In this month’s Jets Comparison, Mike Chase provides information on a group of popular Large-Cabin business jets for the purpose of valuing the Gulfstream G450.
Gulfstream G450 private jet
Gulfstream G450 vs Dassault Falcon 900LX vs Bombardier Challenger 605/650
In this month’s Aircraft Comparative Analysis, Mike Chase provides information on a group of popular Large-Cabin business jets for the purpose of valuing the Gulfstream G450.
Following, we’ll consider some key productivity parameters - payload/range, speed and cabin size - and cover current and future market values for the Gulfstream G450. The field in this study also includes the Dassault Falcon 900LX and the Bombardier Challenger 605/650.
Gulfstream G450 flight-testing started in April 2003, and FAA certification was completed in August 2004. The G450 went into production in 2004, replacing the G400. This aircraft continued the successes of the GIV and GIV-SP.
A cross between the G400 and the G550, the G450 was designed using the G400 airframe and the G550 nose section. It utilizes a Honeywell Primus Epic PlaneView avionics suit and a pair of next generation Rolls-Royce Tay 611-8C engines.
Scheduled to go out of production in early 2018, Gulfstream expects to deliver the last G450 business jet to coincide with initial deliveries of its new Gulfstream G500.
There are 327 wholly-owned G450 business jets, six in shared ownership, and 17 in fractional ownership giving a total fleet of 350 aircraft in operation worldwide. The percentage ‘For Sale’ is 7.4% with 81% under an exclusive broker agreement. Average days on the market are 250 days, according to JETNET.
By continent, North America has the largest G450 fleet percentage (59%), followed by Asia (27%) and Europe (10%) for a combined total of 96%. The largest fleet owner is NetJets in the United States with 14 G450 aircraft. Interestingly, 62% of the G450 fleet is still with the original owner and just 38% of the fleet are pre-owned.
Status of ADS-B Out Equipage
Of the 194 G450 business jets based in the US, 126 (65%) have ADS-B Out installed, leaving 35% of the fleet yet to comply. The FAA has mandated that all US-operated business jets must compile with this new requirement after December 31, 2019.
Payload & Range
We have mentioned in past articles that a potential operator should focus on payload capability as a key factor. The Gulfstream G450 ‘Available Payload with Maximum Fuel’ at 2,719 pounds is significantly greater than that offered by the Falcon 900LX (1,800 lbs) and Challenger 605 (1,298 lbs.), as represented in Table A.
Cabin Cross-Section Views
Chart A shows a cabin cross-section comparison with the G450 offering less width (7.33 ft.) than the Falcon 900LX (7.67 ft.) and the Challenger 605/650 (8.17 ft.). While the G450 and the Falcon 900LX offer the same 6.17 ft. height, the Challenger 605/650 offers slightly less (6.08 ft.).
Interior height is measured at the center of the cross-section. However, two width dimensions can be used – one at the widest part of the cabin and the other at floor level. For our comparison, we use the measurement of the widest part of the cabin.
Cabin length can be measured in three ways, meanwhile. Each yields differing cabin volumes. For example, the Main Seating includes all passenger seats but not the lavatory areas. Due diligence by an owner/operator is required to understand comparative aircraft interior measurements. Table B shows the G450 has the greatest interior cabin length of all the candidate aircraft.
The interior cabin length measurement that one selects from the table will determine the cabin volume in cubic feet for an aircraft. When comparing cabins, perhaps the most important is the measurement of personal space so that a relative value can be reported between candidate business jets.
As an example, the personal space per passenger calculated for the G450 is 414.5 cubic feet. By comparison, the Falcon 900LX offers 317.5 cu. ft. and the Challenger 605/650 286.5 cu. ft., based on the gross cabin volume measurement using four seats in each aircraft.
Some OEMs provide optimistic measurements, thus prospective buyers are advised to measure the aircraft for themselves or consult with interior experts to provide a fair comparison.
Chart B shows the ranges from Newark, New Jersey for the business jets in our field of study, as sourced from Chase & Associates. The Falcon 900LX shows more range coverage than either the G450 or the Challenger 605/650.
Note: The IFR range represents the distance of the aircraft at Long-Range Cruise with four passenger seats occupied. NBAA IFR fuel reserve calculation is for a 200nm alternate (100nm for turboprops). The lines depicted do not include winds aloft or any other weather-related obstacles.
Each of the Gulfstream G450’s Rolls-Royce TAY 611-8C engines offers a thrust rating of 13,850 lbs. The Dassault Falcon 900LX is powered by three Honeywell TFE 731-60 powerplants, each with 5,000 lbst. The Bombardier Challenger 605 is powered by GE CF34-3B engines (8,729 lbst) and the Challenger 650 with CF34-3B MTO engines (9,220 lbst).
Total Variable Cost Comparison
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 Gulfstream G450 at $3,607 is greater than the Falcon 900LX ($3,054) and the Challenger 605/650 ($2,660).
Table C contains the Long-range cruise speed and four-passenger ranges for the comparative aircraft, while the number of aircraft in-operation, percentage ‘For Sale’ and average sold for each model is as reported by JETNET.
The G450 business jet has 8% of its fleet currently ‘For Sale’ and the Falcon 900LX has 11.9% ‘For Sale’. The Challenger 605/650 has the lowest percentage ‘For Sale’ (6.3%). In terms of the average number of used jet transactions (sold) per month, the G450 leads the field with an average of six transactions.
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 (i.e. Part 91) may be depreciated over a five-year Modified Accelerated Cost Recovery System (MACRS) schedule. Aircraft used in common or contract carriage (Part 135) are depreciable under seven-year MACRS.
Table E depicts an example of using the MACRS schedule for a 2017 Gulfstream G450 in private (Part 91) and charter (Part 135) operations over five- and seven-year periods assuming a Vref retail value of $27m.
Asking Prices & Quantity
The current used aircraft market for the G450 business jet shows a total of 26 aircraft ‘For Sale’ with only four displaying an asking price ranging between $12m and $17.5m. We also reviewed the used Challenger 605 market (19 ‘For Sale’ with 10 showing asking prices ranging from $8.1m to $17.5m). There were no asking prices displayed for the nine Falcon 900LX jets ‘For Sale’ and there are currently no Challenger 650 jets ‘For Sale’.
According to Vref, the average 10-year-old (2007 model) G450’s value has declined to 32% of its new value. A 2007 Challenger 605 is 31% of its new retail price.
While each serial number is unique, the Airframe (AFTT) hours and age/condition will cause great variation 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 center on the Gulfstream G450, Falcon 900LX and Bombardier Challenger 605/650 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.
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 jets are considered the “r” squared factor would equal a number above 0.9. Others may choose different parameters, but serious business jet buyers are usually impressed with price, range, speed and cabin size.
We can conclude that the Gulfstream G450, as shown in the productivity index is very productive. The G450 offers a highly competitive value to a prospective owner. Overall, the greater range, speed and cabin capacity will weigh in favour of the G450 for many operators – although operating costs are proportionally higher for this aircraft.
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 which are beyond the scope of this article.
The Gulfstream G450 business jet has its advantages at its price-point - so those operators in the market should find the preceding comparison of value. Our expectations are that the G450 will continue to do very well in the used market for the foreseeable future - but it’s worth keeping a watch for how the new aircraft market develops. The entire story of the large cabin market has been remarkable.