In this month’s Aircraft Comparative Analysis- we provide information on a selection of New/Pre-Owned business jets in the $12-42.2 million range for the purpose of valuing the pre-owned Dassault Falcon 900EX and 900EX EASy.
We’ll consider the usual productivity parameters- including payload/range- speed and cabin size- and cover current and future market values. The field in this study also includes the Gulfstream GIV-SP and G450.
The Dassault Falcon 900 series is produced by Dassault in France. First flight of the original Falcon 900 took place on September 21- 1984. Today- the Falcon 900 series- along with its smaller Falcon 50 sibling and Falcon 7X stand alone in that they are the only business jets boasting three engines.
The Falcon 900 is derived from the Falcon 50- which itself was a development on the Falcon 20 aircraft. Development included computer-aided design and the incorporation of composite materials- and various subsequent updates and developments on the original 900 model have occurred over the years. Improved models include the Falcon 900B- featuring improved engines and increased range- and the Falcon 900EX featuring further improvements in engines and range and an “all-glass” flight deck. The Falcon 900C- meanwhile- is a lower-cost companion to the Falcon 900EX and replaced the Falcon 900B.
In 2003- Dassault began offering its 900EX with the new EASy (Enhanced Avionics System) digital cockpit based on the Honeywell Primus Epic avionics system. In 2005- the Falcon 900DX entered service. Both the Falcon 900EX EASy and Falcon 900DX ended production in 2010. Prior to this- at EBACE 2008- Dassault announced another development of the 900 series – the Falcon 900LX - incorporating High Mach Blended Winglets designed by Aviation Partners Inc. These same winglets are being offered for the entire Falcon 900 series today as a retrofit kit.
Payload and Range
The data contained in Table A is sourced from Conklin & de Decker and is also published in the May edition of B&CA. As we have mentioned in past articles- a potential operator should focus on payload capability. The Falcon 900EX ‘Available payload with Maximum Fuel’ at 2-800 pounds is eclipsed by the Falcon 900EX EASy (3-500 pounds)- but is greater than that of the Gulfstream GIV-SP at 2-019 and G450 at 2-519 pounds.
Also- depicted in Table A- and sourced from Aircraft Cost Calculator- the Falcon 900EX and 900EX EASy each burn 282 gallons per hour (GPH) of JET A- which is 165 GPH – or 36.9% - less fuel than the Gulfstream GIV-SP and G450 (447 GPH).
According to Conklin & de Decker- the cabin volume of the Falcon 900EX and 900EX EASy at 1-264 cubic feet has 17.1% less cabin volume than the GIVSP/G450 at 1-525 cubic feet. The GIV-SPIG450/G450 is almost 12 feet longer than the Falcon 900EX/EX EASy. As illustrated in Chart A – sourced from the UPCAST JETBOOK- the Falcon 900EX/EX EASy interior dimension is slightly wider than the Gulfstream GIV-SP/G450 with both aircraft offering the same cabin height.
The Falcon 900EX/EX EASy has three TFE731-60 engines each offering 5-000 pounds of thrust. By comparison- the Gulfstream GIV-SP and G450 each have two TAY 611-8 and TAY 611-8C Rolls- Royce engines respectively- offering 13-850 pounds of thrust. Using data published in the May B&CA Planning and Purchasing Handbook and the August B&CA Operations Planning Guide we will compare our aircraft.
The nationwide average Jet-A fuel cost used from 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- which details “Cost per Mile”- compares the Falcon 900EX/EX EASy to its competition factoring direct costs and with all aircraft flying a 1-000nm mission with 800 pounds (four passengers) payload. The Gulfstream GIV-SP ($8.53) and G450 ($7.00) show the cost comparisons are more expensive to operate per mile than the Falcon 900EX/EX EASy ($5.63 per mile).
Variable Cost Comparisons
The total ‘Variable Cost’ 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 hourly cost for the Gulfstream GIV-SP at $3-738 and the G450 at $3-042 are considerably more expensive to operate than the Falcon 900EX/EX EASy at $2-414 per hour.
The points in Chart D center on the same group of aircraft. Pricing used in the vertical axis is as published in the B&CA Purchase Planning Handbook and 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. The examples plotted are confined to the aircraft in this study. 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 Falcon 900EX/EX EASy on the Productivity Index are competitive. Before the introduction of the Falcon 900EX- each Falcon 900 series failed to close the productivity advantage of the Gulfstream GIV-SP/G450 aircraft that were largely made up of greater range- speed and cabin volume (at a higher retail price).
However- although the Falcon 900EX/EX EASy still offer a smaller overall cabin volume- they offer greater payload with full fuel- and are considerably less expensive to operate - with a competitive retail price.
Table B depicts the retail prices from Vref and from B&CA for each aircraft. The number of aircraft in-operation- the percentage ‘For Sale’- and the average monthly number ‘Sold’ over the past 12 months are from JETNET. Curiously- as shown- all of the aircraft in our comparative field represent a traditional seller’s market (less than 10% of the fleet ‘For Sale’).
Asking Prices vs Afit & Age
Chart E- sourced from the Multi-dimensional Economic Evaluators (MEE) Inc.- (www.meevaluators.com)- shows a Value and Demand chart for the Falcon 900EX/EX EASy as well as for the Gulfstream GIV-SP and G450. The current pre-owned market for these business jets shows 65 aircraft ‘For Sale’.
Thirty Three of the 65 aircraft have an asking price with the remaining 32 inviting offers. We have plotted the 33 with asking prices.
For demand- we grouped the points into five bins:
1. Those priced less than or equal to $18m;
2. Those greater than $18m- but less than or equal to $23m;
3. Those greater than $23m- but less than or equal to $25m;
4. Those greater than $25m- but less than or equal to $27m;
5. Those priced greater than $27m.
By doing so- we obtained the unbiased Demand Equation- which reads: $14M = $43.6 * Quantity^-0.47. This equation has an adjusted R^2 of 98.9%- an F-Statistic of 369 and a P-Value of 0.03%- meaning that it is an excellent predictor of demand. For value- we found that we could best predict price using 1) Years- and 2) Cubic Feet of Cabin Volume per Passenger. In this instance- age in years and total time on the airframe were highly cross-correlated- preventing us from using them at the same time.
We obtain this unbiased Value Equation: $14M = 0.039853 * Years^-0.612 * Vol/Pass^1.62. This equation has an adjusted R^2 of 94.1%- an F-Statistic of 256 and P-Values for Years and Volume per Passenger of 5.30E- 10 and 2.17E-07- respectively. This equation is an excellent predictor of value.
The ‘Cubic Feet of Volume per Passenger’ term is a metric that separates out a ‘comfort factor’. It is the Cabin Cubic Feet divided by the passenger capacity for any given airplane’s executive configuration. We modelled the dataset using other variables such as TTAF- etc. Volume per Passenger- however- had a strong positive correlation and it made sense- so we used it.
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 C).
Table D shows an example of using the MACRS schedule for a 2003 model Falcon 900EX in private (Part 91) and charter (Part 135) operations over five and seven-year periods- assuming a Vref retail value of $16.0 million.
Finally- Chart F shows the circle ranges from Geneva- Switzerland- for all the business jets in this field of study- as sourced from Aircraft Cost Calculator. The Falcon 900EX/EX EASy shows greater range coverage than the Gulfstream GIV-SP and G450.
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 nautical mile alternate. The lines depicted do not include winds aloft- or any other weather-related obstacles.
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 performance that might factor in a buying decision- too- however.
Using JETNET/AvData information- there are currently 61 or 12.2% Falcon 900 series aircraft (incorporating the 900- 900C- 900DX- 900EX- 900EX EASy- 900LX) “For Sale”. The Falcon 900EX and EX/EASy series of aircraft fares well alongside its competition- so those operators in the market should find the preceding comparison of value. Our expectations are that the Falcon 900EX and EX EASy will continue to do well in the pre-owned market.