All posts tagged 'Private Jet'

The 5 Most Expensive Private Jets on the Market in 2020

While multiple modes of transportation are available in the United States, business aviation ranks among the most important for companies and the affluent alike. The demand for private jets stems not only from the comfortability provided by the aircraft but also from its ability to help reach a variety of markets. Seen as more of a business tool than simply an aircraft, private jets offer a space that can easily be utilized as an office, conference room, or even a bedroom dependent on the user's needs.

Private aviation also represents one of the most luxurious modes of transportation available. Those who can afford the cost of owning and operating a jet see it as more than just an expensive aircraft, they see it as a portrayal of their social status.

From athletes to movie stars, A-list celebrities desire an A-list aircraft to travel in. The cost of this class of aircraft can range from tens of millions to hundreds of millions of dollars. And no, that does not include the cost of operating the jet.

Of course, the amenities of aircraft held to such a high standard come with a hefty price tag. Here are five of the most expensive private jets on the market.

 

 

Gulfstream G650ER  - $71 million


Courtesy of Gulfstream Aerospace

 

 

The Gulfstream G650ER boasts a price tag of $71 million. With a range of more than 7,500 nm and a striking interior made from luxurious leathers, elegant wooden veneers, and handcrafted stonework, its no surprise that Jeff Bezos, founder of Amazon, would make the G650ER his private jet of choice.

Currently, the G650ER holds the record for the farthest fastest flight in business aviation history, allowing it to set new standards for comfort, functionality, and safety. It is one of the fastest civilian aircraft in the world at its highest speed of 607 miles per hour.

The spacious cabin is also designed to be the quietest in business aviation. Sixteen panoramic oval windows fill the cabin with natural light and stunning views of the world below.

Elon Musk is a tech giant with a net worth of $41.1 billion as of 2020. Musk lives in a world surrounded by advanced technology, and he expects his G650ER to be the same. On the inside, this private just is equipped with advanced fly-by-wire technology and streamlined displays of the PlaneView II flight deck to increase safety and reduce pilot workload. The cabin is even entirely customizable and can be controlled using a smartphone app.

 

Bombardier Global 7500 - $72 million


Courtesy of Bombardier

 

The Global 7500 is one of the world’s largest and longest-range business jets on the market. Known for its luxurious interior, the Global 7500 is easily worth its price tag of $72 million.

With an industry-leading 7,700 nm range, a top speed of Mach 0.925, and exceptional short-field performance, the 7500 is practically unrivaled. If the allure of the words “ultimate long-range private jet” don’t entice you, then maybe the full dining table, luxury window seating, and private bedroom will.

Niki Lauda, a Formula 1 world champion, was one of the first to receive the Global 7500. Though a loyal client of Bombardier for many years, Lauda particularly liked the Global 7500 due to its elegant design and abundance of natural light. This jet can be hard to find, with few on the market today.

Unlike any other business jet on the market, the Global 7500 features The Nuage seats, the first new seat architecture in business aviation in almost 30 years. Designed with the intent to bring the comfort of luxury home seating into the cabin, the seat offers three key features unavailable on any other seat in business aviation: deep recline, floating base, tilting headrest.

Bombardier Pũr Air is offered on the Global 7500 with an advanced HEPA filter that captures up to 99.99% of allergens, bacteria, and viruses while completely replacing the cabin air with fresh air in as little as 90 seconds. Available exclusively on Global aircraft, Bombardier Pũr Air delivers cleaner air with better humidity and quicker heating and cooling than 100% fresh air only systems.

Bombardier’s Global 7500 has become the first in business aviation to receive an Environmental Product Declaration (EPD) from the International EPD System based in Sweden. The EPD allows for full environmental transparency about the Global 7500, such as CO2 emissions, noise, water consumption, and other environmental impact indicators. Bombardier believes this aircraft will help cut down on the environmental impact of aviation, and they’re not afraid to prove it.

 

Dassault Falcon 8X - $59 million


Courtesy of Dassault

 

The Dassault Falcon 8X is an amazingly fast aircraft, capable of flying at a speed of 0.90 Mach to a distance of 6,450 nm without refueling. Improved wing design and new powerplant make this business jet 35% more economical than any other ultra-long-haul aircraft on the market. The Falcon 8X has a suggested retail price of $59 million.

While the Falcon 8X has a lower cost than the other four aircraft on the list, there are many unique amenities on this private jet that make it one of the most expensive on the market. For instance, its unique three-engine scheme helps to shorten transoceanic routes. The 8X gets you where you are going faster.

Bill Gates, the co-founder of Microsoft, is no stranger to the world of private jets. In fact, he owns at least 3 private jets as of today. Gates just had to get his hands on the Falcon 7X, the predecessor to the 8X due to Dassault’s reputation for having the most advanced jets on the market. He’ll undoubtedly be looking for an upgrade to the 8X before long.

Offering the longest cabin in the Falcon family, the Falcon 8X will become your personal penthouse at an altitude of 41,000 ft. More than 30 stunning cabin layout options are available, each including seating areas, kitchens, crew compartments, and showers.

The latest technology is at your fingertips in the Falcon 8X with the ability to control its functionality from anywhere in the cabin through your Apple device. You can even call up a virtual moving map of any area around you by simply pointing your iPad in the desired direction.

 

Boeing Business Jet MAX 8 - $85 million


Courtesy of Boeing

 

The BBJ (Boeing Business Jet) MAX 8 is a state-of-the-art, $85 million airliner turned private jet. The interior is an astounding 1,025 square feet. That means space for you and 49 of your closest friends. The sky is the limit on the different configurations, including a master suite with a California King bed, a walk-in closet, and a master bath with a double-size shower and heated marble floors.

The BBJ MAX 8 has a range of 6,640nm and can cruise at an airspeed of 449 kn (832 km/h). Despite being larger and more capable than previous models of BBJ aircraft, the BBJ MAX has a 13% lower fuel burn and lower emissions, thanks to its CFM LEAP-1B engines and advanced winglets.

An interior cabin concept presented by Boeing for the BBJ MAX featured a ‘spaceship sleek’ design, including starlight detailing on the cabin ceiling. With the generous cabin space offered by this business jet, it allows you to create an office or home in the sky.

It's understandable why Steven Spielberg, famed film director, and producer, would choose the BBJ as his personal aircraft. With a net worth of $3.6 billion, he could easily own multiple of these private jets. However, he chooses to share ownership with fellow film producer and good friend Jeffrey Katzenberg.

While capable of offering luxurious seating for 50 people, the majority of clients opt to accommodate less. Instead, they take advantage of the space and implement board rooms, dining rooms, or master suites to get much-needed rest.

Boeing also offers a special panoramic window as an option on the BBJ MAX 8. Measuring 4.5 feet by 1.5 feet, the window allows a generous amount of natural light into the cabin, while at the same time offering beautiful views of the ground below.

 

Airbus ACJ320neo - $95 million


Courtesy of Airbus

 

Coming in at an astounding base price of $95 million, the ACJ320neo changed the game for airlines and is now making waves in the private jet industry. This private jet delivered lower operating costs and increased efficiency than previous Airbus A320 models. New engines and aerodynamically friendly sharklet wingtips aid in reducing fuel consumption and providing additional range.

Considering it has the widest and tallest cabin in the industry at 3 times the space of a large traditional jet, it only makes sense that the elite of the elite would seek out this aircraft for business use.

With private jet owners spending many hours on the aircraft, they must find time to relax during the flight. Airbus offers the Melody Cabin, focusing on providing an attractive environment that is both quieter and better adapted to providing sound and vision in a “home cinema” setting.

What truly sets the ACJ320neo apart from the commercial model is right within the name, with “Neo” being an acronym for new engine option. These new engine options include the Pratt & Whitney PW1100G-JM and the CFM International LEAP-1A.

The ACJ320neo’s head of state, VIP interior can seat 25 passengers and 6 crew with an approximate range of 6,000nm, connecting city pairs such as London and Beijing as well as Moscow and Los Angeles.

 

These private jets were created with the elite in mind. Across the world, they represent wealth and power to socialites and business owners alike. Functioning as more than just a mode of transportation, these aircraft act as apartments, offices, entertainment spaces, and more for the wealthy. Needless to say, it’s expensive to be rich.

Misconceptions about Aircraft Costing

Over the years I have written a number of articles discussing aircraft operating costs and methodologies for analyzing them. This month, I’d like to review some common misconceptions about costs that I run into on a regular basis. Most of these result from connecting something that we are familiar with, like the cost of running an automobile or building a house, and using those as an analogy for the unfamiliar cost of owning and operating an aircraft. 

Misconceptions about Aircraft Costing

The biggest misconception is focusing on the acquisition cost to the detriment of operating costs and asset value over time. I have a client whose maximum acquisition budget is $20 million. This is a real limit and not one to exceed. Where the misconception arises is that if we are looking at Aircraft A with a selling price of $20 million and Aircraft B which sells for $17 million, the former aircraft is the less costly option. But is it?

Assume that both aircraft have similar capabilities in terms of range and cabin.

 

The only way to know which one costs “less” is to evaluate the total costs to acquire, operate and dispose of the aircraft. Two major costs are the operating costs, to include maintenance, and the estimated residual value after a set length of time. Looking at our current scenario, Aircraft A has a lower fuel consumption than Aircraft B. Aircraft A also has engine and airframe maintenance costs similar to Aircraft B. Looking at the costs per hour:

Variable cost.                        Aircraft A.                  Aircraft B. 

Fuel                                        $1,376                        $1,521

Engines                                  $ 580                          $560

Maintenance                         $ 784                          $677

Per Hour                                $2,740                        $2,758

There is more:

Aircraft A flies faster than Aircraft by 8%. Remembering the aircraft fly from origin to destination, the faster aircraft uses fewer hours to fly the same trips. If Aircraft A flies 400 annual hours, this requires Aircraft B to fly 432 hours. The annual variable cost is

Variable cost.                        Aircraft A.                  Aircraft B. 

Per Year                                $1,096,000                $1,191,456

Aircraft A costs almost 10% less in variable cost per year than Aircraft B. If both have about $650,000 per year in fixed costs, the annual operating budget favors Aircraft A slightly. While not enough to make up the $3 million price difference, it does account for about $1 million over 10 years. There is still more.

Aircraft A is a popular model and is currently selling better than Aircraft B. Current market values are being maintained better than for Aircraft B. After 10 years the estimated residual (resale)  value in dollars and percent is higher for Aircraft A. Now our 10-year life Cycle Cost is:

10 YEAR COST.                               Aircraft A                               Aircraft B

Acquisition                                        $20,000,000                         $17,000,000

Variable costs                                   $ 10,960,000                         $11,914,560

Fixed Costs                                       $ 6,500,000                           $ 6,500,000

Resale value                                     ($10,000,000)                       ($ 7,500,000)

10-Year TOTAL                                $27,460,000                          $27,914,560

Aircraft A costs about the same to own and operate as Aircraft B. Making the purchase decision just on acquisition price doesn’t tell the entire story. In the above example, we need to evaluate of parameters in addition to just costs to determine which aircraft is the best value. 

There could be other considerations like product support. Not only the perceived quality but where are the service centers located? If Aircraft A has a service center on your home field while Aircraft B’s nearest service center is 300 miles away, Aircraft A will be easier to maintain and, if AOG at home, might be repairable in less time.

Consider the equipment? What if Aircraft B has a more advanced SVS than Aircraft A? But what if you prefer the usability and displays in the avionics system on Aircraft A?

Never let a spreadsheet make a decision for you.  Never just look at a single cost item when evaluating aircraft costs. Aircraft are not commodities sharing essential the same characteristics. That is why I stress to my clients to look for a best value when making the aircraft decision. Costs are a very important part, but even the total costs do not tell the total story. 

If you are currently in the market for an aircraft please review Globalair.com and their Aircraft Exchange.

(This is a 2nd edition of this article and may be found on other websites)

 

 

Pre-Owned Aircraft Market Stabilizes after Ten–Year Decline

A recovery is in progress in the pre-owned business jet market following what seemed to be an interminable downturn since 2008. Even though the U.S. market strengthened in recent years, weakness in other world-areas kept global inventories excessively high, providing downward pressure on aircraft values in all markets.

Now, as those international markets are returning to relative stability, surging demand in the U.S. is driving a new market dynamic.

Inventory of pre-owned airplanes for sale has declined on a quarter-over-quarter basis for the last two years, with much of what is remaining picked clean of the most desirable aircraft. Just a year ago, a buyer could enter the market for almost any model and be able to find an aircraft meeting its acquisition parameters. And because it was a buyer’s market, it could typically negotiate favorable pricing as well.

Well, that picture has changed considerably, especially for buyers targeting current or recent-production model aircraft with Next-Gen avionics updates, desirable cabin configurations, and reasonably strong paint and interior. Those buyers are finding themselves in competition, even bidding wars, to have a shot at that qualified aircraft. Buyers that are slow to make an offer on a strong candidate are often left behind, finding themselves starting their search anew, and hopefully wiser from the experience.


Falcon 7X

Following are examples from current and recent production models in mid-sized to large-cabin markets where inventory has taken a dramatic drop in the last 12 months:

Model

July 1, 2017

July 1, 2018

% Reduction

Falcon 7X

31

20

35%

Falcon 2000EX Series

25

14

44%

G450

31

18

42%

Challenger 605/650

16

8

50%

Challenger 300/350

34

21

38%

Citation Sovereign/+

34

21

38%

Even some older models have seen inventories drop over the last year, as buyers have recognized value opportunities in this category.

Model

July 1, 2017

July 1, 2018

% Reduction

Falcon 900B

21

11

48%

G200

31

21

32%

GIV-SP

39

26

33%

Challenger 604

32

20

38%

 

Where does the market go from here?
The aircraft market is, of course, driven by the global economy. And there’s also compelling data that suggests our market’s health is tied directly to price of oil, as countries whose economies are tied to oil, and companies whose profits rise and fall with the price of oil, are significant users of business aircraft. While it is beyond the scope of this article to predict the global economy and the price of oil in the long-term, the forecast for the pre-owned market for remainder of 2018 and into 2019 looks good.
- Confidence, a key psychological factor for business jet buyers, is strong that the economic outlook is positive.
- The U.S. tax environment is more favorable for the acquisition of aircraft.
- The number of very-high-net-worth individuals is growing globally.
- Demand for pre-owned aircraft, especially among U.S, buyers, has displayed sustained strength the last two years.
- Utilization of business aircraft, both in North America and Europe, are returning to pre-recession levels.
- Depreciation rates for many models are inching back to historic norms (3-5% annual depreciation), after several years of double digit value slides.

All of this points to a continuation of the current market environment, characterized by more buyers entering the market, and sellers of quality aircraft finding themselves in a stronger position than they have been in a decade. Prices will continue to stabilize, and even experience a slight uptick in some cases.

It should be noted that not all models will see this scenario. Those that are 25-30 years and older are still faced with bloated inventories. Many owners are trying to get out from underneath their aircraft before regulatory mandates take affect that require expensive avionics upgrades. In addition, as these older aircraft become more expensive to maintain and operate, demand for them diminishes. Sellers of aging aircraft will still experience long market times and value softness.


Challenger 605

Summary
Despite the challenges owners of older aircraft are facing, current market trends are positive for the entire industry. Sellers are entering the market with new-found confidence. Buyers are more optimistic that the value of the aircraft they acquire is not going to drop precipitously as soon as they close. OEM’s are getting calls from buyers who just a year ago would have been looking solely in the newer pre-owned market. Charter operators, service centers, and training providers are all enjoying healthy (and in some cases excessive!) demand. A sense of stability is taking hold which has been missing in our market for a decade. And though there always seems to be a storm cloud or two forming on the horizon, aircraft owners are seeing asset value retention finally returning to historic norms.

By Jim Donath

Jim Donath is President of Donath Aircraft Services, a Chicago-based aircraft brokerage firm focused on the mid-sized and large cabin markets for over 40 years.

 

 

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