Over the following paragraphs, we’ll consider the productivity parameters of payload, range, speed and cabin size, and consider current market values in relation to the Bombardier Global 5000 and the Dassault Falcon 7X. First, though, let’s consider the background of the Global 5000…
The Global 5000 offers operators the advantage of short take-off and landing performance and traces its roots to the Global Express, the second Ultra-Long-Range and Large Cabin business jet to enter the market in the late 1990s.
The Global 5000 incorporates a 32 inch reduction in forward fuselage length and a 1,200nm reduction in maximum range. It flew for the first time in March 2003 and received its certification in October 2004.
Three subsequent business jets have followed the Global 5000, including the Global 6000 (already in service), and the in-development Global 7000 and Global 8000 Ultra-Long-Range business jets.
Global 5000 Fleet Dynamics
Since its entry into service, 221 Global 5000s have been delivered globally, with 218 in operation today. Of those, 204 are wholly-owned, one is in shared ownership, and 13 are in fractional ownership.
By continent, North America has the largest percentage of in-operation Global 5000s (45%), followed by Europe (28%) and Asia (25%), accounting for a combined 97% of the world’s Global 5000 fleet.
A relatively high 40% of the 218 Global 5000s currently in operation are in fleet ownership. The largest fleet operator (US-based NetJets) owns 12 units. Interestingly, 13% of the Bombardier Global 5000 fleet are leased.
As of November 2017, the Global 5000 market is comprised of 70% new vs. 30% used. The percentage ‘For Sale’ on the used jet market is 8.3%, the majority of which are under an exclusive broker agreement. Average days on the market currently stands as 375 days, according to JETNET.
A vital consideration for prospective buyers of business jets is that of ADS-B equipage. Of the 218 Global 5000 business jets in operation, 121 (56%) are ADS-B Out equipped, leaving 45% of the fleet yet to comply. The FAA has mandated that all US-operated business jets must comply with this requirement by January 1, 2020.
Payload & Range
As mentioned in past articles, a potential operator should focus on payload capability as a key factor. According to data sourced from Conklin & de Decker (presented in Table A), the Global 5000 ‘Available Payload with Maximum Fuel’ (2,930 lbs) is more than that offered by the Falcon 7X (1,660 lbs).
Cabin Cross-Section Views
Chart A shows the Global 5000 offering more cabin cross section width (8.17ft) than the Falcon 7X (7.70ft). However, cabin height dimensions are almost the same, with both business jets offering a flat floor design.
Interior height is measured at the center of the cross section, while the width dimensions can be measured from the widest part of the cabin or at floor level. For the purpose of this comparison we provide the measurement taken from the widest part of the cabin (i.e. maximum interior width).
Cabin length, meanwhile, can be measured in three ways, each yielding differing cabin volumes. (For example, the Main Seating measurement would include all passenger seats but not the lavatory areas.) Table B, sourced from B&CA, shows that the Global 5000 has the greater interior cabin length compared to the Falcon 7X based on the ‘main seating’ area and ‘net’ measurement, but not in terms of ‘gross’ measurement.
When comparing aircraft cabins, a key cabin volume measurement is that of personal space. As an example, the personal space per passenger calculated for the Global 5000 is 472cu.ft with four passengers and 236cu.ft with eight passengers, per data from M2 Performance Group.
Prospective buyers are advised to measure the aircraft themselves or consult with interior experts to provide fair comparisons. Due diligence from a prospective owner/operator is required to understand comparative aircraft interior measurements.
As depicted by Chart B, using Teterboro, New Jersey as the origin point the Global 5000 (5,475nm) offers less range coverage than the Falcon 7X (5,760nm). Each business jet’s range covers all of North America, South America, Europe, or parts of Russia and Africa.
Note: For jets and turboprops, ‘Four Passengers with Available Fuel’ represents the maximum IFR range of the aircraft at Long-Range Cruise with four passenger seats occupied. NBAA IFR fuel reserve calculation for a 200nm alternate is assumed. The lines depicted do not include winds aloft or any other weather-related obstacles.
The Bombardier Global 5000 is powered by two Rolls-Royce BR710A2-20 turbofan engines each with 14,750 lbst. The Dassault Falcon 7X, meantime, is powered by three Pratt & Whitney PW307A turbofan engines, each with lower thrust at 6,405 lbst.
Total Variable Cost
The ‘Total Variable Cost’ illustrated in Chart C, sourced from Conklin & de Decker, is defined as the Cost of Fuel Expense, Maintenance Labor Expense, Scheduled Parts Expense and Miscellaneous Trip Expense. The Total Variable Cost for the Global 5000 computes at $4,265 per hour, which is almost 25% more than the Falcon 7X at $3,428 per hour.
Aircraft Comparison Table
Table C contains the 2017 new prices from Vref for each aircraft. The average speeds are from Conklin & de Decker and the ranges are from B&CA, while the number of aircraft in-operation, and percentage ‘For Sale’ and average sold are as reported by JETNET.
The Global 5000 business jet fleet had 18 jets ‘For Sale’ (8.3% of its fleet) as of the end of October 2017, while the Falcon 7X had 22 (8.1% of the fleet) ‘For Sale’. Currently, the average number of used transactions (sold) per month is two for the Global 5000 compared to four for the Falcon 7X.
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-model Global 5000 business aircraft in private (Part 91) and charter (Part 135) operations over five- and seven-year periods, assuming a 2017 list price for a Global 5000 at $48 million (per Vref Pricing Guide).
Asking Prices & Quantity
The current used jet market for the Bombardier Global 5000 shows a total of 18 jets ‘For Sale’ with two displaying ask prices ranging from $13.8m to $14.95m. We also reviewed the used Dassault Falcon 7X jet market (22 currently for sale) with five displaying ask prices that range from $17.9m to $24.9m.
According to Vref, a 2007 model Global 5000 value (as a percentage of the New Retail price) has declined to 35% of what it cost new, while the Falcon 7X has retained slightly more of its 2007 new value at 41%.
While each serial number is unique, 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.
Maximum Scheduled Maintenance Equity
As offered by Asset Insight, LLC, Chart D depicts the Maximum Maintenance Equity for the Bombardier Global 5000, based on its age. Note:
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 (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 Global 5000 displays a high level of productivity.
Both business jets are offered at the same new price. While the Bombardier Global 5000 offers greater cabin volume and ‘Available Payload with Maximum Fuel’, it offers less range and a higher variable hourly cost compared to the Falcon 7X business jet. Operators will need to weigh their mission requirements very 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, however.
The Global 5000 continues to be a popular jet model today. Those operators in the market should find the preceding comparison useful. Our expectations are that the Bombardier Global 5000 and Dassault Falcon 7X will both continue to do well in the used jet market for the foreseeable future.
Of course, if the Global 5000 is not outfitted with ADS-B Out, it cannot be placed in operation after December 31, 2019, adding a further buying consideration to the equation...