- 04 Jan 2021
- Brian Foley
- BizAv Market Insight
Are you looking to buy or sell a Bombardier Global model on the pre-owned business jet market? Matt Harris asks Tony Kioussis and Hardy Sohanpal for their insights on how these ultra-long-range models are performing…Back to Articles
Ever since introducing the Global Express to the market at the end of the 20th century, Bombardier Global has been a leading player in the Large Cabin & Ultra-Long-Range jet segment. How are Bombardier pre-owned Global models faring on the pre-owned market today?
Fighting it out with other Large Jet manufacturers such as Dassault and Gulfstream for market share, in the years since the original Global Express was certified Bombardier has consistently refined, developed and expanded the aircraft into a family of jets.
Today, the Global family offers a jet to compete in just about any niche within the Large Cabin & ultra-long-range arena, right up to the 7,700nm-range Bombardier Global 7500 which has the longest non-stop range of any business jet certified to date.
Well-established members of the Bombardier Global family, the Global 5000 and Global 6000 jets, have recently been joined by the Global 5500 and 6500 on the production line, each offering cabin improvements inspired by the Global 7500.
The Global 5500 and 6500 utilize the same Rolls-Royce Pearl 15 engines for improved fuel efficiency, better hot-and-high performance, and extra range.
Flying 5,700nm and 6,600nm, respectively, these newest members to the Bombardier Global family fill gaps between the Global 5000 jet and 6000 (in the case of the Global 5500), and the Global 6000 and 7500 (in the case of the Global 6500).
“The cabin size and operational range of the Bombardier Global fleet is quite remarkable, and this has created a strong industry following,” Tony Kioussis, president of Asset Insight, told AvBuyer.
“Buyers get a considerable amount of space and range with all of the Bombardier Global models, and this has been their main attraction from an end-user’s perspective,” Hardy Sohanpal, head of aircraft sales, Global Jet Monaco, notes, adding that the aircraft type is also “well established and tested across the world” in terms of the technical support available to owners and operators.
“We currently have 13 Globals under management across the world, hence we have first-hand experience from a client experiential and operations perspective," he says.
Bombardier Global Market Information
Today, it is possible to pay anywhere from $70.0m for a brand new Bombardier Global 7500, all the way down to below $10m for an older model Global Express. “You get value for money with a Bombardier Global jet,” Sohanpal says of the pre-owned marketplace.
“For example, you can enter the market from as little as $7m for a well-managed Global Express that is just under 20-years old and is capable of flying 6,000nm and offers 2,140 cubic feet of cabin space. And you could pay $13m for a Bombardier Global XRS.”
Put differently, while many aircraft may be available for a low price, the Global series tends to offer good value for the money,” Kioussis adds.
“As of the end of November 2020, available inventory for the entire Global fleet was approximately 10%,” he reveals. “That provides good opportunities for both buyers and sellers on the pre-owned market.”
According to Sohanpal, the pre-owned market for Bombardier Global jets was displaying classic price elasticity at year-end, 2020. “This is when the sweet spot of demand and price converge and you see a flurry of activity,” he explains.
“This is the case for most Global models, but particularly the 2013- through 2015-model Bombardier Global 6000 jets where prices are presenting a compelling reason for buyers to upgrade existing aircraft to the larger cabin, longer-range of a Global 6000.”
Global Jet has also seen evidence of pent up demand being released for Bombardier Global models following initial buyer hesitation during the early stages of the coronavirus pandemic.
“After buyers took an initial ‘let’s see what happens’ approach, they have slowly been returning to the market, and, by December, that had reached a frantic attempt to complete year-end deals,” Sohanpal says.
Pre-Owned Bombardier Global Fleet Quality
Looking at individual markets, Kioussis says that while inventory for the Bombardier Global Express and Global XRS models stood at 14.1% and 11.3% of the active fleets, respectively, inventory for the other Global models (excluding the Global 7500, 6500 and 5500) remained in the single digits.
“At the same time, Asset Insight’s Asset Quality Rating for Bombardier Global models averaged 6.143, placing the inventory substantially into the ‘Outstanding’ range,” he adds. Based on a scale ranging from 10 (optimum quality) down to -2.5, November’s overall business jet fleet Quality Rating averaged 5.352, showing the tracked Global fleet to be well above average.
“Meanwhile, the Maintenance Exposure to Ask Price Ratio (ETP Ratio) averaged 37.7% for the available inventory, with a low of 10.8% for the Global 6000, and a high of 72.5% for the Global Express.”
This average will come even lower once the Global 7500, 6500 and 5500 have been operational long enough to register.
The ETP Ratio is a useful indicator of an aircraft’s marketability, according to Asset Insight, and is calculated by dividing an aircraft’s financial liability accrued with respect to future scheduled maintenance events (its Maintenance Exposure) by its Ask Price. Kioussis explains that when the ETP Ratio is higher than 40%, a listed aircraft’s average days on the market before a sale occurs tends to increase – usually by more than 30%.
“Keeping in mind that a majority of Bombardier Globals are enrolled on Engine Hourly Cost Maintenance Programs (HCMP), their HCMP-adjusted ETP Ratio – even for most of the Global Express fleet – should be at, or below the 40% point that we view as excessive.
“For these reasons, we see the Global fleet as very attractive relative to marketability,” Kioussis clarifies.
Tips for Bombardier Global Jet Buyers and Sellers…
With Bombardier Global business jets offering attractive pricing on the pre-owned market, relatively low maintenance exposure (to asking price), and a solid reputation among business jet models, there are nevertheless some things that buyers should keep in mind.
“Buyers should first make certain that they need an aircraft of that size and operational capability,” Kioussis cautions. “This is an aircraft whose size carries additional costs, from its fuel burn to the size of hangar it requires.”
If, after consideration, a Bombardier Global model is the right choice, Sohanpal recommends buyers “focus on aircraft that have been professionally managed”, helping ensure a solid maintenance background. And when you are ready to buy, “be ready to move quickly, since quality aircraft are in demand.”
But Kioussis warns buyers never to make an aircraft selection based on its price alone. “The acquisition cost is likely to be only a small portion of your total operating costs. Be sure to run total operating cost figures, by Serial Number, covering the period of time you anticipate owning the aircraft.
“Finally, obtain Residual Value analytics from a trusted source. These should be based on forward-looking indicators, not the slope of the aircraft’s historical depreciation. If the Covid-19 environment has taught us anything, it is that history is not reflective of what’s occurring today.”
On the other side of the transaction table, Sohanpal urges sellers to be more pragmatic on pricing. “Many of the older Globals do require a certain level of investment in upgrading avionics, entertainment, and communication systems,” he highlights.
“It’s also advisable for owners to enrol with an engine and APU maintenance program, which helps provide a level of marketability and ‘comfort’ for buyers entering the market.”
Kioussis suggests sellers make certain to understand how their aircraft competes with other serial numbers, and similar models. “Wishful thinking, and any ‘feeling’ you might have about your aircraft’s value, will not justify your ask price, nor overcome an offer price from a buyer who has done their homework,” he concludes.
About Tony Kioussis
Tony Kioussis is the President of Asset Insight.
Asset Insight provides audit and valuation services and has developed a standardized Asset Grading System scale that evaluates an aircraft’s maintenance condition. Visit www.assetinsight.com.
Tony is also the Editor, Aircraft Value & Maintenance, AvBuyer. Read more of his market insights.
About Hardy Sohanpal
Hardy Sohanpal is Sales Director at Global Jet's Monaco-based sales and acquisitions office.
Global Jet Monaco offers a customized, on-demand solution to the transaction needs of aircraft buyers. Mr. Sohanpal has extensive experience within the VVIP private aircraft industry.