In this month’s Aircraft Comparative Analysis- we provide information on a selection of Pre-Owned business jets in the $11-11.5-million range for the purpose of valuing the Bombardier Challenger 604 (CL604). We’ll consider the productivity parameters - payload/range- speed and cabin size and cover current and future market values. The field compared to the Bombardier Challenger 604 in this study includes the Falcon 2000.Back to Articles
In this month’s Aircraft Comparative Analysis- we provide information on a selection of Pre-Owned business jets in the $11-11.5-million range for the purpose of valuing the Bombardier Challenger 604 (CL604). We’ll consider the productivity parameters - payload/range- speed and cabin size and cover current and future market values. The field compared to the Bombardier Challenger 604 in this study includes the Falcon 2000.
Bombardier introduced the Challenger 604 in 1995 as a longer-range derivative of the 601-3R with a larger fuel capacity and upgraded CF34-3B engines. Standard avionics include a Rockwell Collins Pro Line 4 package (along with dual FMS-6000- dual Litton LTN-101 IRS and Collins WXP-4220 digital turbulence detection radar)- while the CL604 offers a completely new undercarriage- and structural improvements to wings and tail over the CL601-3R. The CL604 ended production in 2006. It can be RVSM certified when Service Bulletin SB-604-34-012 is complied with.
PAYLOAD AND RANGE
The data contained in Table A is published in the B&CA May 2013 issue- but also sources information from Conklin & de Decker. As mentioned in past articles- a potential operator should focus on payload capability. The Challenger 604 “Available payload with Maximum Fuel” at 1-263 pounds is 15.3% greater than the Falcon 2000 aircraft at 1-095 pounds.
According to Conklin & de Decker- the cabin volume of the Challenger 604 at 1-150 cubic feet is 12.3% greater than the Falcon 2000 (1-024 cu. ft.) - see Chart A.
As mentioned previously- the Challenger 604 has two CF34-3B General Electric engines each offering 8-729 pounds of thrust. By comparison- the Falcon 2000 is also powered by two General Electric engines – the CFE 738-1-1B type – each offering substantially less thrust at 5-918 pounds. Table B- sourced from the Aircraft Cost Calculator (ACC) shows the fuel usage by each aircraft model in this field of study. The Challenger 604 - at 306 gallons per hour (GPH) - uses 48 gallons per hour (or 18.6%) more fuel than the Dassault Falcon 2000 (258 GPH).
COST PER MILE COMPARISONS
Additionally- using data published in the May 2013 B&CA Planning and Purchasing Handbook and the August 2013 B&CA Operations Planning Guide we will compare our aircraft. The nationwide average Jet-A fuel cost in the August 2013 edition was $6.08 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 Challenger 604 to its competition factoring direct costs and with each aircraft flying a 1-000nm mission with 800 pounds (four passengers) payload. The Challenger 604 long range cruise at an average 425 knots shows a cost per mile at $7.07- which is 8.9% more than a Falcon 2000 at $6.49 per nm.
TOTAL VARIABLE COST COMPARISONS
The “Total Variable costs” illustrated in Chart C is defined as the cost of Fuel Expense- Maintenance Labor Expense Scheduled Parts Cost and miscellaneous trip expenses. The total variable cost for the Challenger 604 at $3-053 per hour is 9.7% more to operate than the Falcon 2000 at $2-782 per hour.
The points in Chart D center on the same group of aircraft (but as a matter of interest- we’ve included the Challenger 605 and the other aircraft in the Falcon 2000 series – the DX- EX EASy- and LX). Pricing used in the vertical axis is as published in Vref. 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.
1. Range with full payload and available fuel;
2. The average speed flown to achieve that range;
3. The cabin volume available for passengers and amenities.
The result is a very large number- so for the purpose of charting each result is divided by one billion. A computed curve fit on this plot would not be very tight- but when all business jet aircraft are considered the “r” squared factor would equal a number above 0.9. 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 Challenger 604 business jet is very competitive against the Falcon 2000 due- largely- to it offering more range and more cabin volume although the Falcon 2000 costs less to operate hourly and per mile. The Falcon 2000DX- EX EASy- and LX versions of this aircraft family demonstrate how they have closed the index gap compared to the CL604 and the CL605.
In Table C are the relative retail prices from Vref for each aircraft. The number of aircraft in-operation- percentage “For Sale” and the number “Sold” over the past 12 months are from JETNET. The Challenger 604 led all competitors in full sales transactions (sold) in the past 12 months at 65 (or five per month).
Currently- 13.2% of the CL604 fleet is ‘for sale’- making this a buyer’s market (traditionally defined by over 10% of the fleet). Likewise- the Falcon 2000 has 10.8% of its fleet ‘for sale’- with 1.5 units retailing on average per month over the past year.
DEPRECIATION SCHEDULE FOR BUSINESS AIRCRAFT
Aircraft that are used in a trade- business- or for the production of income that are primarily operated domestically- and not used in common or contract carriage may be depreciated over a five year Modified Accelerated Cost Recovery System (MACRS) schedule. Aircraft used in common or contract carriage (e.g.- Part 135) are depreciable under seven-year MACRS- see Table D.
Table E shows an example of using the MACRS schedule for a pre-owned 2006 Challenger 604 in private (Part 91) and charter (Part 135) operations over five and seven year periods assuming a Vref retail value of $11.5 million.
LOCATION BY CONTINENT
Table F- meanwhile- offers a breakdown of the location by continent for the Wholly-Owned Challenger 604 business jet. North America is home to the majority of the fleet with 65% of the 351 wholly-owned CL604 aircraft- followed by Europe at 21%. Currently there are seven Challenger 604 aircraft in shared ownership and five in fractional ownership programs.
Within the preceding paragraphs we have touched upon several of the key attributes that business jet operators value. However- there are often other qualities such as service and support that factor in a buying decision- but are beyond the scope of this article.
Using JETNET/AvData information- there are currently 48 or 13.2% of the pre-owned Challenger 604 models “For Sale”. The Challenger 604 fares well alongside its competition- so those operators in the market should find the preceding comparison of value. Our expectations are that the Challenger 604- which started delivering in 1995- will continue to do well in the pre-owned market.
For more information: Michael Chase is president of Chase & Associates- and can be contacted at: 1628 Snowmass Place- Lewisville- TX 75077; Tel: 214-226-9882; Email: Mike@avbuyer.com- Web: www.mdchase.com
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