In this month’s Aircraft Comparative Analysis, Mike Chase provides information on two popular business jets for the purpose of valuing the Dassault Falcon 900LX. A 2015 large cabin Falcon 900LX has a list price of $43.3m.
Over the following paragraphs, we’ll consider productivity parameters (payload/range, speed and cabin size) and cover current and future market values. The field in this study includes Embraer’s Legacy 650 business jet. Both the Legacy 650 and Falcon 900LX were launched in 2009 following the great recession. So how have these two aircraft fared during this post-recession recovery?
The Dassault Falcon 900 aircraft first flew on September 21, 1984. It is unique because it – along with its siblings, the smaller Falcon 50 and the Falcon 7X, an advanced development – are the only business jets currently (or previously) produced with three engines. The Falcon 900 was developed from the Falcon 50, itself a development of the Falcon 20 aircraft, and the 900’s engineering included computer-aided design and the incorporation of composite materials.
Subsequent, improved models include the Falcon 900B featuring newer versions of its Honeywell TFE-731 engines and increased range, and the Falcon 900EX featuring further improvements in engines and range along with an “all-glass” flight deck. The Falcon 900C is a lower-cost companion to the Falcon 900EX and replaced the Falcon 900B.
In 2003, Dassault began offering the EX with the new EASy (Enhanced Avionics System) digital cockpit based on the Honeywell Primus Epic. In 2005, the Falcon 900DX entered service. Both the Falcon 900EX EASy and Falcon 900DX ended production in 2010.
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 as a retrofit kit.
There are 43 wholly-owned Falcon 900LX aircraft in operation worldwide with none in shared ownership or in fractional ownership. By continent, North America has the largest fleet percentage at 46%, followed by Europe (at 27%) and Asia (24%) for a combined total of 97%. Additionally, seven (16.3%) of the fleet are leased, according to JETNET.
Payload & Range
The data contained in Table A are sourced from Conklin & de Decker and B&CA’s May 2015 issue. A potential operator should focus on payload capability. The ‘Available Payload with Maximum Fuel’ for the Falcon 900LX is 1,800 lbs, which is less than the Legacy 650 (1,909 pounds).
In addition, Table A shows the fuel usage by each aircraft in this field of study. The Falcon 900LX at 274 gallons per hour (GPH) has 24.3% less fuel consumption (88 gallons) than the Legacy 650 (362 GPH). Thus, the Falcon 900LX with three engines is the more fuel-frugal according to data from Aircraft Cost Calculator.
Cabin Cross Sections
According to Conklin & de Decker, the Falcon 900LX cabin volume is 1,218 cubic feet and its cabin length is 33.2 ft. The Embraer Legacy 650 has a larger cabin volume at 1,656 cu ft - 36% greater. This owes to its additional length (49.8 ft) compared to the Falcon 900LX.
Note from Chart A (courtesy of UPCAST JETBOOK) that the Falcon 900LX offers greater cabin height and width, however.
As depicted by Chart B and using Paris, France as a origin point, the Falcon 900LX shows more range coverage than the Embraer Legacy 650—reaching most of Asia, Africa and the United States non-stop, as sourced from Aircraft Cost Calculator (ACC).
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 200nm alternate. The lines depicted do not include winds aloft or any other weather-related obstacles.
The Falcon 900LX is powered by three Honeywell TFE 731-60 engines, each offering 5,000 pounds of thrust (lbst). The Legacy 650, meanwhile, uses two Rolls-Royce AE 3007A2 engines, each offering 9,020 pounds of thrust.
Cost Per Mile
Using data published in the May 2015 B&CA Planning and Purchasing Handbook and the August 2014 B&CA Operations Planning Guide we will compare our aircraft. The nationwide average Jet-A fuel cost used from the August 2014 edition was $6.18 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 C details ‘Cost per Mile’ and compares the Falcon 900LX to its competition factoring direct costs, and with each aircraft flying a 1,000nm mission with 1,600 pound (eight passengers) payload. The Legacy 650 shows the highest cost per nautical mile at $6.12, 14% more compared to the Falcon 900LX at $5.37.
Total Variable Cost
The ‘Total Variable Cost’ illustrated in Chart D is defined as the Cost of Fuel Expense, Maintenance Labor Expense, Scheduled Parts Expense and Miscellaneous Trip Expense. The Total Variable Cost for the Legacy 650 shows a cost at $2,335, which is marginally higher than the Falcon 900LX at $2,301.
Aircraft Comparison Table
Table B contains the new prices from Vref Pricing Guide for each aircraft. The average speed, cabin volume and maximum payload values are from Conklin & de Decker, while the number of aircraft in-operation and percentage ‘For Sale’ are as reported by JETNET.
The Falcon 900LX and Legacy 650 have more than 10 percent of their respective fleets currently ‘For Sale’. However, the Falcon 900LX at 16.3% is higher than the Legacy 650 at 11%.
Jet planes 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).
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 business aircraft 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.
Jets 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 D depicts an example of using the MACRS schedule for a 2015 Falcon 900LX aircraft in private (Part 91) and charter (Part 135) operations over five- and seven-year periods, assuming a used retail value of $43.3 million, per Vref Pricing guide.
Asking Prices vs Age, Quantity and Engines
Chart E, sourced from the Multi-dimensional Economic Evaluators Inc. (www.meevaluators.com), shows a Value and Demand chart for the pre-owned Falcon 900LX including the Legacy 650. The current pre-owned market for Falcon 900LX aircraft shows a total of seven aircraft ‘For Sale’ with two displaying an asking price, thus we have plotted those two.
We also added other large and super medium cabin pre-owned business jets of similar ilk with asking prices ranging from $6 million to $36 million. The equation that we derived from these asking prices and other criteria used should enable sellers and buyers to compare, and perhaps adjust their offerings, if necessary.
Demand and Value are on opposite sides of the same Price axis. Thus, the market for new/used Falcon 900LX responds to at least four features: Years, Max Cruise Mach, Quantity, and Price.
The points in Chart F 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:
1. Range with full payload and available fuel;
2. The long range cruise speed flown to achieve that range;
3. The cabin volume available for passengers and amenities.
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 900LX, as shown in the productivity index is very productive compared with its competitor.
Primary reasons to consider the Falcon 900LX are range, fuel economy, higher cruise speed, lower cost per hour and variable costs. The Falcon 900LX has a smaller cabin volume compared to the Legacy 650 – at least in terms of length - and has a higher acquisition price. Operators should weigh their mission requirements precisely when picking the aircraft option that is the best for them.
Exclusive to our online content, the chart below displays the Falcon 900LX, depicting the Maximum Maintenance Equity available, based on 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.
- The percent of the Maximum Maintenance Equity that an average aircraft will have available based on its age, assumes:
a) Average annual utilization of 470 Flight Hours, and
b) All maintenance is completed when due.
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, however.
The Falcon 900LX continues to be very popular in the market today. Operators should find the preceding comparison informative. Our expectations are that the Falcon 900LX, which started delivering in 2009, will continue to do very well in the new and used jet plane markets for the foreseeable future.