How does Dassault's Falcon 2000LX compare on the market with the Bombardier Challenger 605? What are its strengths and weaknesses? Mike Chase provides information on these two popular Large jets to establish some answers...
In this month’s Aircraft Comparative Analysis, Mike Chase provides information on a pair of popular business jets for the purpose of valuing Dassault’s Falcon 2000LX.
How does the Dassault Falcon 2000LX compare in the market today? Over the following paragraphs, we’ll consider productivity parameters (payload, range, speed and cabin size) and cover current market values. The field in this study includes the Bombardier Challenger 605.
Dassault introduced the original twin-engine Falcon 2000 as the Falcon X in 1989. First flight came in 1993 and two years later in 1995 the Falcon 2000 entered service. The Falcon 2000 offers trans-continental range and features a large stand-up cabin, two CFE-738-1-1B engines (each offering 5,918lbst) and a Rockwell Collins Pro Line 4 integrated avionics suite.
Following on from the Falcon 2000, the Falcon 2000EX took its maiden flight in October 2001 and entered service in May 2003 offering 25% greater range (over 4,000nm) with six-passengers. The improvements in performance were due to new powerplants (two 6,945lbst PW308C jets) and increased fuel capacity.
Next came the Falcon 2000EX EASy - offering the new EASy flight deck, based on the Primus Epic system. US and European certification was awarded in June 2004. Then in October 2005, Dassault announced yet another development on the original Falcon 2000 with the Falcon 2000DX, which offered a 9.9% range improvement.
By May 2006, Dassault announced the Falcon 2000LX (incorporating Aviation Partners blended winglets that offer increased fuel efficiency). The 2000LX replaced the Falcon 2000EX from 2010, though the model was produced from 2007 to 2014.
Today, the Falcon 2000LX has been replaced on the production line by the Falcon 2000LXS, which offers improved short-field capability along with full-length inboard slats on the wing. The 2000LXS also boasts increased payload capability.
A total of 131 Falcon 2000LX aircraft were manufactured, and today all 131 remain in operation globally. Of those, 129 are wholly-owned with two are in shared ownership.
By continent, North America has the largest Falcon 2000LX fleet percentage (59%), followed by Europe (21%), accounting for a combined 80% of the world’s fleet. Almost one-fifth of the Falcon 2000LX jets in operation today are in fleet ownership with the largest fleet operator having four aircraft. Currently, 17.6% of the Falcon 2000LX fleet are leased.
As of March 2018, the Falcon 2000LX fleet is comprised of 46% being operated by the same owner since new and 54% having been sold on the used aircraft market.
The percentage ‘For Sale’ as of this writing is 3.1%, all of which are under an exclusive broker agreement. The average days on the market is 131 days.
Status of ADS B-Out Equipage
Of the 131 Falcon 2000LX business jets based worldwide, 58 (44%) are ADS-B Out compliant, leaving 56% of the fleet yet to be equipped. The FAA has mandated that all US-operated business jets must comply with this new requirement by January 1, 2020.
Payload & Range
As we have mentioned in past articles, a potential operator should focus on payload capability as a key factor. Depicted in Table A, the Falcon 2000LX ‘Available Payload with Maximum Fuel’ (990lbs) is less than that offered by the Challenger 605 (1,298lbs).
TABLE A - Payload & Range Comparison
Cabin Cross-Section Views
Chart A shows a cabin cross-section comparison with the Falcon 2000LX offering less width (7.7ft) than the Challenger 605 (8.17ft), but greater height (6.2ft versus 6.08ft).
CHART A - Cabin Cross-Section Comparison
In addition, the Falcon 2000LX cabin length is greater (31ft) compared to the Challenger 605 cabin (28ft). Nevertheless, according to Conklin & de Decker, the Falcon 2000LX has a smaller cabin volume at 1,028 cubic feet compared to the Challenger 605 at 1,146 cubic feet. The Falcon 2000LX offers greater internal baggage volume, however, at 131cu.ft versus the Challenger 605’s 115cu.ft.
As depicted by Chart B using Little Rock, Arkansas as the origin point, the Falcon 2000LX (4,145nm) shows slightly more range coverage than the Challenger 605 (4,123nm). Each business jet’s range covers all of North America, Central America, the northern part of South America and the western fringe of Europe.
CHART B - Range Comparison
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 Falcon 2000LX is powered by two Pratt & Whitney Canada PW308C turbofan engines each with 7,000lbst. The Challenger 605 is powered by two General Electric CF34-3B turbofan engines offering more power at 8,729lbst each.
Total Variable Cost
The ‘Total Variable Hourly Cost’, sourced from Conklin & de Decker and illustrated in Chart C, is defined as the Cost of Fuel Expense, Maintenance Labor Expense, Scheduled Parts Expense and Miscellaneous Trip Expense.
CHART C - Variable Hourly Costs
The Total Variable Cost for the Falcon 2000LX computes at $2,829 per hour, which is slightly less than the Challenger 605 ($2,866 per hour).
Aircraft Comparison Table
Table B contains the 2017 used prices (per Vref) for each aircraft. The average speeds and ranges are from Conklin & de Decker, while the number of aircraft in-operation, percentage ‘For Sale’ and average sold are as reported by JETNET.
TABLE B - Aircraft Comparison Table
The Falcon 2000LX had 3.1% of its fleet ‘For Sale’ as of the end of March 2018 while 4.2% of the Challenger 605 fleet was ‘For Sale’. The average number of used jet transactions (sold) per month shows the Falcon 2000LX at three units compared to the Challenger 605 at five.
Maximum Scheduled Maintenance Equity
Chart D depicts/projects the Maximum Maintenance Equity of the Falcon 2000LX, based on its age. The Maximum Maintenance Equity figure was achieved the day the aircraft came off the production line (since it had not accumulated any utilization toward any maintenance events).
CHART D - Maximum Scheduled Maintenance Equity
The percent of the Maximum Maintenance Equity that an average aircraft will have available based on its age, assumes an average Falcon 2000LX annual utilization of 400 Flight Hours, and that all maintenance is completed when due.
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 C).
TABLE C - Part 91 and 135 MACRS Schedule
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.
The US enacted the 2017 Tax Cuts & Jobs Act into law on December 22, 2017. Under the new Act, taxpayers may be able to deduct up to 100% of the cost of a new or used aircraft purchased after September 27, 2017 and placed in service before January 1, 2023. This 100% expensing provision is a huge bonus for aircraft owners and operators.
After December 31, 2022 the Act decreases the percentage available each year by 20% to depreciate qualified business jets until December 31, 2026.
TABLE D - MACRS Depreciation Schedule
Table D depicts an example of using the MACRS schedule for a 2013 model Falcon 2000LX in private (Part 91) and charter (Part 135) operations over five- and seven-year periods, assuming a 2013 list price for a Falcon 2000LX at $19.75m (per Vref Pricing Guide).
Asking Prices & Quantity
As of this writing, the used Dassault Falcon 2000LX market showed a total of four aircraft ‘For Sale’ with one displaying an asking price of $13.1m. We also reviewed the used Bombardier Challenger 605 market (13 ‘For Sale’) with five displaying asking prices that range from $11m to $14.25m.
According to Vref, the average ten-year-old Falcon 2000LX value has a depreciated to 44% of its new retail price in 2007.
While each serial number is unique, the Airframe (AFTT) hours and age/condition will cause great variations in price on the used jets market. 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 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 conclude that the Dassault Falcon 2000LX displays a fair level of productivity within its field.
CHART E - Productivity Comparison
The Falcon 2000LX business jet is offered at a much higher used price with similar range and cabin volume compared to the Challenger 605, though it does offer a lower ‘Available Payload with Maximum Fuel’ number. Additionally, the Falcon 2000LX has a lower hourly variable cost compared to the Challenger 605.
Operators should weigh up their mission requirements 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.
The Falcon 2000LX continues to be popular today, and operators in the market should find the preceding comparison useful. Our expectations are that the Dassault Falcon 2000LX 'For Sale' and Bombardier Challenger 605 will continue to do well in the used jets market for the foreseeable future.
Of course, if these aircraft are not outfitted with ADS-B Out, they cannot be placed in operation after December 31, 2019, as mandated by the FAA, and that should be a key consideration of any buyer today.