream G280 is 116.9 cubic feet and the Bombardier Challenger 350 is 107.5 cubic feet, based on the gross cabin volume measurement using eight seats in each aircraft.
Of course, different seating arrangements including divans or double-club seats will result in different personal space measurements per passenger. Prospective buyers are advised to consult with interior experts to provide a fair comparison when choosing the right aircraft interior for their mission needs.
The Gulfstream G280 is powered by Honeywell HTF7250G engines with 7,624 lbst. The Challenger 350, meanwhile, is powered by two Honeywell HTF7350P engines each offering 7,323 lbst.
Cost Per Mile
Using data published in 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 at press time, 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 B details ‘Cost per Mile’ and compares the Gulfstream G280 to its competition, factoring direct costs and with each aircraft flying a 1,000nm mission with an 800 pound (four passengers) payload. The Gulfstream G280 shows the lower cost per nautical mile at $3.97 compared to $4.00 for the Challenger 350 – an insignificant difference.
Total Variable Cost
The ‘Total Variable Cost’ illustrated in Chart C is defined as the Cost of Fuel Expense, Maintenance Labor Expense, Scheduled Parts Expense and Miscellaneous Trip Expense. The Total Variable Cost for the Challenger 350 computes at $1,804 per hour, which is slightly greater than the Gulfstream G280 at $1,799 per hour. Again, the difference is insignificant.
Aircraft Comparison Table
Table C contains the used prices from Vref Pricing Guide for each aircraft. The average speed and cabin volume are from Gulfstream and Bombardier, and the four passenger range is from B&CA May 2017, while the number of aircraft in-operation, percentage ‘For Sale’ and average sold are as reported by JETNET.
The Gulfstream G280 has 2.8% of its fleet currently ‘For Sale’ and the Bombardier Challenger 350 is at 1.1% ‘For Sale’. The average number of new and used transactions (sold) per month for the Gulfstream G280 is two compared to the Bombardier Challenger 350 at four.
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 D).
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 E depicts an example of using the MACRS schedule for a 2017 Gulfstream G280 business aircraft in private (Part 91) and charter (Part 135) operations over five and seven-year periods, assuming a new retail price of $24.5m, per Vref Pricing guide.
Asking Prices & Quantity
The current used market for the Gulfstream G280 shows a total of three aircraft ‘For Sale’ with two displaying an asking price ranging from $14m to $17.9m. We also reviewed the used Challenger 350 market, which yielded asking prices ranging from $16.5m to $17.5m.
According to Vref, since 2014 a Gulfstream G280’s value has depreciated 61% over its new price, while a 2014 Bombardier Challenger 350 has depreciated 66%. Each serial number is unique and the Airframe (AFTT) hours and age/condition will cause great variations in price. Of course, the final negotiated price remains to be decided between the seller and buyer before the sale of an aircraft is completed.
The points in Chart D 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 (and it is here) as the multiple of three factors:
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 Gulfstream G280 displays a high level of productivity.
The Gulfstream G280 has a comparable operating cost compared to the Challenger 350, but is priced approximately $2.17m lower (2017 model). It offers a greater cabin volume, greater range, but offers less available payload with maximum fuel.
Operators should weigh their mission requirements precisely when picking which option is the best for them.
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.
The Gulfstream G280 continues to be popular today. Those operators in the market should find the preceding comparison useful. Our expectations are that the Gulfstream G280 will continue to do well in the new and pre-owned markets for the foreseeable future.