In this edition, we review business jets in the $50.2m-$73.5m range for the purpose of valuing the pre-owned Bombardier Global 6000. We’ll consider the productivity parameters - payload/range, speed and cabin size, and cover current and future market values. The field in this study also includes the Bombardier Global 5000 and the Gulfstream G550 and G650.
The Global 6000 for sale is the fourth and latest business jet model built by Bombardier to compete in the ultra-long-range and large cabin market. The ultra-long-range business jet market began in 1995 with the Gulfstream GV, followed two years later by the Global Express, and is defined as large cabin business jets that can fly a 5,000nm (or greater) distance.
The Global 6000 traces its roots to the Global Express XRS which was the third ultra-long-range large cabin business jet produced by Bombardier. The Global 6000 started delivering to customers in 2012 and there are currently 99 Global 6000s in operation worldwide.
The model offers a large, spacious cabin in excess of 2,000 cubic feet and can travel over 6,100 nm non-stop. Two new models will follow the Global 6000 - the Global 7000 and Global 8000 ultra-long-range large cabin business jets.
Today the ultra-long-range large cabin business jet market has 1,525 units in operation (Table A). Currently Gulfstream (731 units) has a 48% share of the market, followed by Bombardier (37% share or 572 units) and Dassault Falcon (15% share).
Payload and Range
The data contained in Table B is published sourced from Conklin & de Decker and also B&CA (May 2014 issue). A potential operator should focus on payload capability as a key factor. The Global 6000s ‘Available payload with Maximum Fuel’ at 2,804 lbs has the second highest value in the comparative field, which is more than 1,000 lbs greater when compared to the Gulfstream G650 (1,800 lbs).
Also represented, according to Aircraft Cost Calculator the Global 6000 burns 461 gallons of fuel per hour (GPH), which is 1.8% greater than the G650 (453 GPH) and 14.7% more than the G550 (405 GPH).
According to Conklin & de Decker, the cabin volume of the Global 6000 (2,002 cubic feet) is less than that of the Gulfstream G650 (2,421 cubic feet, or 20.9% less) - Chart A. However, the Global 6000 offers a larger cabin volume than the Global 5000 (1,889 cubic feet) and the Gulfstream G550 (1,812 cubic feet).
The differences can essentially be found in the cabin length in feet. Both the Global 6000 and the Global 5000 have the exact same cabin height and width, but the Global 6000’s 48.35 foot length is nearly 6ft longer than the Global 5000’s. The Gulfstream G650 has the greatest length of study group at 53.6 feet. The respective cabin cross-sections are represented in Chart A (courtesy of UPCAST JETBOOK).
As depicted in Chart B, using New York City as a starting destination for the business jets in our field of study, the G650 shows more range coverage than the G550, Global 6000, and Global 5000 at 6,800nm, according to Aircraft Cost Calculator. The Global 6000 ranks third behind the G550.
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 (100nm for turboprops). The lines depicted do not include winds aloft or any other weather-related obstacles.
The Global 6000 and the Global 5000 jets are powered by two Rolls-Royce BR700-710A2-20 engines, each offering 14,750 pounds of thrust for both models. The Gulfstream models also use Rolls-Royce powerplants with the G550 using BR 710-C4-11s offering 15,385 lbst, and the G650 using BR 725 A1-12 engines with 16,900 lbst.
Cost Per Mile Comparisons
Using data published in the May 2014 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 Global 6000 to the Global 5000 and G550 factoring direct costs, and with each aircraft flying a 1,000nm mission with a 1,600 pound (eight passengers) payload. The G550 at $6.55 cost per mile is lower by 16.8% compared to the Global 6000 ($7.87 cost per mile). The G650 ‘Cost per mile’ was unavailable at the time of print.
Total Variable Cost Comparisons
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 Global 6000 at $3,779 is higher than the Global 5000 ($3,466) and the Gulfstream G550 ($2,918). The G650 ‘Total Variable Cost’ was not available at the time of print.
Aircraft Comparison Table
Table C contains the average new retail prices from Vref for each aircraft. The average speed, cabin volume and maximum payload values are from Conklin & de Decker. The number of aircraft in-operation and percentage ‘For Sale’ are as reported by JETNET. The Global 5000 has the highest fleet percentage ‘For Sale’ (10.2%), while the Gulfstream G550 has the most pre-owned sold in the past 12 months (88).
It is interesting to note that of the 99 Global 6000 aircraft in operation today, only 6.1% of the fleet is ‘For Sale’ (representing a traditional seller’s market). Of the 92 wholly-owned Global 6000 aircraft in operation (excluding seven Global 6000s that are in fractional service), North America is home to 46% and Europe 40% of the fleet (a combined total of 86%).
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 (e.g. Part 91) may be depreciated over a five-year Modified Accelerated Cost Recovery System (MACRS) schedule. Aircraft used in common or contract carriage (e.g., Part 135) are depreciable under seven-year MACRS (see Table D). The aircraft can be purchased new or pre-owned to use MACRS accounting method.
Table E, meanwhile, depicts an example of using the MACRS schedule for a 2014 model Global 6000 in private (Part 91) and charter (Part 135) operations over five and seven-year periods, assuming a Vref retail value of $62.0 million.
Source ACC – www.aircraftcostcalculator.com
Asking Prices Vs AFTT, AGE & Engine Thrust
Chart E, sourced from the Multi-dimensional Economic Evaluators Inc. (www.meevaluators.com), shows a Value and Demand chart for the pre-owned Global 6000, Global 5000, Gulfstream G550 and G650. The current pre-owned market for these aircraft shows a total of 55 aircraft ‘For Sale’. Fifteen of the 55 have an asking price - thus, we have plotted those 15.
The equation that we derived from these asking prices and other criteria used should enable sellers and buyers to compare, and perhaps adjust their offerings if necessary. Demand and Value are on opposite sides of the same Price axis. The market treats the Global 6000, Global 5000, G550 and G650 in much the same way.
The Demand Equation for these vehicles is Price ($m) = 63.9 *Qty-0.5416. The flat slope (exponent >-1.0) indicates that there is more revenue in the lower portion of the market than there is in the upper. This equation is very well correlated, with an adjusted R2 of 96.1%, a Pearson’s2 of 96.9%, a P-Value of 1.31%, and a Standard Error of $1.81m.
The Value Equation is Price = 36.93 x Years-0.4781 x Max Range Nautical Miles1.666. We find that the Value Equation for these aircraft is well correlated, with an Adjusted R2 of 92.4%, a Pearson’s2 of 94.7%, and a Standard Error of $1.94m (with P-Values of 1.58e-05 and 3.85e-07 for Years and Range in Nautical Miles, respectively). The exponential value of range term - at 1.666 - is especially strong and reflects the importance that this market sector places on long-range capacity.
Thus, the market for used Global 6000, Global 5000, G550 and G650 responds to at least the four features depicted here: Years, Range, Price and Quantity.
The points in Chart F center on the same aircraft. Pricing used in the vertical axis is as published in the B&CA August 2014 Operations Planning Guide. The productivity index requires further discussion in that the factors used can be somewhat arbitrary.
Productivity can be (and it is here) defined 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.
The result is a very large number so for the purpose of charting, each result is divided by one billion. Added to this chart to illustrate the overall standing of the Global family of aircraft are the Global 6000 and Global 5000 along with the Gulfstream G650 and G550. 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 aircraft buyers are usually impressed with Price, Range, Speed and Cabin Size. After consideration of the Price and Cabin Size, we can conclude that the Global 6000, as shown in our productivity index, is very competitive with the Gulfstream G550 although, the Global 6000 is more costly to operate hourly than the G550.
Another valuable measure is the payload capability of the Global 6000 at 2,804 lbs is more than 1,000 lbs greater than the G650 and 300 lbs greater than the G550. Nevertheless, it is clear from the chart that the Gulfstream G650 for Sale has created a new target for productivity.
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, but are beyond the scope of this article.
Overall, the Bombardier Global 6000 fares well against its competition so those operators in the market should find the preceding comparison of value. Our expectations are that the Global 6000 ultra-long-range large cabin business jet will continue to do very well in the pre-owned market over the coming years. Meanwhile, on the new aircraft market, it will be interesting to watch how Bombardier closes the gap on the G650 once the Global 7000 and 8000 are certified and delivering...