FC Jetcraft May.qxp_FC December 06 15/04/2019 12:22 Page 1

Volume 23 Issue 5

™

ACTIONABLE INTELLIGENCE FOR BUSINESS AVIATION

THIS MONTH Jets Comparison: Dassault Falcon 8X vs Bombardier Global 5000 proudly presents

2012 Bombardier Global 5000 Serial Number 9453

Learn more about this and our other exceptional aircraft on pages 34 - 35 and the back cover

Richard Seymour Photography

Is Your Jet’s Cabin Connectivity Becoming Obsolete? What’s the Future for Cockpit Avionics Safety? www.AVBUYER.com

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Editor Welcome May19.qxp_JMesingerNov06 16/04/2019 11:55 Page 1

Guest Editor’s VIEWPOINT

Frederic Dubant

The Emotional Roller-Coaster of an Aircraft Transaction losing an aircraft transaction ultimately brings great joy and satisfaction. But these are only the last of many emotions that industry professionals experience during the process. While it’s true that sometimes a transaction goes smoothly, most deals have their share of sweat and tears before they close. Right at the start, being chosen as the entrusted broker by a buyer or seller is a great recognition of past work and a good reputation. And that trust will be core to the transaction as it unfolds. The first potentially emotional topic broached with the client after remuneration is the need for exclusivity. For example, aircraft sellers can be averse to the idea of exclusively selling through one broker, and careful explanation is needed to show the seller that nonexclusivity works against their best interests. By keeping to one broker, the seller will avoid sending different messages to the market (whether about their aircraft’s history, its status or its pricing). Working exclusively with one broker needn’t trap a seller. They can always negotiate a termination at short notice if they are unhappy with the service they receive.

C

Patience

The offer, the letter of intent (LOI), or the memorandum of understanding (MOU) stage is the basis through which all deals are crafted. Price, payment terms, deposit, allocation of costs and delivery condition are all agreed here. An MOU should be carefully negotiated and drafted, lest it become a memorandum of misunderstanding. A significant investment of time and energy is required at this stage of the process as documents are prepared and signed – and frustration can arise if anything goes awry (such as a deposit not being paid). Once the offer is accepted, the purchase agreement is prepared. Patience and teamwork are essential to this complex stage of the transaction. Many parties are required to work together, including brokers, advisors, lawyers, bankers, escrow agent, aviation authorities, registries and operators. The broker needs to ensure that all parties and steps are treated in a fair manner, and to the highest industry standards.

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Uncertainty and Relief

The purchase agreement will require a thorough prepurchase inspection (PPI) to be performed by a maintenance center the buyer selects to determine whether they wish to proceed with the purchase or not. The PPI requires the seller to fix any discrepancies that have an impact on airworthiness. Where costs are incurred, the process is always emotional, and although the aircraft is generally well known to the selling party (and airworthiness issues should have been anticipated), there is always an element of uncertainty and fear as to what might be discovered. So the issuance of a clean PPI report is always a relief.

Anticipation

Following the PPI, and with all conditions stipulated under the purchase agreement met, the aircraft is ready for delivery. Excitement and anticipation prevail - but it’s still too early to claim a done deal… A deal is only done when cash is in the bank and the bill of sale exchanged. Anything could happen, and you begin to wonder about the unlikely but possible external factors that could unravel the deal. (I have had deals disrupted by a volcanic eruption, floods in India, a terrorist attack, a CEO stepping down, or a competitor coming in at the last minute). It is necessary to stay vigilant until the end, focussed on what really matters and aiming to close as soon a possible.

Joy

Finally, on the day of closing when everything falls into place, the buyer is satisfied, and instructions are given to wire the funds, at that moment the funds hit the bank account and another deal closes, joy, satisfaction and relief are experienced. But only for a short time, because the mind quickly turns to the next deal…! ❙

Frederic Dubant is EVP Commercial at Comlux, and in his role advises on both the sellers’ side and the buyers’ side in aircraft transactions. Beyond the aircraft transaction phase, Comlux also provides professional solutions for aircraft refurbishment, aircraft ferrying and aircraft management. http://comlux.com

www.AVBUYER.com

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EMBRAER LINEAGE 1000 2013 / SN 19000362

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AIRCRAFT SALES & ACQUISITIONS

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AIRCRAFT SALES & ACQUISITIONS

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AIRCRAFT SALES & ACQUISITIONS

EMBRAER LINEAGE 1000 2013 / SN 19000362

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AIRCRAFT SALES & ACQUISITIONS

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AIRCRAFT SALES & ACQUISITIONS

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AIRCRAFT SALES & ACQUISITIONS

GULFSTREAM 550 2010 / SN 5279

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Contents Layout May19.qxp 17/04/2019 12:38 Page 1

Vol. 23 Issue 5

Contents

2019

4

Guest Editor - Frederic Dubant, Comlux

18

Trends and observations from the leading analysts…

38

52

How to Maximize Bonus Depreciation in 2019

58

Booth S107

Trip Planning

What to Know When Planning a Flight to Europe

Ownership

60

How to Assess Risk When Flying in Volatile Airspace

64

Is Business Aviation Prepared for CORSIA?

70

Can we Maintain the Caliber of BizAv’s Future Pilots?

74

Avoid Overpaying for Your Jet Operation

78 88 94 100

122

EBACE 2019

Which Private Jets Will Replenish the Used Market? Used Jet Market: Thoughts on the Year so Far…

114

team at

Buying & Selling Aircraft

46

108

Visit the

Market Indicators

Jet Comparision

Dassault Falcon 8X vs Bombardier Global 5000

Aircraft Price Guide Large Jet Values

Aircraft Specifications

Large Jet Performance & Specifications Guide

Connectivity

Is Your Jet’s Cabin Connectivity Becoming Obsolete?

Avionics

What’s the Future for Jet Cockpit Safety Why Will Space-Based ADS-B be so Important?

Maintenance

Have you Understood Your MRO Quote?

Community News

134

OEM News and Industry Appointments

142

Products & Services

146

Showcases

157

Market Place

161

Advertisers Index

162

Aircraft for Sale Index

Next Month

• Turboprop Comparison: Daher TBM 930 • Aircraft Finance 101: Exchange Rates, Interest & Your Jet Transaction • Jet Connectivity: How Much do you Really Need?

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Vol 23 Issue 5 2019
AVBUYER MAGAZINE

EDITORIAL Commissioning Editor Matthew Harris +44 (0)20 8939 7722 [email protected] Editorial Contributor (USA Office) Dave Higdon [email protected] Consulting Editor Sean O’Farrell +44 (0)20 8255 4000 [email protected] ADVERTISING Lee McLoughlin - Account Director US Aircraft & Services Sales Freephone from USA: +1- 855 425 7638 [email protected] Matt Chappell - Account Manager US & Canada Aircraft & Services Sales Freephone from USA: +1- 855 425 7638 [email protected] Lise Margin - Account Manager US Aircraft Sales +1- 703 818 1024 [email protected] Maria Brabec - Account Manager EMEA & APAC Aircraft & Services Sales +420 604 224 828 [email protected] UK Sales +44 (0)208 549 9508 STUDIO/PRODUCTION Helen Cavalli / Mark Williams +44 (0)20 8939 7726 [email protected] [email protected] CIRCULATION Sue Brennan +44 (0)20 8255 4000 Freephone from USA: +1- 855 425 7638 [email protected] AVBUYER.COM Jayne Jackson [email protected] Emma Davey [email protected] MANAGING DIRECTOR John Brennan +44 (0)20 8255 4229 [email protected] USA OFFICE 1210 West 11th Street, Wichita, KS 67203-3517 EUROPEAN OFFICE AvBuyer House, 34A High Street, Thames Ditton, Surrey KT7 0RY, UK +44 (0)20 8255 4000 Freephone from USA: +1- 855 425 7638 PRINTED BY Fry Communications, Inc. 800 West Church Road, Mechanicsburg, PA 17055 www.AVBUYER.com

Aircraft Finance Corporation May.qxp_Layout 1 15/04/2019 10:19 Page 1

TIME TO REFINANCE YOUR BIRD We offer our clients 20-year terms from 4.92% on both new and pre-owned aircraft, and up to 100% financing of avionics upgrades. Our 20-year term allows our clients to save thousands of dollars every month, compared to a traditional aircraft loan. We recently refinanced a Challenger 605 for a Texas business owner. The client had previously financed the aircraft with one of the “Big Banks” with a monthly payment of $70,169 on a 7-year term. With our 20-year term, his payment became $29,515 per month, allowing his business to utilize their cash flow. For over 20 years, we have been offering aircraft financing to businesses and individuals across the United States. Contact our team, to learn more about our different loan programs.

800-434-4185 | 949-698-0085 | [email protected] | AIRCRAFTBANKER.COM

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Avpro branding February.qxp_Layout 1 17/04/2019 09:17 Page 1

Avpro realizes that opportunities are fleeting and time is money.

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MarketIndicators May19.qxp_Layout 1 16/04/2019 14:31 Page 1

MARKET INDICATORS

Business Aviation Market Overview The only way to describe the combination of factors impacting Business Aviation is ‘interesting’, notes Rolland Vincent, Editor, Market Indicators. What are those factors, and how are they contributing to buyer and manufacturer uncertainty? he recent news of the decision to delay the UK’s exit from the EU until Halloween on October 31, 2019 is more likely to spook investors and increase uncertainty than soothe their concerns and ease tensions in the interim. In what is likely to be one of the most bizarre elections in recent memory, the UK will now be required to hold European Parliamentary elections on May 23, while still being led by UK Prime Minister Theresa May, who may or may not be PM for long, depending upon whether her deal – or maybe a compromise deal – can be reached with Jeremy Corbyn’s Labour Party. This even though Members of Parliament are currently on recess. The unintended consequences of what has become a chaotic political divorce are reverberating throughout the British and European economies, and are clearly impacting

T

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Commercial, Business, and General Aviation. Meanwhile (and providing further evidence that we are living in interesting times), the US Administration has threatened it may – or may not – impose $11bn of tariffs per year on EU exports, which the Trump administration claims may be justified by alleged subsidies for Airbus SE. In response, the EU may impose its own similarly-valued volley of tariffs against US imports, this time in retaliation for alleged subsidies to Boeing Co., in what may only be described as tit-for-tat. EU tariffs on a wide range of US goods have been proposed, covering the spectrum from tobacco to frozen lobster and from soups to nuts. Observers of this mounting food fight can be excused for screaming “Mayday, Mayday, Mayday!” before promptly ejecting from their flaming aircraft. www.AVBUYER.com

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AVBUYER.com With 35+ years in the aviation industry, Rolland Vincent, president, Rolland Vincent Associates (RVA) has served as a trusted consultant at Textron, Bombardier and ICAO in various roles in strategy, marketing, business development, aviation economics and aviation statistics. Identifying a need for enhanced insights into the state of the business aviation marketplace, Rolland Vincent Associates partnered with JETNET in 2010 to create JETNET iQ. Mr Vincent is chair of the Transportation Research Board’s Standing Committee on Light Commercial and General Aviation, and is president, RVA, a consultancy focused on aviation market research, strategy, and forecasting. Contact him via [email protected]

due to a recent switchover to stricter vehicle pollution standards, is putting pressure on the European Central Bank to become more active in policies to stimulate the economy. Business aircraft flight operations (as measured by departures) in Europe continue to expand at a very tepid pace, up less than 1% Year-over-Year (YoY) in March 2019. The sentiment of European-based owners/operators of fixed-wing turbine business aircraft slipped in both Q3 and Q4 2018 and has yet to recover, according to JETNET iQ Surveys.

Lower New & Used Jet Sales in 2019?

The Looming Threat of Recession

In the different regions of the world important to Business Aviation, economic recoveries were never supposed to look like the one we have experienced since the 2008/2009 financial crisis. Europe is now teetering on a ‘triple dip’ economic recession, as EU-wide GDP growth slips to 1% or even below in 2019. With weak domestic demand, Italy slipped into recession in H2 2018, and was almost followed by Germany as demand for its exports slipped in key markets, including China and the US. The German Government recently revised its GDP growth forecast for 2019 to just 0.5%, half of the previous estimates, with trade disputes and the overhanging uncertainty of Brexit looming large on the near-term horizon and dragging down exports and investment spending. A contraction in Germany’s manufacturing sector, partly www.AVBUYER.com

With forecasts for lower GDP growth in 2019 YoY in most key markets for Business Aviation – including North America, Europe and much of Asia-Pacific – and limited used inventory, we expect sales of both new and used business aircraft to be lower this year than last. With deliveries of new business jets likely to be up in 2019 (by about 5% in units and perhaps 10% in value YoY), we expect OEM order backlogs will continue their multi-year decline, while book-to-bill performance will slide back below 1-0 for the current year. While it is still too early to know many of the implications of the Boeing 737 MAX accident investigations that are underway after what appear to be linked crashes in Indonesia and Ethiopia, it is quite plausible to assume that additional layers of FAA regulatory oversight of OEMs could lead to delays in new product certifications as both parties figure out how to work together in the future.

In Summary…

As industry leaders gather in Geneva at EBACE2019 on May 21-23, the state of the market, the dynamic regulatory environment, and ongoing pilot/maintenance technician shortages will no doubt be front-and-center amongst the hot topics for debate, as OEMs vie to outdo each other in the competition for customer and media attention. Underlying it all is the fact that these are indeed interesting times. MI www.navigating360.com

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Vol 23 Issue 5 2019


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MARKET INDICATORS

AVBUYER.com

Flight Activity - North America MARCH 2019 vs MARCH 2018 North America Flight Activity

PART 91

PART 135

FRACTIONAL

ALL

TURBOPROP

2.1%

-3.5%

-0.9%

-0.3%

LIGHT JET

1.0%

-10.0%

3.2%

-2.7%

MID-SIZE JET

-0.9%

-2.6%

12.3%

1.7%

LARGE CABIN JET

-3.8%

2.0%

-10.8%

-2.4%

ALL

0.1%

-3.9%

6.3%

-0.6%

MARCH 2019 vs FEBRUARY 2019 North America Flight Activity

PART 91

PART 135

FRACTIONAL

ALL

TURBOPROP

20.8%

10.4%

21.1%

16.4%

LIGHT JET

16.8%

13.0%

16.4%

15.4%

MID-SIZE JET

8.2%

12.1%

14.5%

11.1%

LARGE CABIN JET

8.8%

9.8%

5.2%

8.8%

ALL

14.6%

11.3%

14.3%

13.3%

TRAQPak’s review of Year-over-Year (YoY) North American flight activity (March 2019 vs. March 2018) indicates that March 2019 recorded a decrease of 0.6%. Month-over-Month (March 2019 vs February 2019), activity was up 13.3%... Year-over-Year, results by operational category were mixed with Fractional activity posting a substantial increase. Part 91 activity was basically flat, while Part 135 activity declined for the tenth straight month. The aircraft categories were mostly negative with Mid-size Jets posting the only increase from 2018. Light Jets dropped the most.

Month over Month

Month-over-Month, results by operational category were all positive, with Part 91 activity posting the largest monthly increase and Fractional flight activity not far behind. By aircraft category, all of the results were in the black for March, with Turboprops posting the largest increase.

April Forecast

For April 2019 TRAQPak analysts estimate there will be a 0.2% increase in overall flight activity Year-over-Year. MI www.argus.aero

Flight Activity – Europe There were 66,736 Business Aviation departures in Europe during March according to WingX’s latest monthly Business Aviation Monitor. That’s a strong increase compared to February, but just a 0.7% growth in YoY flights... During March, a large increase in piston traffic offset declines in business jet and turboprop traffic. Overall, Q1 2019’s total activity is up by 0.6% versus Q1 2018. March saw some minor growth in the top market (France), but slight declines in activity in Switzerland and the UK. A larger decline was recorded for Germany, which came in the Small and Mid-size Jet categories. Q1 2019 growth is strongest in Spain with total Business Aviation activity up 9% over Q1 2018. Large Jet activity was up 2% during March, with strong gains in Italy where departures were up by 12% YoY. MidSize and Small Jet flights fell 2% YoY. Overall trends in flights within Europe were slightly up, but down on the last 12-months trend. European departures to North America and Africa were up, but flights to the Asia-Pacific region fell by 12%. Arrivals into Europe from CIS were up by 3%, but well down for Q1 as a whole. Charter/AOC activity dropped 1% in March, reinforcing a much weaker trend so far this year compared to last. Conversely, private flight activity increased 3%, extending a stronger trend compared to the last two years. “Total Business Aviation activity continues to eke out some growth this year, but business jet activity is clearly slowing, as evidenced in the charter market,” summarized Richard Koe, managing director, WingX. “This is coming from a big drop off in peripheral markets such as Russia and Turkey, and a slowdown in key city hubs, notably London, which is a direct consequence of business uncertainty and falling consumer confidence as Brexit drags on.” MI www.wingx-advance.com

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Understanding the Business Aviation Market - with AvBuyer

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AVBUYER MAGAZINE

www.AVBUYER.com

25 Park Lane, London W1K 1RA EU +44 (0) 203 603 0000 | US +1 917 414 1995 | [email protected] | www.thejetbusiness.com

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MARKET INDICATORS

AVBUYER.com

Mixed Signals in Used Gulfstream Markets Hagerty Jet Group previously predicted a choppy 2019 for business jet transactions, and entering Q2 2019 it continues to sense mixed market signals, with some buyers pursuing off-market transactions… A steady transaction volume is noted, but with increasing supply and notably decreasing ask prices, transaction volume in Q1 2019 was stronger than Hagerty Jet Group was anticipating. “Most used Gulfstream markets we track had stronger transaction volume in the past quarter than the prior 12 months,” Hagerty Jet Group reveals. Most notably, there were 16 G550 sales in Q1 2019, almost double the average of the previous three years. “We tracked a spike in off-market aircraft transactions that were not publicly advertised or were unknown by market participants,” the company adds. As many as six of the 16 G550 transactions for the quarter were considered off-market, and Hagerty Jet Group considers this as an indication that many buyers are frustrated by the lack of good inventory and are seeking direct opportunities with unlisted aircraft. Although average values remain flat across most makes and models, Hagerty Jet Group expects prices to soften in Q2. In the G550 market alone there were 14 price reductions in Q1 with an average decrease of 9%, suggesting sellers are lowering price expectations to compete for buyers who are otherwise considering off-market alternatives. “Although the G550 market had a bump in value of nearly

10% in 2018, we believe demand will wane with fewer transactions in Q2 than Q1 and at lower prices,” Hagerty Jet Group predicts. “General sentiment from our peers in the broker community signals a decrease in overall demand as global economic uncertainty continues to loom.” MI www.hagertyjetgroup.com

eVTOL Aircraft Market: Global Forecast to 2030 The demand for increased efficiency in commercial operations is the key factor influencing the growth of the eVTOL aircraft market, according to a recent report from Netherlands-based ASDMedia BV. According to the report, the eVTOL aircraft market is estimated to be US$162m in 2025 and is projected to reach $411m by 2030, at a CAGR of 20.42% during the forecast period. The demand for enhanced efficiency and human safety and increasing investment activities are expected to drive the market. However, the limited reliability of eVTOLs during transportation and the inability to predict the external environment are expected to hinder the market. According to the report, Asia-Pacific is estimated to lead the eVTOL aircraft market in 2025 and is projected to grow at the highest rate during the forecast period. The study segments the eVTOL aircraft market on the basis of Lift Technology (Vectored Thrust, Multirotor, Lift Plus Cruise), Application (Commercial, Military, Cargo), Type of Propulsion (Electric/Battery, Electric/Hybrid, Electric/Hydrogen), MTOW (1,500 Kilograms), Mode of Operation (Optionally Piloted, Piloted), and Range (0–200

24
Vol 23 Issue 5 2019
AVBUYER MAGAZINE

Kilometers, 200–500 Kilometers). It then maps these segments and subsegments across the major regions of the world, namely, North America, Europe, Asia Pacific, the Middle East and Latin America. page 28 MI www.asdreports.com



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SPARFELL AVIATION GROUP’S CHAIRMAN LEADING WITH PASSION A leader in global aviation, Philip G. Queffelec has made it his personal mission to elevate aviation services to new heights

P

hilip G. Queffelec was born into the world of aviation, his own father a renowned pilot. Already as a young child, he knew his dream would be to follow in his father’s footsteps. Philip has dedicated his life to aviation, founding his first company within the industry in 1988. A serial entrepreneur at heart, he would go on to found several companies, representing MacDonnell Douglas in Europe through Euro Aircraft Trading in the 1990s. In the year 2000, he founded two companies dedicated to private aviation in Geneva: Corporate Jet Management and Masterjet. Since day one, Philip has made it his personal goal to strive for excellence in each endeavour, and his efforts paid off with Masterjet (now part of Luxaviation Group), which rose to the leading company in aircraft acquisition, management and operation in France and Portugal in under ten years.

Philip went on to found Sparfell Aviation Group, setting out to leverage his own experience within aviation and bring together a global team of experts to deliver an elevated experience across the board. Since its founding, Sparfell Aviation Group has upheld Philip’s dedication to providing the highest level of service possible, from aircraft acquisition and leasing to defence and design. “Our force comes from our passion,” he explains. “I do not think you can do a great job if you lack passion for what you do.” As Founder and Chairman of Sparfell Aviation Group, Philip’s eyes are set on the skies. “With the group, I wanted to consolidate and integrate me and my partners’ expertise to develop a powerful synergy between aviation services and offer a tailor-made experience to every client.”

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AIRBUS A380-800

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2012 LINEAGE 1000 S/N 317

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1’386 TT, RVSM, RRCC, WiFi, 2020 Compliant, 13 Pax.

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2015 LEGACY 600 S/N 1216

2007 OFF-MARKET LEGACY 600

3’838 TT, JSSI-Platinum, CPDLC, WiFi, 13 Passengers

3’086 TT, Newly Refurbished & Paint, RRCC, WiFi

2007 LEGACY 600 S/N 995

2015 GLOBAL 6000 S/N 9609

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4’532 TT, 144/LDG OVH/ADSB as of June, EASA, EEC, RRCC, WiFI, 13 Pax.

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2008 A109E POWER “ELITE” S/N 11728 232 TT, EASA, JSSI, MTOW 3’000 Kg, 6 + 1 Passengers

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Sparfell_AvBuyer_May_2019.indd 2

2010 A109S GRAND S/N 22162

1’569 TT, New Interior & Painting in June 2018, 5 + 1 Pax.

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MarketIndicators May19.qxp_Layout 1 16/04/2019 14:36 Page 5

MARKET INDICATORS

AVBUYER.com

Is Winter Coming to the Asian Market? Asian Sky Group’s Jeffrey Lowe reflects on the market in China and throughout Asia-Pacific in 2018, and the prospects for the year ahead. The US has its “Sage of Omaha” in Warren Buffet. Here in Asia we have Superman – Li Ka Shing. And he’s “super” because he started work at the tender age of 15 in a plastics trading company and when he retired in 2018 he was worth US$38bn and held the title of the “Richest Man in Asia”. So, when Mr. Li speaks, people listen. Recently, looking ahead at the economy in 2019, he said “it will probably be very complicated – everyone should be cautious”. You could literally hear the wallets being put back into pockets. Other industry giants in China have joined in. Baidu CEO and the Chairman of Cheung Kei Group have warned “winter is coming” and that this winter will be “colder and longer than expected”. Then on the heels of these dire proclamations, the Chinese Government announced the economy grew at its lowest rate in 10 years – a mere 6.6% with expectations that it will worsen through the year. Not a surprise then that people are buying fewer mobile phones, cars… and aircraft - and selling more of them too.

Chinese Fleet Exodus?

Through 2018, ASG’s transactional consulting business advised on mostly an outflow of aircraft from Greater China into the US and Canada. Sellers could be categorized as a mixture of ‘replacement’ (with a new aircraft either delivered 28
Vol 23 Issue 5 2019
AVBUYER MAGAZINE

or on order); ‘hard to still justify’ (by owners who only used the aircraft for 100 hours a year anyway); and ‘motivated’ (i.e. those with the bank knocking on the door). This latter category were not quite repossessions but were certainly controlled resales by the lender. A knock-on effect of this fleet upheaval has certainly been hard times experienced by the management companies, and making a buck is becoming harder and harder.

2018: A Year in Review

2018 had everything: Management companies going bankrupt and putting their AOCs up for sale; whole fleets of aircraft being put on the market to downsize and survive; senior management changes; and business model adjustments. Asian Sky Group expect more of the same in 2019 with management companies right-sizing, consolidating and seeking other sources of revenue. Every management company (it seems) is an aircraft broker now. Some are developing their MRO business or opening FBOs. All are making efforts to generate more revenue and grow. So, what actually happened and how did 2018 end? Did the Asia-Pacific fleet expand or contract? China has always been the growth leader in the region; how did it fair in 2018? Find out in the Asian Sky Group’s Year-End 2018 Asia-Pacific Business Jet Fleet Report. MI www.asianskymedia.com



page 30

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Hatt & Associates May.qxp_Layout 1 16/04/2019 15:50 Page 1

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2012 Nextant 400XT S/N: RK-334. Reg: N590TM Asking $1,495,000 11,338.2 Hours since New Remanufactured Nextant in 2012 Collins Pro Line 21 Avionics Suite Aircell Axxess (Dual Iridium SAT Phone, Internet & Wifi) A,B,C, D inspection being completed at Hawker Beechcraft Tampa Production Unit #20

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MARKET INDICATORS

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In-Service Aircraft Values & Maintenance Condition Asset Insight’s market analysis on March 31, 2019 covering 96 fixed-wing models and 1,656 aircraft listed for sale revealed an additional 2% inventory increase to the tracked fleet. Following are the details… Of the fleet categories, Small Jets experienced the largest inventory rise with a 3.2% increase. Medium Jet inventory increased 1.6% while Large Jets increased 1.5% and Turboprop inventory rose by 1.1%. Average aircraft value for the tracked fleet dropped 4.4% to post a figure just $20k higher than the record low value. While Large Jet values were the only ones to lose ground, it was sufficient to overcome the gain recorded by each of the other three groups.

$ Million

$1.50

$1.42

$1.45

5.191

5.15

$1.40 $1.35

A

M

J

Quality Rating

J

A

S

O

N

Maintenance Exposure

D

J

F

M

Quality Rating Trendline

Table B LOW RISK AIRCRAFT MODEL ETP RATIO G650 3.8% Boeing BBJ 5.7% F2000LX 10.8% Phenom 300 11.3% F900EX EASy 13.0% Citation CJ4 525C 13.5% Pilatus PC-12 14.3% CL605 14.5% F2000EX EASy 15.0% Citation Encore + 15.2% G150 18.7% Citation Sovereign 680 19.0% Citation CJ3 19.1% G550 19.3% G450 19.8% KingAir 350 - Post-2000 20.3% Hawker 900XP 20.9% Piper Meridian 21.3% F2000EX 23.2% CL300 23.5% Citation CJ2+ 525A 25.4% Global 5000 26.3% Learjet 45XR 26.4% Citation XLS (MSG3) 28.3% Citation Mustang 510 28.3% Phenom 100 29.6% KingAir B-200 - Post-2000 29.6% F900EX 30.1% Global XRS 30.6% Citation XLS 32.9% Hawker 850XP 34.0% Citation Encore 34.2% KingAir 350 - Pre-2001 36.4% F50EX 37.1% Citation CJ2 37.3% Learjet 60XR 37.9% Embraer Legacy 600 38.4% Citation CJ1+ 39.2

Fleet asset quality dropped 0.5% in March to record a 12-month low figure. The change in fleet mix resulted in higher quality Large Jets remaining in the inventory fleet. Medium Jet buyers focused on higher quality assets, resulting in the group’s 12-month worst Quality Rating and Maintenance Exposure figures. The Small Jet inventory, meanwhile, ended the month with a nominal drop in asset quality, but a hefty 14.9% improvement in Maintenance Exposure, nearly equalling the group’s 12month average. Finally, Turboprop Quality Rating and Maintenance Exposure figures were relatively unchanged. Overall, our tracked inventory posted the following figures: • The Quality Rating receded for the third consecutive month to post a 12-month low figure, but remained in the ‘Very Good’ range, dropping from 5.219 to 5.191 on Asset Insight’s scale of -2.5 to 10. • While the current inventory fleet is anticipated to experience more near-term maintenance events, these will be somewhat less expensive, and Maintenance Exposure (an aircraft’s accumulated/embedded maintenance expense) improved/fell 3% to $1.42m, virtually tying the fleet’s 12-month average.

Maintenance Exposure to Ask Price (ETP) Ratio

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Vol 23 Issue 5 2019
AVBUYER MAGAZINE

5.35

5.25

Inventory Fleet Maintenance Condition

The ETP Ratio is a useful indicator of an aircraft’s marketability. It is computed by dividing the asset's Maintenance Exposure (the financial liability accrued with respect to future scheduled maintenance events) by its Ask Price. ‘Days on Market’ analysis has shown that when the ETP Ratio is greater than 40%, a listed aircraft’s time on the market increases, usually by more than 30%. During Q1 2019, assets whose ETP Ratio was 40% or more were listed for sale over 62% longer (on average) than aircraft whose Ratio was below 40% (237 versus 384 Days on Market). Asset Insight’s March analysis also noted that nearly 52% of all tracked models, and over 62% of the tracked fleet posted an ETP Ratio above 40%. Overall, the

Table A

Fleet Maintenance Condition



HIGH RISK AIRCRAFT MODEL ETP RATIO Citation Excel 560XL GV G200 Premier 1A Piaggio P-180 II CL604 GIV-SP (MSG3) KingAir 300 Hawker 400XP KingAir B-200 - Pre-2001 F900B Learjet 45 F900 Citation Bravo F2000 Premier 1 Citation V Ultra Learjet 45 w/APU Hawker 800XP Citation V 560 Hawker Beechjet 400A Global Express GIV-SP Piaggio P180 Hawker 1000A Learjet 60 F50 Citation VI KingAir C90 Citation ISP Citation II G100 Hawker Beechjet 400 GIV Hawker 800A CL601-3R Learjet 35A Learjet 31 CL601-3A Learjet 55 CL601-1A F20-5

41.2% 41.6% 42.7% 43.7% 47.9% 48.0% 48.4% 50.1% 50.2% 51.3% 52.9% 53.6% 56.3% 59.5% 60.9% 66.9% 68.0% 70.2% 70.3% 75.6% 77.2% 77.4% 80.7% 88.5% 91.4% 100.4% 105.8% 109.2% 111.2% 114.3% 135.1% 137.0% 144.8% 148.4% 158.0% 158.1% 175.7% 177.2% 188.8% 217.9% 249.8% 301.0%

Maintenance Exposure to Ask Price Ratio (“ETP Ratio”) as of March 31 2019 Source: JETNET (www.jetnet.com) Asset Insight, LLC (www.assetinsight.com)

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MarketIndicators May19.qxp_Layout 1 16/04/2019 16:33 Page 7

MARKET INDICATORS

Large Jets Ask Price vs. Maintenance Exposure

Asset Quality Rating

$ Millions

Scale -2.500 to 10.000

$ Millions

Mar-19

Feb-19

Jan-19

5.200

Dec-18

$3.20

Nov-18

5.300

Oct-18

$3.30

Sep-18

5.400

Aug-18

Mar-19

Jan-19

Feb-19

Dec-18

Nov-18

Oct-18

Sep-18

Jul-18

Aug-18

Jun-18

May-18

Apr-18

$10.5

$11.2

$3.40

5.472

Jul-18

$11.5

5.500

Jun-18

$12.5

$3.50

May-18

$3.48

Apr-18

$13.5

tracked fleet’s ETP Ratio decreased (improved) during March to 66% from February’s 70.2%. Specifically: • Large Jets worsened from 59.4% to 62.2%; • Medium Jets improved slightly, from 79.7% to 79.5%; • Small Jets posted the largest improvement, decreasing from 76.8% to 62%; • Turboprops remained unchanged at 52.9%.

upcoming maintenance events slightly, but the cost for those events is expected to be somewhat lower. Unfortunately for sellers, Ask Prices decreased 6.2% to post the lowest figure since May 2018. That was the main cause of the group’s ETP Ratio increase (degradation). But the greatest hurdle to completing transactions continues to be the large number of older aircraft and the scarcity of young, low time assets.

Market Summary

Medium Jets: Inventory for the tracked fleet increased by eight units in March, but the group’s average Ask Price improved another 0.8%. Surprisingly, higher quality assets were the ones primarily transacting, resulting in the remaining inventory posting the group’s worst 12-month Asset Quality and Maintenance Exposure figures. While the ETP Ratio is just below the group’s 12-month worst figure, sellers continue to test the Ask Price boundary and, so far, it does not appear to have dampened buyer interest or the level of transactions.

If you’ve been reading these reports you may notice that our tracked fleet increased by two models in March, which impacted the number of units analysed within the Large and Medium Jet groups. Even without these additions, however, both fleets would have posted an inventory increase. Large Jets: Inventory increased by five units, and March’s transactions were marginally focused toward higher quality assets. Changes to the inventory mix increased the number of

Ask Price vs. Maintenance Exposure

Medium Jets

Asset Quality Rating

$ Millions

$2.90

$1.28

Scale -2.500 to 10.000

$1.30 $1.25

$2.70

5.300

5.200

$1.20

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Vol 23 Issue 5 2019
AVBUYER MAGAZINE

Mar-19

Feb-19

Jan-19

Dec-18

Nov-18

Oct-18

Sep-18

5.000

Aug-18

5.023 Jul-18

$1.10

5.100

Jun-18

$1.15

May-18

Feb-19

Mar-19

Jan-19

Dec-18

Nov-18

Oct-18

Sep-18

Aug-18

Jul-18

Jun-18

May-18

Apr-18

$2.30

$2.53

Apr-18

$2.50

www.AVBUYER.com

MarketIndicators May19.qxp_Layout 1 16/04/2019 14:54 Page 8

AVBUYER.com Tony Kioussis is president of Asset Insight. The company provides audit and valuation services and has developed a standardized Asset Grading System scale that evaluates an aircraft’s maintenance condition.

Small Jets Ask Price vs. Maintenance Exposure

Asset Quality Rating

$ Millions

$0.85 5.500

Small Jets: Inventory increased by 16 units and, with sales focusing heavily on higher quality assets, the new fleet mix helped improve (lower) Maintenance Exposure by nearly 15%, while Asset Quality remained relatively steady. The greatest effect of all this was the 19% decrease in the ETP Ratio, which posted the group’s 12-month best (lowest) figure. With Maintenance Exposure decreasing and the ETP Ratio improving, Ask Price not surprisingly posted an increase (2.4%) with sellers pushing the figure above the group’s 12month average. Last month, Asset Insight stated that buyers could probably justify some very attractive offers, and they apparently did. Assetincreased Insight analytics (www.assetinsight.com) Turboprops: While inventory by another three

aircraft, the resulting fleet mix had minimal effect on the overall Insight analytics (www.assetinsight.com) Quality RatingAsset and Maintenance Exposure figures. At $1.49m, Ask Price for the tracked fleet remained on the low end of the narrow band maintained during the past twelve

MI www.assetinsight.com

Outstanding Excellent 5.500 5.250 or to Greater 5.499

Turboprops

$0.65 $0.60

$1.50 $0.55

www.AVBUYER.com

Mar-19

Feb-19

Jan-19

Dec-18

Nov-18

5.200 5.100 5.000

4.893

4.900 4.800

Mar-19

Feb-19

Jan-19

Dec-18

Nov-18

Oct-18

4.700 Jun-18

$0.50

May-18

Mar-19

Feb-19

Jan-19

Dec-18

Nov-18

Oct-18

Sep-18

Aug-18

Jul-18

Jun-18

May-18

Apr-18

$1.45

$1.49

Below Average Average 4.500 Less to than 4.749 4.500

Good 4.750 to 4.999

Asset Quality Rating

Apr-18

$1.48

Very Good 5.000 to 5.249

Scale -2.500 to 10.000

$0.61

$1.53

❙

Asset Quality Rating Key

$ Millions

$1.55

Oct-18

months (between $1.48m and $1.53m). There’s comfort in this stability for buyers and sellers, and it is leading to healthy transactions for both sides.

Sep-18

Ask Price vs. Maintenance Exposure

5.100

Sep-18

$0.65

Aug-18

Mar-19

Jan-19

Feb-19

Dec-18

Nov-18

Oct-18

Sep-18

Jul-18

Aug-18

Jun-18

May-18

$0.70 Apr-18

$1.60

Aug-18

$1.70

5.338 5.300

Jul-18

$0.75

Jul-18

$1.80

Jun-18

$1.90

May-18

$1.82

Apr-18

$2.00

Scale -2.500 to 10.000

AVBUYER MAGAZINE
Vol 23 Issue 5 2019


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B

BOMBARDIER CHALLENGER 350

Which Private Jets Will Replenish the Used Market? With a lack of newer inventory on the used business jet market right now, questions arise as to what will refresh and restock the market and satisfy renewed buyer demand. Dave Higdon reviews some of the likely candidates… sked for his take on the prospects for the used jet market, one broker told AvBuyer, “If my crystal ball worked that well I'd have an across-the-board bet on the Kentucky Derby.” Another echoed, “You're asking me something equivalent to picking all six numbers in the next lottery drawing.” One market analyst, who was willing to speak on-the-record, gave an assessment – and it was equally cloudy: “We’ve run similar analytics in the past, but only for aircraft that had been in production for a while,” explained Tony Kioussis, president and CEO of Asset Insight. “We also asked one of our partners (JETNET) to consider

A

38
Vol 23 Issue 5 2019
AVBUYER MAGAZINE

how to derive this information, and they ran into the same problem.” It’s a data shortage that hampers the type of prognostications on which JETNET and Asset Insight have both earned their reputations. “The hurdle neither of us can overcome is that because the models of interest are just entering service, there is virtually no data we can use to support a useful conclusion,” Kioussis explains. “There is simply no way to know if historical buying patterns will hold. We suspect they won’t, due to the mentality of the millennial buyer and the operational capabilities of these new models.”



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BUYING & SELLING AIRCRAFT

EMBRAER PHENOM 300E

As existing owners receive their new Cessna Citation Latitudes, Gulfstream G650s, Bombardier Global 7500s and Challenger 350s (among other models), many used jets will flow into the marketplace. But it's difficult to predict which trade-ins and cast-offs will attract interest within the used markets because of the wide range of customertypes, the mission changes they experience, their reasons for replacing a previous jet, and their logic for buying a new aircraft. “Remember, some of these new airplane sales won't trigger the placement of a used aircraft into the marketplace because the company might be growing its fleet,” a west coast analyst explains. “Alternatively, some of those new airplanes will go to first-time owners. And others will be purchased by a fractional program that won't be placing the old jet on the resale market.” Several analysts suggest taking a cue from today's top-selling jets: “The best we can hope for is to get some indication from today's bestsellers because today's top choices in the new jet market will often become equally popular in the used market for all the same reasons,” explained the west coast analyst. “That in no way is meant to predict these jets’ individual demand – simply to extrapolate today's best-sellers into the future.” With that as a guide, we review some of the prospective stars of tomorrow, based on the reasons they sell well today. Following are the top recommendations from a few analysts who are willing to ‘go out on a wingtip’…

Bombardier Challenger 350

When GAMA delivered its 2018 shipments report, some unexpected names rose to the top due to their sales success. The ‘Best Seller’ for the year 40
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CIRRUS SF50 VISION

was Bombardier's Challenger 350 business jet, with 60 units delivered. A Super Mid-Size Jet, the Challenger 350, quickly racked up sales because of the depth of its capabilities and performance. For example, with a full cabin of 10-11 passengers the Challenger 350 provides a cruise range of 3,200nm at Flight Level 450. And while shorter than previous Challenger models, the Challenger 350 offers a tall cabin, making it popular with individuals, companies and fractional programs alike. Analysts expect the Bombardier Challenger 350 to hold much of its value, starting at a standard-equipped price of ~$27m – a value equation likely to carry over to the used jet market.

Embraer Phenom 300E

The larger of Embraer's two strong-selling Light Jets, the Phenom 300E led the Light Jet shipments in 2018. The Phenom 300 has been a big-seller for years and is now in its new incarnation as the 300E. With 57 new Phenom 300Es shipped last year, the airplane continued Embraer's seven-year run with this top-selling jet. The popular Phenom 300E, priced in the region of $9.5m, provides the capability to fly nearly 2,000nm with six passengers in the cabin. The biggest challenge a prospective used Phenom 300E buyer may face is finding an owner willing to sell.

Cirrus SF50 Vision

Another top seller is the first-in-history singleengine private jet – Cirrus’s SF50 Vision Jet, which appears to be destined for strong sales after Cirrus delivered 63 in 2018. Tailored for owner-pilots and small businesses, www.AVBUYER.com

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GULFSTREAM G650

CESSNA CITATION LATITUDE

Cessna Citation Latitude

the Vision provides a Garmin integrated panel geared to its single-pilot status. At a cruise speed of about 300kts, the Vision competes well with other lighter jets and turboprop singles. Its 1,300nm range makes it an ideal candidate for those business trips that start and end back home – on the same day. The Vision is also attractive to operators ready to move up to a jet – particularly with a price of just over $2m. And Cirrus has already released its secondgeneration Vision, the Vision G2, with more features and more appeal. As Vision Jets trickle into the used market, analysts expect singleengine economics to drive demand among business owner/pilots and companies with modest air-travel needs.

With 57 units shipped in 2018, the Latitude was Cessna's best-selling jet, and a top-seller in the industry overall. While still very new, the Latitude's long-term potential and modern systems, performance and accouterments, and large Super Mid-Sized cabin, stand to appeal to future owners of the eventual pre-owned models that will flow into the market. With a cruise speed of almost 450 knots, long legs up to 3,280nm, and room to let its passengers roam, the Latitude has a bright future. Its popularity became clear quickly after the FAA granted the Latitude's type certificate in June of 2015, and the rapid growth in sales appears solid enough to create a significant pool of used examples as the years roll on.

Gulfstream G650

In Summary

It doesn't take a calculator or spreadsheet to recognize that selling more than 325 Large Cabin, Ultra-Long-Range jets in under six years is a remarkable, noteworthy accomplishment – particularly coming off the Great Recession. The combination of range and speedy performance of the G650 appear destined to make it a long-term, in-demand aircraft with appeal lasting beyond its production run. In fact, as an inproduction aircraft the G650 made the unusual mark of achieving such high demand that in the years after it was first introduced, prospective buyers were bidding up prices to own one. With a maximum operating speed of Mach 0.925 and a still-air range of 7,000nm, the G650's capabilities are exceeded only by its hangar-mate, the 7,500nm G650ER and competing Bombardier Global 7000. Expect to see plenty of buyers vying for their own G650 as used ones hit the future market. www.AVBUYER.com

There are plenty of positive signs of models that prove popular on the new aircraft market today that ought to impact the used market with just as much verve. As established by our analysts at the start of this article, though, without solid data the proof will have to play out over time. But there’s plenty of exciting potential for the future used market. ❙

Dave Higdon is a highly respected aviation journalist who has covered all aspects of civil aviation over the past 36 years. Based in Wichita, he has several thousand flight hours, and has piloted pretty much everything from foot-launched wings to combat jets. Contact him via [email protected]

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Used Jet Market: Thoughts on the Year so Far… How has the used business jet market performed so far in 2019? And how can buyers and sellers ensure they get a good deal? Jet Tolbert offers the perspectives of the dealer broker community he has been speaking to over the past few months… o sum up the year so far, the used business jet market started 2019 slowly, but as things appear to be heating up many of the dealers and brokers I speak with are generally happy with the shape of today’s market and are regularly completing transactions. But what does the quickening in activity that we’re seeing mean for today’s buyers and sellers?

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A Summary of the Last Few Months

Let’s first consider what’s happened in the market in the past six months. December 2018 was unusually strong for aircraft transactions. While it’s traditional that December sees an increase in the number of transactions, almost every broker I’ve spoken with 46
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experienced the same surge in transactions in December 2018, compared with what is traditional for that month. The general consensus was that January was either slow or steady with the closing of deals that were agreed during December 2018, and then February brought a slowing in activity (although the best pedigree, lowest-time aircraft could still have experienced strong offer activity). While sellers have been receiving serious sales enquiries all the while, it’s unsurprising to note that the sellers with higher quality aircraft have been receiving interest from a higher number of active buyers and some have even found themselves with back-up offers on the table, should a sale fall through. www.AVBUYER.com

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At the same time, sellers of similar aircraft with slightly higher time or ‘very good’ pedigree – as opposed to exceptional pedigree – may have received little interest during that same timeframe. Moving into March and April most brokerages spoken with have been reporting an upturn in serious enquiries and offers accepted, even on those aircraft that were receiving little, or no interest in the preceding months.

The Current Market Questions

Could the increase in activity be related to a growing confidence in the stock market and the strong dollar? Or could this latest flourish in buyer activity simply indicate that people are keen to get a transaction finished before the traditional summer lull? Historically the market becomes frustrated after Memorial Day as even the most serious buyers and sellers can be hamstrung when executives and business partners are out of reach on vacation. Or maybe the opposite could be true and the current activity could hold strong through the summer. Either way there will be more aircraft arriving on the market as we move closer to Q4, providing more options for buyers to consider.

A Note on the Off-Market Scene

There have been mentions lately about a rise in ‘off market’ transactions, fueled by the lack of newer

Make More Informed Buying Decisions with

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inventory on the used market. It’s important to note that while a buyer might like to find an offmarket ‘deal’, they’re less likely to find a seller prepared to accept an offer in line with what the market will bear.

In Summary…

From a seller’s perspective there are buyers out there today for high quality, well maintained aircraft. If that describes an aircraft you’re looking to place on the market, then you can be confident of receiving buyer interest. And with the right advertising, sellers with indemand aircraft can leverage their bargaining power to not only yield an attractive offer, but potentially have back-up options in case the first buyer gets twitchy. Today, more than ever, the assistance of a buyer’s agent or seller’s broker will help navigate the pitfalls, and entanglement with counterparties (as can be the case when attempting an ‘offmarket’ transaction). The experience of a well-established, respected firm with a good handle on the market and all its available advertised and ‘off-market’ inventory will make all the difference. More information from www.americanaircraftsales.com ❙ Jet Tolbert is President of American Aircraft Sales. Established in 1968, it is a premier brokerage firm which has been a trusted partner since corporations first began utilizing jet aircraft to grow their businesses. With offices in the US, a Latin America sales team and a partner office in Zurich, Switzerland, American Aircraft Sales is an active NBAA, IBAC, EBAA & AsBAA member.

www.AVBUYER.com

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BUYING & SELLING AIRCRAFT

How to Maximize Aircraft Bonus Depreciation in 2019 Are you planning on buying a business jet or turboprop this year? David Mayer offers insights on how bonus depreciation works, and how you can maximize its benefits…

f you plan to purchase a private aircraft in the US this year, developing and executing an appropriate tax strategy before you enter into a letter of intent or contract to purchase the aircraft enhances the likelihood that you will be able to take 100% depreciation (bonus depreciation). This strategy should incorporate your projected business revenues, intended aircraft use, and unique attributes as a business taxpayer relative to taking depreciation deductions. Depreciation is an allowance Congress enacted to encourage businesses to purchase capital equipment and other tangible personal property such as private aircraft. Depreciation allows business taxpayers to claim an annual tax deduction to recover the aircraft cost (or other basis (adjusted cost)) of the property for its wear and tear, deterioration or obsolescence. A taxpayer usually deducts depreciation over a certain number of years called the ‘recovery period’.

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Straight-line, MACRS & Bonus Depreciation

Perhaps the best-known depreciation method is straight-line under the Alternative Depreciation System (ADS). This method allows the taxpayer to deduct roughly equal parts of the aircraft cost or other basis over the applicable recovery period. The recovery period depends on the 52
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predominant use of the aircraft. As a rule of thumb, the recovery period is six years for FAR Part 91 aircraft (private use) and 12 years for FAR Part 135 aircraft (commercial use, such as chartering or carrying freight). The Modified Accelerated Cost Recovery System (MACRS) is another way to depreciate aircraft. The Internal Revenue Code (IRC) sets forth specific requirements that a taxpayer must meet to qualify to use this accelerated depreciation method. MACRS allows a taxpayer to write off its aircraft in five years for FAR Part 91 (private use) aircraft and seven years for FAR Part 135 aircraft (commercial use). A taxpayer takes depreciation in the early years of the recovery period relative to approximately equal parts under the straight-line method. Although the total depreciation taken under the straightline and MACRS depreciation methods is the same, acceleration of depreciation under MACRS increases the time value of the tax benefits of MACRS compared to the slower straight-line method. Consequently, a tax advisor can help evaluate the system and method that maximizes depreciation arising out of a taxpayer’s unique circumstances. Taxpayers must comply with the MACRS requirements for an aircraft to be eligible for bonus depreciation. Under the www.AVBUYER.com

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AVBUYER.com David Mayer is a partner in the global aviation practice group at the Shackelford Law Firm in Dallas, Texas. His practice encompasses worldwide private aircraft matters, including regulatory compliance, tax planning, purchases, sales and financing, risk management, insurance, cross-border structuring, operations and more. Learn more at https://shackelford.law

Tax Cuts and Jobs Act of 2017, bonus depreciation applies to new and, for the first time, pre-owned aircraft acquired and placed into service after September 27, 2017, and before January 1, 2027, with a phasedown of 100% depreciation starting 2027. Importantly, to depreciate a pre-owned aircraft, the taxpayer must not have used the aircraft before purchasing it.

Qualified Business Use

The IRC establishes qualifications for, and limitations on, deducting depreciation under MACRS and, by extension, bonus depreciation. MACRS requires that an aircraft must be used in a trade or business, or for the production of income. A taxpayer must also ‘predominantly’ operate the aircraft for ‘qualified business use’ (QBU). In other words, QBU generally means the aircraft operates in connection with the taxpayer’s business enterprise conducted regularly and continuously for income or profit. Predominant use generally refers to 50% or more of total aircraft use per tax year. In part to guard against taxpayer abuse of depreciation deductions, the IRC has placed aircraft in a special category called ‘listed property’ under IRC Section 280F. In general, listed property that a taxpayer does not use more than 50% for business will not qualify for MACRS or bonus depreciation. Instead, such property must be depreciated under the slower ADS using the straight-line method. In relation to depreciation, the failure to comply with MACRS may arise out of excessive personal use under the listed property rules and MACRS requirements discussed above. However, in certain circumstances, an aircraft may be eligible for bonus depreciation if the taxpayer can demonstrate 25% business use. Once the 25% threshold is met, this special rule in IRC section 280F allows a taxpayer to add in other activity that the rule initially excludes from the QBU test. The effect of the add-back is to boost the business use above the basic 50% requirement. It is important to prepare contemporaneous and detailed records that support all aspects of QBU on the assumption that the IRS will ask for the records. IRC Section 274 describes various types of personal use of aircraft. Often, personal use refers to the use of the aircraft for entertainment, amusement or recreation such as parties, golf outings, family vacations and sporting events. But it can also mean personal use of an aircraft for another reason: non-entertainment such as travel of an aircraft passenger for business unrelated to the business activities of the tax-paying entity that owns the aircraft. If an aircraft is used for entertainment purposes, the IRC has a special provision that minimizes the impact of personal use on bonus depreciation. For purposes of depreciation, the provision allows a taxpayer to elect the straight-line www.AVBUYER.com

calculation of the disallowed deductions attributable to entertainment use. The provision permits a taxpayer to claim bonus depreciation in the acquisition year and, concurrently, elect separately to calculate an IRC Section 274 “entertainment disallowance” using the straight-line method. This election allows the taxpayer to deduct more depreciation in the year of acquisition than it otherwise would without the special IRC section 274 rule. This area deserves planning attention as it might, if structured correctly, provide a taxpayer with an increase in after-tax value and spur the taxpayer to establish an entertainment travel policy that applies this provision.

Compliance: Recapture Income

Clients often ask whether they can claim bonus depreciation in the acquisition year by satisfying the QBU and other MACRS eligibility requirements in that year and keep bonus depreciation if they do not satisfy the QBU and other MACRS eligibility requirements after the acquisition year. In this scenario, the answer is ‘no’. And the consequence might be very expensive for the taxpayer because the Internal Revenue Service (IRS) can use a ‘recapture’ provision. By doing so, the IRS causes the taxpayer to recognize income for the excess depreciation taken over the allowable straight-line method, as calculated through the year of recapture. After that, the aircraft remains on straight-line and cannot return to MACRS. At a minimum, the taxpayer should track and record the QBU and other MACRS eligibility requirements throughout the ADS recovery period and, to be on the safe side, as long as the taxpayer owns the aircraft. Once a taxpayer qualifies for MACRS and bonus depreciation, the taxpayer will still encounter such other limitations as the passive activity loss limitations, the excess business loss limitations, and the hobby-loss rules. Prospective purchasers of aircraft seem universally interested in 100% bonus depreciation, but, as a taxpayer, the purchaser should not assume either that the aircraft will be eligible for bonus depreciation or that bonus depreciation will offer the optimal tax and economic solution. Still, by planning ahead of a purchase and involving specialized aircraft tax advisors, a purchaser should be able to identify the appropriate type of depreciation to maximize the reduction in its taxable income and lower its after-tax cost of capital. It certainly seems worth looking closely at bonus depreciation as it is easy to appreciate the significant value it might provide in an overall tax strategy. ❙ This article was published in a recent issue of AINsight.

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Jeteffect 6 aircraft May.qxp 16/04/2019 15:07 Page 1

Gulfstream G550 • S/N 5045

Gulfstream G500 • S/N 5100

Gulfstream G200 • S/N 156

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Jeteffect 6 aircraft May.qxp 16/04/2019 15:07 Page 2

Falcon 50EX • S/N 313

Citation Sovereign+ • S/N 680-0510

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FLIGHT PLANNING

What to Know When Planning a Flight to Europe International Business Aviation operators flying into Europe can expect to find a sophisticated infrastructure, thanks to

efforts by EASA. But that’s no reason to relax trip planning,

as Keegan Coutinho of Click Aviation Network highlights… aving been involved in trip support operations and flight planning for seven years prior to joining Click Aviation Network shortly after its inception, Keegan Coutinho is a current FAA dispatch license holder. As an integral member of the Click trip support team, Coutinho focuses his expertise mainly on flight planning and communicating with flight crews on international trips around the world, preparing flight plans tailored to an operator’s specific needs. AvBuyer caught up with Coutinho to seek his best advice to operators flying into Europe.

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AvBuyer: What are some of the complexities regularly encountered by international operators flying to, or over Europe that justifies hiring a trip planner? Coutinho: Thanks to the network built by EASA (the European Aviation Safety Agency), the process of transiting or operating to Europe has become fairly easy today. But international operators should continue to use a trip planner when flying there, primarily because of the regulations that are continually being developed to help ensure Europe’s airspace www.AVBUYER.com

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becomes safer and facilitates a growing volume of air traffic. A trip planner will help provide clarity, assisting with the feasibility of an international operator’s trip. As an example, it’s crucial to have the operator clarify the purpose of flying to their preferred European countries and ensure the appropriate documentation is available. AvBuyer: What aspects of travel to Europe do you find often surprises international operators flying there? Coutinho: There are definitely areas that could catch an international operator out without adequate planning. One prime example is where international operators sometimes assume that because operating within European airspace is relatively easy (compared to flying in other continents) they don’t feel the need to acquire the necessary documentation. Items such as a third-country operator certificate establishes that the operator and aircraft are compliant with the international safety standards and are therefore fit to operate within Europe. Failure to secure such a certificate prior to flying into European airspace will lead to problems for the operator. AvBuyer: Does the fact that a country is a member of the European Union necessarily mean a uniform set of procedures are required of operators traveling to that country? Coutinho: The procedures laid out by the governing bodies of the EU nations are relatively similar. However, with Brexit in motion, and the uncertain political and economic climate of the eastern EU countries, it’s imperative a trip planner offers as much support to

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an international operator as possible. This will help ensure the authorities are provided with all the documentation required for clearing a flight to operate into the region. AvBuyer: What are the three main things for an international operator to keep in mind when planning a successful trip to Europe? Coutinho: Of all the elements of trip planning, compliance ranks top. You’ll have picked it up already within this interview, but it’s essential to have all your documents verified and in place before flying so as to avoid delays or complications to your trip. Safety is another key consideration for international operators. The standards set by EASA are stringent when compared to the safety regulations implemented by some less-developed countries. Many international operators will therefore need to ensure due diligence is carried out relating to aircraft equipment checks and upgrades. Finally, EASA (and other related bodies) have been working extensively to reduce aviation carbon emissions (and thus reduce the carbon footprint on our planet). Measures such as route optimization, fuel-efficient engines, and development of biofuel as a fuel source are some of the many items EASA would like operators to co-operate with and implement. So international operators seeking to operate into Europe should be thinking about how their flight plan will minimize the carbon footprint of their trip. More information from www.click.aero ❙

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How to Assess Risk When Flying in Volatile Airspace With the political climate in certain parts of the world constantly

changing, aircraft operators visiting or overflying these areas need to

take extra care. David Colindres shares the risk assessment advice he offers all members of the San Marino Aircraft Registry…

t was at the age of 17 that David Colindres’ father and friends sparked his interest in aviation. After several summers spent working with his father at the Registry of Aruba, he realized how fascinating the world of aviation was, and particularly those aviation professionals who were running the industry. “There was a culture – a passion, and especially opportunities for significant growth within the industry,” he reflects. After graduating from business school at Purdue University in 2001, Colindres worked with the Registry of Aruba and was responsible for 80 private Jets. After 12 years learning the business, a new

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opportunity presented itself as his father expanded the business and secured a long-term agreement with the Government of San Marino to establish the San Marino Aircraft Registry (SMAR). David was tasked with leading the development and implementation phases, and then subsequently was asked to manage its operations as President – the position he continues to hold with SMAR today. SMAR currently has a registered fleet of around 230 aircraft. Eighty percent of these aircraft operate privately, and 18 organizations hold AOCs for Part 135 operations. Among the more common types registered with SMAR are Airbus Corporate

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Jets, Boeing Business Jets, Bombardier Challengers and Globals, Gulfstream G450s, G550s and G650ERs, and Dassault Falcon 7Xs and 8Xs.

Advice on Secure Operations

Occasionally there may be a need for a registered member to fly into a region with a heightened need for security. Colindres advises SMAR members over such matters through safety notices. “According to ICAO Legal Requirements and Guidance under Annex 17, each state is obliged to develop regulations, practices and procedures in compliance with ICAO standards, and to integrate geopolitical factors that will be unique to each country,” he highlights. “The goal is the safety of passengers, crew, ground personnel and the general public in all matters related to the safeguarding against acts of unlawful interference with civil aviation. That is the theory. However, the practice can be very different in a politically volatile state, or a conflict zone,” he warns. “The aim of the safety notices we issue to operators on our registry is to ensure they are aware of the risks of traveling to such regions and nations and are encouraged to take all the reasonable steps to ensure safe operations. “The safety and security of an aircraft operation in or near a particular geographical area or location is entirely the responsibility of the aircraft operator,” Colindres continues. “So, we recommend the operator carefully considers the risks and potential consequences of operating in or near conflict zones, whether or not they are officially publicized.” Operators of business jets and turboprops, like the commercial airline operators, will already have a framework in place, Colindres explains. “Such operators are required to have a Safety Management System (SMS), and we recommend that the SMS principles are applied to conduct a safety and security risk assessment when a trip is planned into a politically volatile region or a conflict zone.” “Operators need to take into account global airspace risks communicated by the states themselves, and also by third parties, including NOTAMs, AICs and any other sources.”

No Risk Assessment? No Excuses…

Colindres points out that private operators of smaller aircraft are also required to have an SMS and therefore are responsible for conducting a thorough risk assessment. “As the nature of conflict and the area and airspace affected may change unexpectedly, 62
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David Colindres

operators are advised to update their risk assessments according to the circumstances and the information available,” he continues. There is a variety of useful sources of information, including ICAO’s Conflict Zone Information (https://www.icao.int/czir), which contains a state’s own source of information related to risks to civil aviation. “Be aware, however, that states with conflict zones are not likely to advise ICAO,” Colindres warns. Other sources include EASA’s Conflict Zone Information Bulletins (https://ad.easa.europa.eu/czib-docs/page-1), NOTAMs, and State Aeronautical Publications (i.e. AICs) which are useful for risk assessment purposes. Finally, operators planning trips into volatile regions should be closely monitoring all sources of information before operating their flights. “You should always pay close attention to the news and media reports about your destination in the weeks, days and hours before travel,” Colindres concludes. ❙ More information from www.smar.aero www.AVBUYER.com

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Is Business Aviation Prepared for CORSIA? How is the Business Aviation community seeking to reduce its carbon footprint, and what should operators be aware of for their future operations? Mike Chase highlights in his latest JETNET >>KNOW MORE industry review…

he United Nations’ International Civil Aviation Organization (ICAO) serves as a global forum to develop policies and standards for the aviation industry, including a comprehensive set of measures to address greenhouse gas emissions. In 2016 an agreement was reached at ICAO to set up the Carbon Offsetting and Reduction Scheme for International Aviation (CORSIA). ICAO’s global emissions scheme required all aircraft operators to monitor their emissions on all international flights, beginning January 1, 2019, to help reduce emissions with improvements in aircraft technology and in operations and infrastructure, and to further the use of aviation biofuels.

T

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A new aircraft noise standard became effective on January 1, 2018, and new aircraft carbon dioxide (CO2) emissions and engine particulate matter standards will become effective on January 1, 2020.

How Significant are Air Travel Emissions?

Air travel accounts for nearly 9% of carbon dioxide emissions from the US transportation sector. US commercial air travel accounted for most of the aircraft-related carbon dioxide emissions, with military and General Aviation making up the rest. On July 25, 2016, the US Environmental Protection Agency (EPA) issued the final endangerment finding under section 231(a)(2)(A) of the Clean Air Act for aviation emissions. Both EPA



www.AVBUYER.com

6

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Quantitative Goals for the Fuel Burn, Emissions, and Noise Metrics Under CLEEN I & CLEEN II G OA L A R E A

CLEEN I GOALS

CLEEN II GOALS

Noise (cum below Stage 4)

-32 dB

-32 dB

-

LTO NOx Emissions (Below CAEP/6)

-60%

-75% (-70% re: CAEP/8)

Aircraft Fuel Burn

-33%

-40%

and FAA expect to take a similar approach in promulgating future domestic aircraft greenhouse gas standards for aircraft that are covered. Traditionally, both the EPA and FAA have worked within the ICAO process to establish international emission standards and related requirements for other pollutants. US aviation is part of the increasingly interconnected global aviation sector which makes up about 2% of the world’s carbon dioxide emissions, but is one of the fastest growing sources. From 1990 to 2010, global aircraft carbon dioxide emissions grew by about 40%. If global aviation were a country, it would rank as the seventh largest carbon dioxide emitter. US aircraft emissions represent 29% of all global aircraft emissions, according to the Center for Climate and Energy Solutions. And overall, global aircraft emissions are forecast to triple by 2050.

2019 European Aviation Environmental Report

The first edition of the European Aviation Environmental report was completed in 2016. The 2019 second edition has been prepared by the European Aviation Safety Agency (EASA), the European Environment Agency (EEA) and EUROCONTROL. The European Union (EU) is firmly committed to the goals of the Paris Agreement. To achieve its objectives, the European Commission (EC) has put forward ‘A Clean Planet for All’, a strategic longterm vision for a prosperous, modern, competitive and climate-neutral economy by 2050. The EC is making an irreversible shift to low and ultimately no - emission mobility by 2050 and its report confirms a longstanding effort for European citizens to be able to travel by air while leaving a minimal footprint. However, it’s recognized that the contribution of aviation activities to climate change, noise and air quality is increasing, impacting the health and quality of life of Europe’s citizens. 66
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European Business Jet Operations

Business jet operations produce significantly less noise and harmful emissions than the Commercial Airline (jet and turboprop) fleet. The 2019 European Aviation Environmental report notes that a major factor in the low environmental impact levels from business jets is because they account for just about 7% of Europe’s total air traffic. The report notes, “The rapid expansion of Business Aviation up to 2008 was accompanied by the entry into service of new aircraft, but Business Aviation declined sharply with the economic downturn, which led to more frequent use of the existing aircraft and a gradual aging in the fleet.” Nevertheless, after slight increases in 2011 and 2013, the overall trend for business jets has been down, and in 2017 the sector was at its lowest point over the past 17 years. General Aviation turboprops were not included in the study. For some airline segments (i.e. regional turboprops) the trend for adding to noise or harmful emissions is increasing. The report says that although aviation accounts for just 3% of global carbon emissions, their combined effect “has not kept pace with the recent strong growth in the demand for air travel, thereby leading to an overall increase in the environmental impact.” Effective coordination between stakeholders is of “utmost importance to build on existing [mitigating] measures and address the environmental challenges, thus ensuring the longterm success of the aviation sector,” the report concludes.

A Note on the FAA CLEEN Program

The FAA Continuous Lower Energy, Emissions, and Noise (CLEEN) program is the principal environmental effort to accelerate the development of new aircraft and engine technologies, and advance sustainable alternative jet fuels. In 2010 the FAA initiated the first CLEEN Program, entering into five-year agreements with

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Boeing, General Electric (GE), Honeywell, Pratt & Whitney and Rolls-Royce. These companies matched or exceeded the FAA funding in this costsharing program. Over the five-year period, the FAA invested a total of $125m, and with the funding match from the five companies the total investment exceeded $250m. In 2015 the FAA initiated a follow-on program called CLEEN II which continues efforts to achieve the CLEEN goals and develop and demonstrate aircraft technology and alternative jet fuels. Under the CLEEN II program, the FAA has awarded five-year agreements to Aurora Flight Sciences, Boeing, Delta Tech Ops/MDS Coating Technologies, General Electric, Honeywell, Pratt & Whitney, Rolls-Royce, and Rohr/UTC Aerospace Systems. These companies will match or exceed the awards in this cost-sharing program. The total federal investment is expected to be $100m over five years.

Sustainable Alternative Jet Fuel (SAJF)

In January 2019, Van Nuys airport in California was chosen to demonstrate the use of sustainable alternative jet fuel (SAJF) for business aircraft. The primary purpose was to dispel any concerns about the safety of business aircraft use of SAJF. World Fuel provided 8,000 gallons of the blended renewable fuel. The airport saw more than 140 departures of turbine-powered aircraft using this fuel during the event. Also drawing from those supplies were aircraft from Gulfstream, Bombardier and Embraer. Bruce Parry, IBAC’s environment director observed, “The single largest potential reduction in aviation’s greenhouse gasses is from the 68
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broad adoption of sustainable alternative fuels.” “Our industry is uniquely poised to make a huge, positive difference in the fight against climate change, not by changing how much we fly, but by changing how we fuel,” Bombardier’s president David Coleal added. “SAJF will enable a future of clean, efficient propulsion in Business Aviation.” “We look forward to the day this fuel is commonplace in our industry and we are all doing our part to reduce emissions worldwide,” Gulfstream president Mark Burns concluded. Gulfstream noted that each gallon of SAJF burned achieves more than a 50% reduction in greenhouse gas emissions, relative to petroleum-based jet fuel on a life-cycle basis. In response to CORSIA, the business jet industry has taken the first step as it begins seeking ways to reduce its carbon footprint with the use of SAJF. That’s a good thing, because, as stated above, ICAO required all aircraft operators to monitor their emissions on all international flights effective January 1, 2019, and new aircraft carbon dioxide emissions will become applicable from January 1, 2020. More information from www.jetnet.com

❙

Mike Chase’s analytical and consultancy services are highly valued within the Business Aviation industry. He is founder and president of Chase & Associates, and works closely with several respected sources including JETNET. Contact Mike via [email protected]

www.AVBUYER.com

@BOOTH R89

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OWNERSHIP

Can we Maintain the Caliber of BizAv’s Future Pilots? Various factors could compromise the excellence of future pilots entering the

cockpits of business jets. What are these factors, and what could the industry do to maintain a high caliber of pilots? Andre Fodor reflects…

y invitation, I recently attended a gathering of industry leaders. The theme was to address the upcoming challenges facing Business Aviation and the discussion focused on how to identify and proactively manage those challenges. The gathering drew a good mix of participants, including managers of large flight departments, engineers, product development executives from the OEMs, and systems integration and test and

B

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certification pilots. Of interest to everyone was the pilot shortage and how to attract new pilots to the corporate flight deck without compromising the high levels of operational capability and safety currently prevalent in Business Aviation. An influx of low-time, less experienced pilots could suffer from a loss of mentorship as seasoned pilots leave Business Aviation cockpits in favor of the airlines or retirement. So, the question was: ‘What will be the caliber of the next generation of corporate pilots and www.AVBUYER.com

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AVBUYER.com With a focused approach on global excellence and creativity, Andre Fodor has managed flight operations for the U.N. and Flight Options as well as being a senior demonstration pilot and instructor for Embraer Aircraft. He is the Aviation Director for his current employer.

flight department managers?’ With aircraft cockpits becoming increasingly sophisticated and complex and airspace requiring a higher degree of navigational accuracy there is concern that there could be a deficit of seasoned experience. Airmanship and real-life experiences acquired through flight hours under the oversight of a seasoned pilot are proven safety enhancers.

Pilot Training Examples

So how are some of the new pilots entering the job market today coping? On a recent trip to the Middle East, the lead instructor of an ab-initio flight academy for a major airline told me his trainees begin with zero time and progress to 257 hours, all in jet aircraft. From the start, the training syllabus utilizes the same Standard Operating Procedures (SOPs), call-outs and profiles they will use in the airline’s cockpits. The students reside at the training facility, dress in airline uniform and the flight training format is the same as for the airline’s mainline flight training program. The goal is to deliver standardization and focused procedural training. The next aircraft flown by these graduates will be the large airliners that fly long-haul international trips. By contrast, one test pilot described to me his training with the Air Force. By the time he was 24 he was in charge of a fully-armed F16 flying in harmful territory. He described his level of proficiency as ‘very high’, although his total time was well below 700 hours. He attributed his proficiency to scenario-based training. That training had a high focus on simulations of failures and abnormalities. The goal he was set was to successfully complete his tasks without compromising safety while remaining under very specific guidelines.

Fault Tolerance

Only recently I learned about ‘fault tolerance’, which describes how an aircraft system can withstand a malfunction and using sensors and automation identify a fault, run it through a logic matrix, and automatically cope with the malfunction. Only then will it display the fault to the crew along with any additional procedures that may be required to manage the condition. Compared to redundancy (where there is a back-up to the primary system) fault tolerance aims to reduce human workload by preventing task saturation and managing the performance deficit of a low-experience pilot handling the high demands of modern aircraft and airspace. Consider the following example of fault tolerance during an aircraft’s malfunction: www.AVBUYER.com

The sensors identify and send a message to the fault tolerance management computer (FTMC). A generator has failed. The logic attempts to troubleshoot using a diagnostic application that looks for unusual conditions of the electrical system and the decision matrix accomplishes a generator re-set which is done automatically and in the background. The FTMC senses a new trip of the same generator, analyses the energy load requirements of the aircraft and re-configures the electrical distribution. It then sends an email message to maintenance control alerting of the malfunctions and what parts may be affected. Only after all these tasks are concluded does the Crew Alerting System (CAS) display an advisory message to the crew with instructions of any limitations or procedures that must be followed. It has managed the fault before giving notice of it without increasing workload – thus allowing the crew to focus on flying the aircraft. In due time, Fault Tolerance may grow beyond a maintenance application and become integral to crew resource management – just like having an additional crew member on-board. Conceptually, these new operational tools may play a role in broadening the use of single-pilot-flown or autonomously-flown aircraft. Such advancements in workload management will complement the human skill sets that are required to fly higher and faster in highly complex airplanes.

Decision-Maker or Spectator?

The greatest challenge to these leaps in technology is to maintain a solid interface between humans and technology. We must make sure that ultimately, the pilot is still the integral decision-maker and not a spectator to the technological wonders of automation. All these ‘bells and whistles’ must enhance the pilot’s ability to become better aviators and not replace our instincts, human prowess and decisionmaking for a few thousand lines of logic programing. During the Leaders gathering, we concluded that more than anything, it’s our responsibility to attract new talent to Business Aviation. For that to succeed, we need to deliver long-term career opportunities, with chances to progress, which are also a viable alternative to the airline cockpit. Most importantly, we need to shore-up training and experience with a strong mentorship and skilltransfer process that will help deliver the next generation of successful Business Aviation pilots and industry leaders. ❙ AVBUYER MAGAZINE
Vol 23 Issue 5 2019


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Avoid Overpaying for Your Jet Operation

A recent Bloomberg article described how high net worth individuals are potentially being taken advantage of by aggressive overcharges on their aircraft bills. David Wyndham considers this, and highlights ways to understand and manage your operating costs…

ew specific examples were cited in the Bloomberg article, and unsurprisingly no aircraft owner was willing to attribute their name to such a story, but what it highlighted is that there are many different costs associated with owning and operating an aircraft. These will vary significantly from trip to trip. While transparency is offered as one solution to the issue of overcharging, that approach misses one important area: understanding. Aviation, like medicine or law, has a complex language that seems designed to confuse the layperson. With medicine and law, you have a professional at your disposal to assist with questions such as, "What do you mean I have hypertension?" or, "Just what is a waiver of subjugation?"

F

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Many aircraft owners, when faced with complex aircraft bills, have accountants to review and authorize bills for payment. But the accountant often lacks the expertise to fully understand the aircraft costs they are responsible for paying.

How Should Aircraft Costs be Presented?

Each bill submitted to an aircraft owner should be itemized with taxes, fees, labor, services and parts. Even with that level of detail, however, many are still unsure as to what the bill means and whether it is too costly. I have assisted several owners recently with a detailed review of their costs. While I have yet to come across fraudulent bills or blatant overpricing, it is easy to see why a reasonable question may be, "Why are these bills so high?" www.AVBUYER.com

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The first place to start to understand these costs is with a budget. The management company or aviation department must provide a budget based on the expected utilization of the aircraft. At the financial management level there needs to be enough detail so that individual accounts have differentiation, but not so many details that the complexity outweighs the benefits of detail.

Operating Cost Categories to Consider

Fuel: A major cost driver for most aircraft, the cost of fuel per gallon will vary and, in many instances, cheap fuel will beget add-on fees away from home. For example, itemized bills will often contain ramp fees and other services. Other Trip Expenses: These need to be verified too, and include items such as the catering, hotel and meals for the crew. I had one owner who stayed at high-end hotels. Wanting the crew to be immediately available, he had them stay at the same hotels. As a result, crew travel costs were far greater than what many would consider ‘normal’. www.AVBUYER.com

Maintenance Costs: More detail is required for this within the budget than just one item. Categories should specify whether the bill is for scheduled maintenance (i.e., an 800-hour inspection), or for unscheduled maintenance (i.e. changing a flat tire or replacing a burnedout landing light). Component overhauls and life-limited part replacement should also be noted. The annual budget should note the scheduled inspections with the expected flat rate, or the cost to inspect and replace mandatory items, and allow for the oncondition or unscheduled items that may also require service. The management company or flight department should get quotes for major maintenance from at least two qualified sources, if possible. And when requesting quotes, you should account for what is included and excluded. If, for example, there are scheduled parts to be replaced, is labor included or only the cost of parts? You must also consider time. For example, a low-cost bid that takes 60 days to accomplish

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AVBUYER.com David Wyndham is vice president of Conklin & de Decker, a JSSI Company, where his expertise in cost and performance analyses, fleet planning and life cycle costing are invaluable. He’s formerly an instructor pilot with the US Air Force. Contact him via [email protected]

may be worse than the higher cost bid with a 30day return to service. Maintenance costs vary from year-to-year and major inspections will cause a large increase in expenditures. These major scheduled inspections can occur every 6–10 years on the airframe; sometimes longer. Older airframes exceeding 20 years may see more age-related checks, and these should be accounted for. Engines are a separate consideration and require a major service very infrequently. For most private and corporate operations, an engine may have a 4,000-hour mid-life inspection and run 8,000 hours before it gets overhauled. At 400 annual hours, that overhaul is going to occur when the aircraft is 20 years old. Unscheduled events tend to be rare for turbine engines, but they do occur and can be extremely costly.

How to Make Maintenance Costs Predictable

Guaranteed hourly maintenance programs (GHMPs), as the name implies, set a fixed guaranteed rate for the maintenance. An engine GHMP is very common for jet engines. In fact,

since the financial crisis many lenders and lessors now require them as a standard term of condition. There are also airframe and parts-only programs available for many turbine aircraft. A GHMP will usually have a contracted price based on utilization and aircraft age and may incur a calendar and hourly fee, or just an hourly fee. A GHMP provides budget stability and peace of mind, as well as added resale value for the aircraft.

In Summary…

There needs to be good communication and clear expectations between the owner and management company or aviation department. Cost overruns need to be communicated as soon as they are known, and not after submitting the bill. Someone should spend a little time with the owner or accountant to review the major bills and, importantly, ensure there are no surprises. When in doubt, seek the opinion of a professional. Aircraft are complex machines that, when well-maintained, will provide safe and comfortable service for many years. ❙ More information from www.conklindd.com

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It’s easy to see which Falcon owners have long-range plans.

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AirCompAnalysis May19.qxp_ACAn 16/04/2019 12:15 Page 1

JET COMPARISON

Aircraft Comparative Analysis Dassault Falcon 8X vs Bombardier Global 5000 In this month’s Jet Comparison, Mike Chase compares Dassault’s Falcon 8X Ultra-Long-Range business jet against Bombardier’s Global 5000. What are the areas each jet excels in…?

O

ver the following paragraphs we’ll consider various key productivity parameters including payload, range, speed and cabin size. Current market values will also be discussed. Which is the better option for a buyer in the market for an Ultra-Long-Range jet: Speed or range? This is one of the questions that will be considered in the following comparison…

About the Competitors…

The Dassault Falcon 8X entered service in October 2016. It was built with an extra 500nm range over the Falcon 7X. That range increase was enabled via an additional centerfuselage fuel tank and a lighter, re-designed wing. The re-worked wing also keeps the Falcon 8X competitive on short runways. It needs 6,000 feet to take off fully loaded but can stop in 2,150 feet. Three Pratt & Whitney Canada PW307D engines power this aircraft. As of this writing, there were 44 Falcon 8X business jets

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in operation, all of which were wholly-owned. In March 2019, Europe had the largest Falcon 8X fleet percentage (56%), followed by North America and Asia (19% each). Together, they accounted for a combined 93% of the total fleet. The Bombardier Global 5000 has been in production since 2005 and also offers the advantage of having short take-off and landing performance. Powered by a pair of Rolls-Royce BR710 A2-20 turbofan engines, it has a high-speed cruise of 499 knots, and its takeoff range is exceptionally short. Loaded to its maximum take-off weight, it can take off in around 5,000ft. There were 229 Global 5000 business jets in operation at the time of writing, 215 of which were wholly-owned. One was in shared ownership and 13 in fractional ownership programs. North America was home to the largest Global 5000 fleet percentage (47%) in March 2019, followed by Asia (26%) and then Europe (23%), accounting for a combined 96% of the total fleet. www.AVBUYER.com

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www.AVBUYER.com HOW MANY

EXECUTIVE

SEATS

DASSAULT Falcon 8X

(Manufactured between 2016-Present)

vs.

$59.3 Million

12

$50.4 Million

13

(2019 Model)

BOMBARDIER Global 5000

(Manufactured between 2005-Present)

(2019 Model)

WHICH OF THESE LARGE jets WILL COME OUT ON TOP HOW MUCH

Dassault Falcon 8X

DO I NEED?

Bombardier Global 5000

RUNWAY (Balanced field length, ft)

1000

1500

2000

HOW FAR

4,960

2500

3000

4000

3500

(Nautical Miles. 4 Pax)

CAN WE TAKE?

6,630

Bombardier Global 5000 5,350

Dassault Falcon 8X

Bombardier Global 5000

7,139

OPERATION?

EACH MONTH?

NEW/USED SOLD

Dassault Falcon 8X

459 471

Bombardier Global 5000

WHAT’S THE

COST PER HOUR?

3 (12.2%)

Dassault Falcon 8X Bombardier Global 5000

www.AVBUYER.com

(Knots)

1 (4.6%)

44

Sources used: Conklin & de Decker, JETNET, Vref, Chase & Associates

6000

5500

CRUISING SPEED? 2,650

4,900

HOW MANY

229

5000

LONG RANGE

(Lbs)

HOW MANY

UNITS IN

4500

WHAT’S THE

HOW MUCH

PAYLOAD

CAN WE GO?

Dassault Falcon 8X

5,820

12-Month Average Figure (% = Global Fleet For Sale)

$3,514 $3,984

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JET COMPARISON

AVBUYER.com

Table A - Payload & Range

Payload & Range Comparison

Dassault Falcon 8X Bombardier Global 5000

34,900 38,959

73,000 92,500

Max Fuel (lb)

MTOW (lb)

4,900

7,139

1,259

Max Payload (lb)

5,555

2,930

Avail Payload w/Max Fuel (lb)

Source: OEM’s, JETNET, B&CA, Conklin & de Decker

1,312

Chart A - Cabin Cross-Sections Dassault Falcon 8X

4,920

Max P/L w/Avail Fuel IFR Range (nm)

Bombardier Global 5000

As we have established previously, a potential operator should focus on a jet’s payload capability as a key factor in selecting the right aircraft for their need. Table A (left) shows the Dassault Falcon 8X’s ‘Available Payload with Maximum Fuel’ is 1,259 lbs., which is much less than the 2,930 lbs. offered by Bombardier’s Global 5000.

Cabin Cross-Section Comparison

Chart A (left), meanwhile, shows a cabin cross-section comparison of the Falcon 8X and Global 5000, courtesy of UPCAST JETBOOK. As shown, the Global 5000 has more cabin height and width compared to the Falcon 8X. Not depicted, though, the Falcon 8X has a slightly longer cabin length (42.7ft) compared to the Global 5000 (42.47ft). However, the overall cabin volume of the Global 5000 is greater (1,889cu.ft) compared to the Falcon 8X (1,695cu.ft). The Falcon 8X and the Global 5000 do not offer external baggage storage capacity, but both offer plentiful internal baggage storage with the Global 5000 having 195cu.ft and the Falcon 8X offering 140cu.ft.

Range Comparison

Source: UPCAST JETBOOK

Chart B - Range Comparison Falcon 8X Global 5000

6,630 nm (w/4 Pax) 5,350 nm (w/4 Pax)

6 5

Represented in Chart B (left), using Teterboro, New Jersey as the origin point, the Falcon 8X shows considerably greater range coverage than the Global 5000 at 6,630nm versus 5,350nm, with both jets carrying four passengers. For business jets, ‘Four Pax Range’ represents the maximum IFR range of the aircraft at long range cruise. NBAA IFR fuel reserve calculation is for a 200nm alternate. This range does not include winds aloft or any other weather-related obstacles.

Powerplant Details

Dassault’s Falcon 8X is powered by three Pratt & Whitney PW307D powerplants, each offering 6,725lbst. The two Rolls-Royce BR710 A2-70 engines on the Bombardier Global 5000 each offer 14,750lbst.

Cost Per Mile Comparison

Source: Chase & Associates 

a







        Cruise with NBAA IFR alternate fuel reserve calculation for

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Chart C (overleaf) details ‘Cost per Mile’ for our comparative jets (per JETNET), factoring direct costs (no depreciation) and with each aircraft flying a 1,000nm mission with an 800lbs (four passengers) payload. The average US Jet-A fuel cost used for March 2019 was $4.92 per gallon. The Falcon 8X shows a lower cost per nautical mile at $9.19 compared to $10.25 for the Global 5000. That’s a difference of 11.5% in cost per mile.

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2015 G650ER s/n 6144

Fwd. Galley & Crew Rest, U.S. Registered, 13 Pax Interior

2013 Challenger 605 s/n 5942

Price Just Reduced, ADS-B Out, Always U.S. Owned

2007 Citation CJ3 s/n 525B-157

One U.S. Owner Since New, Engines on Programs, Operated Part 135

2004 Falcon 2000EX s/n 026

ADS-B Out w/ WAAS & LPV, Two U.S. Owners Since New, Excellent Maintenance History

2011 Gulfstream G450 s/n 4230

FANS 1/A+, ADS-B Out, WAAS/LPV, TCAS 7.1, One U.S. Owner Since New

2007 Citation CJ2+ s/n 525A-377

ADS-B Out w/ WAAS, 1570 Hrs. TT, Cessna Maintained

2001 Global Express s/n 9050

Low Time, U.S. Registered, Operated Part 135, New Interior

2007 Gulfstream G200 s/n 155

New to Market, Fresh Inspections, One U.S. Owner Since New

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JET COMPARISON

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Chart C – Cost per Mile*

Total Variable Cost Comparison

The ‘Total Variable Cost’ illustrated in Chart D, middle left (sourced from JETNET), is defined as the cost of fuel expense, maintenance labor expense, scheduled parts expense and miscellaneous trip expense (hangar, crew and catering). The Total Variable Cost for the Falcon 8X computes at $3,514/hour compared to the Global 5000 at $3,984/hour.

$9.19

Falcon 8X

$10.25

Global 5000 $0.00

$6.00

$3.00

$9.00

$12.00

US $ per nautical mile

Aircraft Comparison Table

*1,000 nm mission costs (No Depreciation)

Table B (middle, left) contains the new prices (per Vref) for the Falcon 8X and Global 5000, while the long-range cruise speed, cabin volumes and ranges are from Conklin & De Decker, and the number of aircraft inoperation, percentage ‘For Sale’ and average sold are as reported by JETNET. The Falcon 8X had 4.6% of its fleet for sale as of the end of March 2019, while the Global 5000 had 12.2% for sale. The average number of new and used transactions (sold) per month stood at one unit for the Falcon 8X and three for the Global 5000 over the previous 12 months.

Source: JETNET

Chart D – Variable Cost $3,514

Falcon 8X

$3,984

Global 5000 $0

$2,000

$1,000

$3,000

$4,000

US $ per hour Source: JETNET

Maximum Scheduled Maintenance Equity

Table B - Aircraft Comparison Table Dassault Falcon 8X Bombardier Global 5000

459

471

Long Range Cruise Speed (Kts)

1,695 1,889

6,630 5,330

$59.300 $50.411

Cabin Volume Cu Ft

4 Pax w/Avail Fuel IFR Range (nm)

New 2019 Vref Price $USm

4.6% 12.2%

229

44

% For Sale

In Operation

1

3

Average Per Month Sold*

*Average Full Sale Transactions in the past 12 months; Source: JETNET Data courtesy of Conklin & de Decker; JETNET; Vref

Chart E - Maximum Scheduled Maintenance Equity Dassault Falcon 8X

Assumed Annual Utilization: 475 Flight Hours Average Maximum Maintenance Equity: $4,279,088

Pct of Avg Max Mtnc Equity vs. Aircraft Age 100%

Pct of Max Mtnc Equity

90%

80% 70% 60% 50% 40%

30%

20%

1

2

3

4

5

6

7

Source: Asset Insight (www.assetinsight.com)

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8

9

10

11

Aircraft Age (Years)

12

13

14

15

16

Chart E (bottom, left) depicts and projects the Maximum Maintenance Equity available for the Falcon 8X, based on an aircraft’s age over a 16 year period. The Maximum Maintenance Equity figure is achieved the day the aircraft leaves the production line (since it has 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 an average annual utilization of 475 flight hours, and that all maintenance is completed when due.

Depreciation Schedule

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 can use accelerated depreciation of assets by taking a greater percentage of the deductions during the first few years of the applicable recovery period (see Table C, overleaf). 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.

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AirCompAnalysis May19.qxp_ACAn 16/04/2019 12:22 Page 5

JET COMPARISON

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Table C - MACRS Depreciation Schedule MACRS Schedule for PART 91 1

2

3

4

5

6

20.0%

32.0%

19.20%

11.52%

11.52%

5.76%

Year Deduction

MACRS Schedule for PART 135 Year Deduction

1

2

3

4

5

6

7

8

14.29%

24.49%

17.49%

12.49%

8.93%

8.92%

8.93%

4.46%

Source: NBAA

Table D - MACRS Depreciation Schedule Falcon 8X 2019 Falcon 8X - Private (Part 91) Full Retail Price - Million $59.300 Year

1

Rate (%)

20.0%

2

32.0%

3

19.2%

Depreciation ($M)

$11.860

$18.976

$11.386

Cum. Depreciation ($M)

$11.860

$30.836

$42.222

Depreciation Value ($M)

$47.440

$28.464

$17.078

4

11.5%

5

11.5%

6

5.8%

$6.831

$6.831

$3.416

$49.053

$55.884

$59.300

$10.247

$3.416

$0.000

2019 Falcon 8X - Charter (Part 91) Full Retail Price - Million $59.300 Year

1

Rate (%)

Depreciation ($M)

Depreciation Value ($M) Cum. Depreciation ($M)

14.3%

2

24.5%

3

17.5%

$8.474

$14.523

$10.372

$8.474

$22.997

$33.368

$50.826

$36.303

$25.932

4

12.5%

$7.407

$18.525 $40.775

5

8.9%

6

8.9%

7

8.9%

8

4.5%

$5.295

$5.290

$5.295

$2.645

$46.070

$51.360

$56.655

$59.300

$13.230

$7.940

$2.645

$0.000

Source: Vref

Table E - MACRS Depreciation Schedule Global 5000 Full Retail Price - Million $50.441 Rate (%)

Depreciation ($M)

Depreciation Value ($M)

Cum. Depreciation ($M)

1

20.0%

$10.088

$40.353

$10.088

2

32.0%

$16.141

$24.212

$26.229

3

19.2%

$9.685

$14.527

$35.914

4

11.5%

$5.811

$8.716

$41.725

5

11.5%

$5.811

$2.905

$47.536

6

5.8%

$2.905

$0.000

$50.441

2019 Global 5000 - Charter (Part 135) Full Retail Price - Million $50.441 Year

Rate (%)

Depreciation ($M)

Depreciation Value ($M)

Cum. Depreciation ($M)

1

14.3%

$7.208

$43.233 $7.208

2

24.5%

$12.353

$30.880

$19.561

Source: Vref

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3

17.5%

$8.822

$22.058

$28.383

4

12.5%

$6.300

$15.758

$34.683

5

8.9%

$4.504

$11.253

$39.188

6

8.9%

$4.499

$6.754

$43.687

7

8.9%

$4.504

$2.250

$48.191

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 sevenyear 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 any 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 percent of the cost of a new or pre-owned 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 (left) depicts an example of using the MACRS schedule for a 2019 model new Dassault Falcon 8X in private (Part 91) and charter (Part 135) operations over five- and seven-year periods. Table E (left), meanwhile, depicts an example of using the MACRS schedule for a 2019 model new Bombardier Global 5000 in private (Part 91) and charter (Part 135) operations over five- and seven-year periods.

Asking Prices & Quantity

2019 Global 5000 - Private (Part 91) Year

J

8

4.5%

$2.250

$0.000

$50.441

The current used market for the Falcon 8X aircraft showed a total of two jets for Sale at the time of writing, both with invitations for buyers to make an offer. For the Global 5000, a total of 28 aircraft were listed for sale, eight of which displayed asking prices that ranged between $13m and $31.995m. While each serial number is unique, the Airframe Total Time (AFTT) 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.

Productivity Comparisons

The points in Chart F (overleaf) are centered on the same aircraft. Pricing used

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8

Sky Aviation Holdings May.qxp_Empyrean 18/04/2019 09:56 Page 1

2004 Hawker 400XP

Serial Number: Airframe TT:

RK-378 3592

ENGINE #1 TT: 4698 TC: 4528 ENGINE #2 TT: 4698 TC: 4528 • One Owner Since New • High Pedigree Maintenance History • Engines on ESP • Maintenance Tracking On CAMP • ADS-B Out Compliant • New Interior • New Paint • Fresh A Inspection • Fresh Landing Gear Inspection

1996 Beechcraft Beechjet 400A

Serial Number: Registration: Airframe TT: Landings:

RK-119 N150TC 4506.1 3276

ENGINE #1 TT: 4506.1 TC: 3276 ENGINE #2 TT: 4506.1 TC: 3276 • Fresh A & B (8/2018) • ADS-B Compliant • NEW PAINT (10/2018) • Maintenance Tracking on CAMP • DBU-5000 USB DATA LOADER • XM WEATHER • Engines on ESP Gold Lite

Sky Aviation Holdings LLC

Pompano Beach Airport, 751 NE 10th Street, Pompano Beach Florida, 33060, United States www.AVBUYER.com

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JET COMPARISON

Chart F - Productivity Comparison $70.0

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:

2019 Falcon 8X

Price (Millions)

$60.0 $50.0

1.

2019 Global 5000

$40.0

2.

$30.0

3.

$20.0 $10.0 $0.0 0.000

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2

2.000

4.000

6.000

Index (Speed x Range x Cabin Volume / 1,000,000,000)

8.000

Four Passenger Range (nm) with available fuel; The long-range cruise speed flown to achieve that range; The gross 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. In summary, the Falcon 8X demonstrates a higher level of productivity at a higher price (purchased new). The Falcon 8X has a lower cost per mile and variable cost per hour than the Global 5000, and it also offers much greater range than the Global 5000. In the favor of the Global 5000, Bombardier’s jet offers greater cabin volume, and the ‘Available Payload with Maximum Fuel’ is much greater than that of to the Falcon 8X.

In Summary

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. Ultimately, operators should weigh up their mission requirements precisely when picking which option is the best for them. Both jets in our study show similar levels of productivity. Of course, there are other differences for a buyer to consider when making a choice between the two, but it really depends on budget constraints and mission needs. ❙

BOMBARDIER GLOBAL 5000

Compare, Contrast, Decide with

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Mike Chase’s analytical and consultancy services are highly valued within the Business Aviation industry. He is founder and president of Chase & Associates, and works closely with several respected sources to compile his unique Aircraft Comparative Analysis features. Contact Mike via [email protected]

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For Immediate Sale

2002 GULFSTREAM IV/SP S/N 1484

2005 GULFSTREAM G200 S/N 108

2014 GULFSTREAM G550 S/N 5464

2001 LEARJET 31A S/N 222

2.900 Hours ONLY, 2016 Paint & Interior by Gulfstream, WiFi, 2 Owners Since New, Make Offer

1,100 Total time, FWD Galley, RRCC, Asking $35m

8,000 hours, 2016 Interior, New Paint, ADS-B, WiFi, ESP Gold, Asking $3.55m

Low time, TR’s, Raisebeck Mod., ESP Gold, Make Offer

2002 LEARJET 60 S/N 257

Wifi, Brake upgrade, Fresh major insp., ESP Gold, Asking $1.8m

+1.561.691.3545

[email protected]

Values Intro.qxp_Finance 16/04/2019 15:08 Page 1

VALUES - LARGE CABIN JETS

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Business Aircraft Values: The Large Cabin Choice There are occasions when the operator’s mission dictates an aircraft of larger capacity. This month our value study focuses on our definition of Large Cabin and Ultra-LongRange business jets. he average Large Cabin and Ultra-Long-Range jets share more in common than they differ, with similar cabin sizes and comparable cruise speeds ranging roughly between 450-500kts. For the purpose of this month’s focus, we’ll categorise Large Cabin and Ultra-Long-Range jets under the generic category of ‘Large Cabin jets’, on the basis of their shared characteristics, and MTOWs that generally range between 38,000-100,000 pounds. Large Cabin jets have much in their favor. Seatsfull range capabilities typically go up to, and into the 6,000nm range, making these effective nonstop continent and ocean-crossing machines. The fewer the stops, the shorter the overall trip time! One disadvantage the Large Cabin jets have over their Small and Medium jet kin is their need for runways longer than 6,000ft, which restricts the number of airports they can use by comparison. Nevertheless, for the trans-oceanic traveller, the advantages offered by these airplanes far outweigh the negatives. Where the Large Cabin airplanes really excel (as the name would suggest) is in their cabin capacities. A cabin will typically stretch from 30-40 feet or more, enabling operators to enjoy a wider array of finishing options and office capabilities than jets in the smaller segments can provide. Cabin heights in excess of six feet guarantees stand-up cabin comfort, while seating capacity of 8-18 is typical.

T

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Naturally, the size and range capabilities of Large Cabin jets don’t come cheaply, and you’ll need a larger fuel budget, more hangar space and a larger maintenance budget. Yet for the company with the need, the Large Cabin jet will rarely prove too small, and only occasionally be too large for an airport you’d prefer to access. In these situations, supplemental charter is the answer.

Large Cabin Jet Price Guide

The following Large Cabin Jets’ Average Retail Price Guide represents current values published in the Aircraft Bluebook–Price Digest. The study spans model years from 2000 through Spring 2019. Each reporting point represents the current average retail value published in the Aircraft Bluebook by its corresponding calendar year. For example, the Falcon 2000LX values reported in the Spring 2019 edition of the Bluebook show $20.0m for a 2013 model, $17.5m for a 2012 model and so forth. Aircraft are listed alphabetically. With the reader’s knowledge of aircraft, equipment, range and performance, the following Guide allows the reader to determine the best value aircraft for consideration. Note: We have included 41 aircraft models in the following Large Cabin average price guide, and for additional assistance, Conklin & de Decker’s Performance and Specifications data for these models can be referred to, beginning on page 94.

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IBA April.qxp_Layout 1 15/04/2019 11:29 Page 1

SIKORSKY HELICOPTERS S-92A • Attractively Priced • Option to Lease • Owner Finance Available • Suitable for SAR and VIP Conversion, Provided by a Globally Recognisable Company • EASA Compliant • Sky Connect System W / Satcom and Flight Tracker MMMUII • Honeywell MK XXII Enhanced Ground Proximity Warning System (EGPWS) • Rockwell Collins TTR-4000, TCAS II Installed • The Largest Commercial Helicopter Available in the Market! • Available For Sale or Lease

[email protected] | Tel: +44 (0) 1372 224488 | Mob: +44 (0) 7827 358944 | Dir: +44 (0) 1372 224596 | Fax: +44 (0) 1372 224489

Retail Values May2019.qxp_RPG 17/04/2019 10:15 Page 1

VALUES - LARGE CABIN JETS

Large Cabin Jets: Average Retail Price Guide MODEL YEAR $

2019 US$M

2018 US$M

2017 US$M

2016 US$M

2015 US$M

2014 US$M

2013 US$M

2012 US$M

13.0

----

----

12.0

14.250

12.750

11.750

2011 US$M

2010 US$M

11.0

10.0

10.750

10.0

MODEL BOMBARDIER CHALLENGER 850ER BOMBARDIER CHALLENGER 650

32.350

24.0

22.0

20.0

BOMBARDIER CHALLENGER 605

17.0 15.250

BOMBARDIER CHALLENGER 604 BOMBARDIER CHALLENGER 350

26.673

19.0

17.0

16.0

15.5

13.0

12.0

11.5

BOMBARDIER GLOBAL 6000

62.310

44.0

41.0

37.0

34.0

32.0

29.0

27.0

BOMBARDIER GLOBAL 5000

50.441

35.0

32.0

31.0

28.0

26.0

24.0

BOMBARDIER CHALLENGER 300

15.0

BOMBARDIER GLOBAL EXP XRS

10.6

9.6

22.0

19.0

17.0

21.5

19.5

18.5

BOMBARDIER GLOBAL EXP DASSAULT FALCON 8X

59.3

54.0

50.0

47.0

DASSAULT FALCON 7X

53.8

42.0

39.0

34.0

31.0

27.0

25.0

DASSAULT FALCON 2000LXS

35.1

29.0

27.0

25.0

23.0

21.5

20.0

DASSAULT FALCON 2000S

29.950

26.0

23.0

22.0

20.0

17.0

16.0

DASSAULT FALCON 2000LX

20.0

23.0

17.5

20.0

15.5

DASSAULT FALCON 2000DX EASY

17.0

13.5 12.0

DASSAULT FALCON 2000EX EASY DASSAULT FALCON 2000EX DASSAULT FALCON 2000 DASSAULT FALCON 900LX

44.8

36.0

33.0

29.0

25.0

23.0

21.0

20.0

19.0

17.5

DASSAULT FALCON 900DX

14.5

DASSAULT FALCON 900EX EASY

17.0

DASSAULT FALCON 900EX DASSAULT FALCON 900C EMBRAER LINEAGE 1000E

45.0

42.0

40.0

30.0

27.0

EMBRAER LINEAGE 1000 EMBRAER LEGACY 650-135BJ

20.0

18.0

17.0

EMBRAER LEGACY 600-135BJ

25.0

24.0

22.0

20.0

15.0

14.0

13.0

12.0

10.0

9.0

13.0

11.0

10.0

8.0

----

7.5

14.0

EMBRAER LEGACY 135BJ EMBRAER LEGACY 500

18.5

17.0

16.0

15.0

EMBRAER LEGACY 450

15.0

14.5

13.5

12.5

GULFSTREAM G650ER

71.5

64.0

60.0

55.0

51.0

49.0

47.0

44.0

GULFSTREAM G550

61.5

43.0

40.0

36.0

33.0

30.0

28.0

26.0

24.0

22.0

20.0

19.0

18.0

17.0

15.0

14.0

GULFSTREAM G500 GULFSTREAM G450

24.0

21.0

19.5

18.0

GULFSTREAM G400 GULFSTREAM G350

12.5

10.5

9.5

GULFSTREAM G300 GULFSTREAM G280

24.5

20.0

18.5

17.5

16.5

15.5

14.5

13.5

GULFSTREAM GV GULFSTREAM G1V-SP AIRCRAFT BLUEBOOK DATA - CHRIS REYNOLDS, EDITOR. EMAIL: [email protected]

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What your money buys today

Spring 2019 2009 US$M

2008 US$M

2007 US$M

9.0

8.0

7.0

9.5

8.5

8.0

2006 US$M

2005 US$M

2004 US$M

2003 US$M

2002 US$M

2001 US$M

2000 US$M

MODEL YEAR $ MODEL BOMBARDIER CHALLENGER 850ER BOMBARDIER CHALLENGER 650 BOMBARDIER CHALLENGER 605

6.3

6.0

5.7

5.4

5.0

7.8

7.4

6.8

6.6

6.3

4.7

4.5

4.2

BOMBARDIER CHALLENGER 604 BOMBARDIER CHALLENGER 350

9.1

8.4

BOMBARDIER CHALLENGER 300 BOMBARDIER GLOBAL 6000

15.0

13.0

12.0

11.0

10.0

17.5

16.5

15.550

14.5

13.5 12.0

BOMBARDIER GLOBAL 5000 BOMBARDIER GLOBAL EXP XRS 11.0

10.0

9.5

9.0

8.0

BOMBARDIER GLOBAL EXP DASSAULT FALCON 8X

16.0

15.0

14.0

DASSAULT FALCON 7X DASSAULT FALCON 2000LXS DASSAULT FALCON 2000S

12.5

11.5

10.0

9.5

11.5

11.0

10.5

DASSAULT FALCON 2000LX DASSAULT FALCON 2000DX EASY

10.0

9.5

9.0

8.7

DASSAULT FALCON 2000EX EASY

7.5

6.8

7.5

7.0

6.4

5.9

5.2

DASSAULT FALCON 2000EX 4.9

4.5

3.7

DASSAULT FALCON 2000 DASSAULT FALCON 900LX

13.5

12.5

11.5

10.5

9.5

16.0

15.0

14.0

13.0

12.0 8.6

DASSAULT FALCON 900DX 11.0 7.6

10.5

DASSAULT FALCON 900EX EASY

8.7

8.2

7.8

7.1

6.9

6.7

6.1

6.0

DASSAULT FALCON 900EX DASSAULT FALCON 900C EMBRAER LINEAGE 1000E

18.0

EMBRAER LINEAGE 1000 EMBRAER LEGACY 650-135BJ

7.0

6.5

6.0

EMBRAER LEGACY 600-135BJ 5.5

5.0

4.5

4.2

4.0

EMBRAER LEGACY 135BJ EMBRAER LEGACY 500 EMBRAER LEGACY 450 GULFSTREAM G650ER

20.0

19.0

17.0

16.0

15.0

14.0

17.0

15.5

14.5

12.5

10.5

9.5

13.0

12.0

11.0

10.0

9.0

8.5

8.0

7.2

5.6

5.0

13.0

GULFSTREAM G550

8.5

GULFSTREAM G500 GULFSTREAM G450

6.4

6.2

GULFSTREAM G400 GULFSTREAM G350

5.0

4.5

GULFSTREAM G300 GULFSTREAM G280 11.8

10.8

10.3

GULFSTREAM GV

6.6

6.1

5.7

GULFSTREAM G1V-SP

AIRCRAFT BLUEBOOK DATA - CHRIS REYNOLDS, EDITOR. EMAIL: [email protected]

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2007 Premier 1A - s/n RB-0196 Deal Pending!

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ACSpecs Intro.qxp_AC Specs Intronov06 17/04/2019 10:51 Page 1

SPECIFICATIONS - LARGE JET

Aircraft Performance & Specifications Large Jets

T

he AvBuyer Magazine Guide to Aircraft Performance and Technical Specification Data is updated by Conklin & de Decker on a regular basis. The Guide is much more comprehensive and informative, providing more aircraft types and models and including variable cost numbers for all models. This month’s category of aircraft - Large Jets – appears opposite, to be followed by Medium Jets next month. Please note that this data should be used as a guide only, and not as the basis on which buying decisions are taken. The data presents aircraft aged below 20 years of age only, but Conklin & de Decker provides details of older airplanes too. If there are any other ways in which we can improve the content or presentation of this information, please let us know.

Tel: +44 (0) 208 255 4000; Email: [email protected] © 2019 Conklin & de Decker Associates, Inc., P.O. Box 1142, Orleans, Massachusetts, 02653, Tel. 508-255-5975, www.conklindd.com

Description of Cost Elements

The following describes the content of each cost element used in The Aircraft Cost Evaluator. There are no sales taxes included in these costs.

SPECIFICATIONS - GENERAL

Cabin Dimensions: Cabin Height, Width, and Length are based on a completed interior. On “cabin-class” aircraft, the length is measured from the cockpit divider to the aft pressure bulkhead (or aft cabin bulkhead if unpressurized). For small cabin aircraft, the distance is from the cockpit firewall to the aft bulkhead. Height and width are the maximum within that cabin space. Cabin Volume is the interior volume, with headliner in place, without chairs or other furnishings.

•

Maximum Payload is the maximum zero fuel weight minus the basic operating weight.

Performance Range: • Ferry Range - is the maximum IFR range of the aircraft with the maximum fuel on board and no passenger seats occupied. This uses the NBAA IFR alternate fuel reserve calculation for a 200 N.Mi. alternate. This is used for jet and turboprop aircraft.

Seats Executive: This is the typical crew and passenger seating commonly used on the aircraft. This is not the maximum certificated seats of the aircraft. These numbers may vary for different operations (Corporate, Commercial, EMS, etc.).

Cruise Speed: (Knots True Air Speed - KTAS) Max Cruise Speed - is the maximum cruise speed at maximum continuous power. This may also be commonly referred to as High Speed Cruise.

Weights: • Maximum Take-Off Weight is specified during aircraft certification.

Engines: The number of engines, manufacturer and model are shown.

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Specifications.qxp_PerfspecDecember06 16/04/2019 15:14 Page 1

FERRY RANGE-nm (NBAA IFR FUEL RESERVES)

MAX SPEED (ktas)

NUMBER OF ENGINES

23.7

930

8

38850

3350

3065

470

2

HTF7000

BOMBARDIER CHALLENGER 350

6.08

7.17

23.7

930

8

40600

3400

3277

470

2

HTF7350

BOMBARDIER CHALLENGER 604

6.08

8.17

28.4

1146

10

48200

4815

3756

488

2

CF34-3B

BOMBARDIER CHALLENGER 605

6.08

8.17

28.4

1146

10

48200

4850

3756

488

2

CF34-3B

BOMBARDIER CHALLENGER 650

6.08

8.17

28.4

1146

10

48200

4850

3756

488

2

CF34-3B MTO

BOMBARDIER CHALLENGER 850

6.08

8.17

48.42

1964

15

53000

9382

2456

459

2

CF34-3B1

BOMBARDIER GLOBAL EXPRESS

6.25

8.17

48.35

2002

13

95000

5700

5940

505

2

BR 710-A2-20

BOMBARDIER GLOBAL EXPRESS XRS

6.25

8.17

48.35

2002

13

98000

4800

6055

511

2

BR 710-A2-20

BOMBARDIER GLOBAL 5000

6.25

8.17

42.47

1889

13

92500

7139

5200

511

2

BR 710-A2-20

BOMBARDIER GLOBAL 6000

6.25

8.17

48.35

2002

13

99500

5770

5890

511

2

BR 710-A2-20

DASSAULT FALCON 2000EX

6.2

7.7

31.2

1028

10

42200

6510

3878

482

2

PW308C

DASSAULT FALCON 2000EX EASy

6.2

7.7

31.2

1028

10

42200

6510

3878

482

2

PW308C

DASSAULT FALCON 2000DX

6.2

7.7

31.2

1028

10

41000

6510

3378

482

2

PW308C

DASSAULT FALCON 2000LX

6.2

7.7

31.2

1028

10

42800

5200

3891

478

2

PW308C

DASSAULT FALCON 2000LXS

6.2

7.7

31.2

1028

10

42800

4950

3803

478

2

PW308C

DASSAULT FALCON 2000S

6.2

7.7

31.2

1028

10

41000

4950

3371

479

2

PW308C

DASSAULT FALCON 900C

6.2

7.7

33.2

1270

12

45500

2945

3450

500

3

TFE 731-5BR-1C

DASSAULT FALCON 900EX

6.2

7.7

33.2

1270

12

48300

6164

4500

482

3

TFE 731-60

DASSAULT FALCON 900EX EASy

6.2

7.7

33.2

1270

12

49000

6164

4500

482

3

TFE 731-60

ENGINE MODEL

CABIN VOLUME (Cuft)

7.17

MAX PAYLOAD (lbs)

CABIN LENGTH (ft)

6.08

MAX TAKEOFF (lbs)

CABIN WIDTH (ft)

BOMBARDIER CHALLENGER 300

PASS SEATS TYPICAL

CABIN HEIGHT (ft)

AVBUYER.com

Airplane performance and specification numbers can vary depending on how they are measured. Please note this data should be used as a guide only, and not the basis on which buying decisions are taken.

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Specifications.qxp_PerfspecDecember06 16/04/2019 15:15 Page 2

CABIN VOLUME (Cuft)

PASS SEATS TYPICAL

MAX TAKEOFF (lbs)

MAX PAYLOAD (lbs)

FERRY RANGE-nm

MAX SPEED (ktas)

NUMBER OF ENGINES

6.2

7.7

33.2

1270

12

46700

5064

4100

482

3

TFE 731-60

DASSAULT FALCON 900LX

6.2

7.7

33.2

1270

12

49000

4114

4800

482

3

TFE 731-60

DASSAULT FALCON 7X

6.2

7.7

39.1

1506

12

70000

4400

5466

492

3

PW307A

DASSAULT FALCON 8X

6.2

7.7

42.7

1695

12

73000

4900

6290

-

3

PW307D

EMBRAER LEGACY 600

6

6.92

49.8

1656

13

49604

4855

3091

455

2

AE 3007A1E

EMBRAER LEGACY 650

6

6.92

49.8

1656

13

53572

4938

3661

459

2

AE 3007A2

EMBRAER LEGACY 650E

6

6.92

49.8

1656

13

53572

4938

3661

459

2

AE 3007A2

GULFSTREAM G200

6.25

7.2

24.5

869

8

35450

4050

3130

470

2

PW306A

GULFSTREAM G280

6.25

7.2

32.25

888

8

39600

4050

3590

482

2

HTF7250G

GULFSTREAM G300

6.2

7.3

45.1

1658

13

72000

5300

3486

500

2

TAY 611-8

GULFSTREAM G350

6.2

7.3

45.1

1658

14

70900

6000

3680

500

2

TAY 611-8C

GULFSTREAM G IV SP

6.2

7.3

45.1

1658

13

74600

5300

3880

500

2

TAY 611-8

GULFSTREAM G400

6.2

7.3

45.1

1658

13

74600

5300

3880

500

2

TAY 611-8

GULFSTREAM G450

6.2

7.3

45.1

1658

14

74600

6000

4070

500

2

TAY 611-8C

GULFSTREAM G V

6.2

7.3

50.1

1812

13

90500

6100

6250

508

2

BR 710-A1-10

GULFSTREAM G500

6.3

7.9

47.58

1715

8

79600

5250

5135

516

2

PW815GA

GULFSTREAM G550

6.2

7.3

50.1

1812

18

91000

6600

6360

508

2

BR 710-C4-11

GULFSTREAM G650

6.4

8.5

53.6

2421

18

99600

6500

6520

516

2

BR 725 A1-12

GULFSTREAM G650ER

6.4

8.5

53.6

2421

18

103600

6500

7095

516

2

BR 725 A1-12

ENGINE MODEL

CABIN LENGTH (ft)

DASSAULT FALCON 900DX

(NBAA IFR FUEL RESERVES)

CABIN WIDTH (ft)

AVBUYER.com

CABIN HEIGHT (ft)

SPECIFICATIONS - LARGE JETS

Airplane performance and specification numbers can vary depending on how they are measured. Please note this data should be used as a guide only, and not the basis on which buying decisions are taken.

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General Aviation May.qxp_Layout 1 15/04/2019 11:30 Page 1

Join over 23,000 industry professionals for the most important three days of business aviation, with 1,000 exhibitors, 2 static displays of aircraft – one inside the exhibit hall and the other outside at Henderson Executive Airport, and more than 50 education opportunities. Save the date and visit the NBAA-BACE website to learn more.

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Connectivity.qxp_Finance 16/04/2019 09:50 Page 1

CONNECTIVITY

Is Your Jet’s Cabin Connectivity Becoming Obsolete? What are the tell-tale signs your jet’s cabin connectivity solution is becoming outdated? Trevor West asked industry insiders Jared Maynard and Nancy Walker for their tips and suggestions…

orn seats and weathered sidewalls tell you your cabin needs updating. Signs that your cabin connectivity system is obsolete can be just as telling, and the two leading indicators are the equipment and functionality, according to Satcom Direct’s Jared Maynard and Nancy Walker, SmartSky Networks.

W

100
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Starting with the equipment: Is it less reliable now than when new? Do errors frequently occur, and are reboots necessary? • Does the performance of the system satisfy the requirements of your mission?

• •

“These are all common signs that you need to start considering a replacement,” notes www.AVBUYER.com

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Connectivity.qxp_Finance 16/04/2019 09:51 Page 2

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“There are a lot of systems still flying that are actually at or near the end of their [service] life. In other words, you can’t fix it when it breaks.”

Maynard, aircraft resales sales manager at Satcom Direct. Limited parts availability and difficulties getting the equipment serviced are other red flags, he says. “There are a lot of systems still flying that are actually at or near the end of their [service] life. In other words, you can’t fix it when it breaks.” If you ignore the age and support available for your equipment, “you could be forced to upgrade when you need to repair it,” Maynard warns.

What do Your Payment Methods Tell You?

Your payment method can also provide a quick check on the state of your technology: Do you pay for connectivity by the minute, or by data volume? “The former is the hallmark of circuitswitched connections, such as Inmarsat Swift64 and Iridium data systems,” explains Walker, Chief Commercial Officer, SmartSky. “These systems are slow, costly to operate and deliver a poor user experience.” Today, IP www.AVBUYER.com

connectivity has supplanted circuit-switched connectivity. Indeed, the cost of service is another indicator of obsolescence. Could an upgrade provide you significant savings? “For a fraction of the cost, [current systems] can deliver a lot more value,” notes Maynard. “Usually it has to do with increased capacity and more efficient protocols.” Security is another equipment obsolescence issue. Many legacy connectivity systems have components made by ZTE and Huawei, both of which have been linked to state-sanctioned industrial espionage. “The latest security protection is only available on networks free of China-made ZTE and Huawei equipment,” says Walker.

Firmware or Software Upgrades

Another equipment check is to consider when was the last time the manufacturer released a firmware or software upgrade for the product? These updates can breathe new life

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CONNECTIVITY

AVBUYER.com

C

“Everything you can do on the ground with your mobile telephone you should be able to do in the air.” you have on the ground, then it is time to look for a different solution.” Note that a perfectly up-to-date system can also become functionally obsolete if your mission changes. For example, a domestic company that expands into international operations will need a solution to match, “so when you travel to London you have [Internet] coverage throughout the flight,” Maynard says.

Ready to Upgrade Your Jet Connectivity?

into hardware, improving reliability and performance, unlocking new capabilities. “Most modern systems are updated on a regular basis, so if a long period of time has passed since the last release, maybe they’re shifting resources to a new product and yours is being left behind,” Maynard elaborates, adding, “It’s a lot like a cell phone. If it’s older, they stop providing updates and you can’t reap the benefits of all the new features.” But functionality is just as important as equipment in separating the up-too-date solution from the obsolete. “Any connection that does not provide an office-like experience should be considered obsolete,” says Walker. There is a simple test: Compare what you can do in the cabin with what you can do with your phone, Walker suggests. “Everything you can do on the ground with your mobile telephone you should be able to do in the air. “If you cannot get connectivity that rivals what 102
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Both Satcom Direct and SmartSky Networks offer solutions for obsolete connectivity. The Satcom Direct Router handles onboard Internet connectivity and a variety of proprietary data management services, and the company is also a value-added reseller for Inmarsat, Intelsat, Iridium, Viasat, and SmartSky. SmartSky’s recently launched 4G LTE Air-ToGround (ATG) network, using proprietary beam-forming technology, will provide coverage for 80% of the airspace used by Business Aviation flights over the Continental US by July 2019, and full coverage by year’s end. If you’re ready to upgrade and are evaluating current technology solutions, you should focus on the connectivity’s throughput, latency and bidirectionality. Throughput Explained: The actual amount of data that a system transports is known as throughput, and this is typically used to compare network performance. The maximum amount of data that a system can transport is known as bandwidth, and this is typically used to measure capacity. New Ka/Ku-Band satcom systems typically provide throughput up to 30 times greater than the systems they’re replacing, notes Maynard. Latency Explained: The time it takes data to be sent and receive a reply is the latency. “The higher the latency, the more the effective bandwidth appears to shrink,” says Walker. All else being equal, ATG networks offer much



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1

Jean Boulle April.qxp_Layout 1 15/04/2019 11:36 Page 1

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