- 01 May 2018
- Mike Chase
- Jets Comparison
Over the following paragraphs, we’ll consider productivity parameters (payload/range, speed and cabin size) and cover current market values for the Legacy 650. The field in this comparative study includes the Bombardier Challenger 850.
Both aircraft are derivatives based on the platform of regional commercial airliners that offer a seating capacity for 50 passengers.
Embraer announced its entrance into the Business Aviation market in 2000 with the Legacy 600, which subsequently made its first flight in 2001. The Legacy 600 is derivative of the 35-seat Embraer ERJ-135 regional jet. European certification came in August 2002 and FAA certification followed soon after.
The Legacy 600 family is available in two versions: Legacy 600 Executive and Legacy Corporate Shuttle. The Legacy Shuttle, which offers a shorter range than the Legacy 600 Executive, offers seating for 16 passengers in three partitioned sections, or seating for 19–37 in airline-style seats. The Legacy 600 model is powered by two Rolls-Royce AE3007A1E engines each offering 7,953 lbst.
The Legacy 650 followed the Legacy 600 into the market in 2011, and is based on the platform of ERJ-145 (50 passenger) regional jet. The Legacy 650 is a longer-range version of the Legacy 600. The Legacy 650 model is powered by two Rolls-Royce AE3007A2 engines each offering 9,020 pounds of thrust and has a certified flight level ceiling of 41,000 feet.
There are 93 wholly-owned Embraer Legacy 650 aircraft in operation worldwide. By continent, Asia has the largest fleet percentage (46%), followed by Europe (29%) and South America (13%), for a combined total of 88% of the fleet. Three (3.2%) of the Legacy 650 in operation fleet are leased, according to JETNET.
Payload & Range
The data contained in the table below are published in B&CA’s May 2016 issue, but is also sourced from Conklin & de Decker. As we have mentioned previously, a potential operator should focus on payload capability as a key factor. The Legacy 650 ‘Available Payload with Maximum Fuel’ (1,909 lbs) is considerably greater than the Challenger 850 (358 lbs).
In addition, the table shows the fuel usage by each aircraft in this field of study. The Legacy 650 burns more fuel per hour at 362 gallons per hour (GPH) compared to 311 GPH for the Challenger 850, according to Aircraft Cost Calculator.
According to Conklin & de Decker, the Legacy 650 cabin volume is 1,656 cubic feet and its cabin length is 49.8 ft. The Challenger 850 offers the greater cabin volume (1,964 cu. ft.) but is shorter in length at 48.4 ft. The following chart, courtesy of UPCAST JETBOOK, shows the main volume gain for the Challenger 850 over the Legacy 650 comes with its width (8.17 ft, versus 6.92 ft).
As depicted by the following chart, and sourced from Aircraft Cost Calculator, using Shanghai, China as the origin point, the Legacy 650 (3,569.5nm) shows considerably more range coverage than the Challenger 850 (2,394.6nm).
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.
As mentioned previously, the Legacy 650 is powered by two Rolls-Royce AE 3007A2 engines offering a thrust rating of 9,020 pounds. The Challenger 850 business jet is powered by two General Electric CF34-3B1 engines, each offering 8,729 pounds thrust.
Cost Per Mile
Using data published in the May 2016 B&CA Planning and Purchasing Handbook and the August 2016 B&CA Operations Planning Guide we will compare our aircraft. The nationwide average Jet-A fuel cost used from the August 2016 edition was $4.90 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.
The following chart details ‘Cost per Mile’ and compares the Legacy 650 to the Challenger 850 factoring direct costs and each aircraft flying a 1,000nm mission with a 800 lbs (four passengers) payload. The Challenger 850 shows the higher cost per nautical mile ($5.88) compared to the Legacy 650 ($5.47). That’s a difference of 41 cents, or 7.5% cost per nautical mile in favor of the Legacy 650.
Total Variable Cost
The ‘Total Variable Cost’ illustrated in the chart below 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 computes at $2,145 per hour, which is 14.3% less than the Challenger 850 at $2,502 per hour.
Aircraft Comparison Table
The following table contains the used aircraft prices from Vref Pricing Guide for each jet. The average speed, cabin volume and maximum payload values are from Conklin & de Decker and Aircraft Cost Calculator, while the number of aircraft in-operation and percentage ‘For Sale’ are as reported by JETNET.
The Legacy 650 has 14% of its fleet currently ‘For Sale’, while the Challenger 850 has 8.7% ‘For Sale’. Also, the average number of new deliveries and used transactions (sold) per month is the same at one transaction/sale per month for each aircraft.
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.
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 following depicts an example of using the MACRS schedule for a 2012 Legacy 650 aircraft in private (Part 91) and charter (Part 135) operations over five- and seven-year periods, assuming a used retail value of $13m, per Vref Pricing guide.
Asking Prices & Quantity
The current used jet market for the Embraer Legacy 650 shows a total of 13 aircraft ‘For Sale’ with four displaying an asking price ranging from $12.95m to $15.45m.
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.
The points in our final chart (below) 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 Legacy 650 displays a high level of productivity.
Popular attributes of the Legacy 650 are the lower cost per mile, lower variable cost, and greater available payload with maximum fuel compared to the Challenger 850. The Challenger 850 has more cabin volume, lower fuel burn but at a higher pre-owned price. The Challenger 850, however, while offering a shorter cabin, has a higher cabin volume due to its significantly larger width.
Operators should weigh their mission requirements precisely when picking the option that 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 Embraer Legacy 650continues to be very popular today. Those operators in the market should find the preceding comparison useful. Our expectations are that the Embraer Legacy 650 will continue to do well in the used jet market for the foreseeable future.
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