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The Top 10 Business Jets

by Lydia Wiff 15. January 2017 08:00
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It’s hard to believe that just over 100 years ago, flying was just a pipe dream.  We’ve come a long way and now aviation has a part to play in many industries and has become its own segment of the aerospace industry.  “Business aviation” refers to any aircraft that are used in furtherance of a business.  According to the National Business Aviation Association, business aviation contributes approximately $150 billion to economic output and employs at least 1.2 million people (NBAA.org).  While only about 3% of the 15,000 registered business aircraft are flown by Fortune 500 companies, the rest belong to varying sizes of for-profit and not-for-profit companies all over the United States – this includes universities, local and federal government, and other businesses. 

Arguably, the future of aviation is business aviation and Globalair.com has their top ten picks for business aircraft backed up by several years of experience in aircraft sales. 

#10: Gulfstream 550 (G550)

If there is one company that evokes luxury in their aircraft, Gulfstream Aerospace has to be it.  The sleek frame of the G550 cuts through the air at 0.80 Mach using two Rolls-Royce BR710 engines with a max cruising altitude at 51,000 feet.  This luxury jet can be configured up to 19 passengers and sleeps 8 comfortably.  If you’re looking to escape the cares of everyday life easily, or reach your international group in England, the G550 has a range of almost 7,000 nautical miles (nm).

While it boasts a comfortable ride for passengers (a cabin over 40 feet long), pilots aren’t soon forgotten with the state of the art PlaneView™ flight deck featuring some of the most advanced avionics known in existence.  The flight deck features four liquid crystal displays for your flight crew with easy software upgrades making it compatible to your flight department, no matter how big or small.  Additionally, a Head-Up Display (HUD) is included in the G550 that projects flight data in the pilot’s forward-looking field of vision.  In times of reduced or obscured vision, such as inclement weather, the Enhanced Vision System (EVS) uses infrared technology to capture what the pilot cannot see – runway markings, taxiways, and other terrain are now visible in poor weather conditions.

According to the NBAA, the G550 has the reliability of 99.9% -- this means out of five years of service, you will only miss one trip (Gulfstream.com).  In a world where time equals money, this is a statistic to get behind.

#9: Gulfstream 200 (G200)

The little brother to the G550, the G200 had its first flight on Christmas Day in 1997 and was later released in 1999.  While Gulfstream no longer produces the G200, it doesn’t keep it from being a popular used aircraft.  It was originally named the “Astra Galaxy”.

Like most Gulfstream aircraft, the G200 boasts a large cabin size that can hold to 18 passengers, but typically configured for 8-10 passengers.  Unlike the Rolls-Royce engines, the G200 runs on two Pratt & Whitney Canada PW306A turbofans producing a maximum cruise spend at 0.80 Mach, similar to the G550.  While it has approximately the same cruising speed, the G200 has almost half the range at 3,400 nm at 45,000 feet which makes it a perfect aircraft for domestic flights here in the U.S.

From this description, the G200 can be seen not only as a predecessor to the G550, but the smaller, less expensive version of the G550.  The G200 is an excellent aircraft for a business that does mostly domestic flights.

#8: Hawker 4000

Taking a break from the Gulfstream family, the Hawker 4000 hails from Beechcraft which is owned by Textron Aviation – the parent company to Cessna and others.  Produced from 2011 to 2013, the Hawker 4000 was quickly realized as the top jet product by Beechcraft.

A worthy competitor to the G200 as well as slightly newer, it can seat up to ten people (14 maximum) and has average of 6 feet of standing room in the interior cabin.  It cruises at 45,000 feet with a range of 3,445 nm and 870 km/hr.  A common identifier of the Hawker 4000 is the hawk profile painted in tan on the tail section.

If you’re currently in the G200 as an airframe, a newer and comparable version would be the Hawker 4000.

#7: Hawker 800XPi

A predecessor to the Hawker 400 is the Hawker 800 which was first produced in the early 1980s.  A later version of the Hawker 800 was the XP and XPi which was most notable by the addition of winglets.

Like the previously mentioned aircraft, the 800XPi is similar in size when it comes to passenger capacity and length.  The maximum speed in cruise is 745 km/hr while its range is the shortest out of the group at just under 2,000 nm and has a service ceiling at 41,000 feet.  However, it’s rate of climb is nothing to sneeze at – 1,948.8 feet/minute!

#6: Citation Sovereign

We now switch gears back to the Textron company to that of Cessna and the Citation Sovereign.  This particular aircraft is classified as a mid-size business jet and at the time of its introduction in 2004, the third largest in the Citation line (weight-wise).

A unique feature of the Sovereign is its ability to take off and land in short distances which is unusual in a business jet.  For corporations and private companies, this becomes a valuable feature for plants and factories situated in small towns with short runways.  Not only does the Sovereign get you there fast (848 km/hour), but it also is considered a transcontinental aircraft with a range of over 3,000 nm.

#5: Falcon 2000

In our plethora of business aircraft manufacturers, we come to Falcon (birds of prey do make good names).  Dassault Aviation is a French aircraft manufacturer that can be seen as a fairly healthy competitor to Textron’s companies as well as Gulfstream.  Probably the most notable of the Falcon line are the aircraft that have three engines, however, the 2000 is the one of the older models in the line with just two engines.

Like other aircraft in its class, the 2000 has comparable speed as well as range which is 3,000 nm.  The impressive thing about the 2000 is its ability to climb to 37,000 feet in just nineteen minutes – that’s just over 1,900 feet/minute!

#4: Challenger 605

We’ve finally come to our last brand name in jets (although not our last pick) which is that of Challenger.  It’s one of the few non-American manufactures and actually is produced by Canadair which you might recognize as the manufacturer of the Canadair Regional Jet (CRJ).  Coincidentally, Canadair is an independent company that is also a division of Bombardier Aerospace – famous for its Bombardier Business Jets, or BBJs, among others.

The Challenger 605 is the fourth aircraft in the 600 series which dates back to the late 1970s.  The 605 was introduced in 2006 as an upgrade to the 604.  Some new features included larger cabin windows, updated Rockwell Collins instrumentation and the capability of holding an “electronic flight bag”.   The most distinct visual feature is the rounded tailcone.

The 605 is comparable in size to the previously discussed aircraft, but is one of the fastest at 870 km/hour and a range close to 4,000 nm.

#3: Challenger 300

The Challenger 300, at first glance, can easily be confused with the Challenger 600 series which is not the case.  Unlike the 600 series, the 300 is recognized as a Bombardier (parent company of Canadair). 

It entered commercial service in early 2004 and is considered a super-mid-size jet.  This basically means it’s very comparable to all the other aircraft discussed, but has greater range capability.   The 300 has a range of approximately 5,700 km and caps out at 45,000 feet.  

#2: Gulfstream IV-SP (GIV-SP)

We’re back in the Gulfstream family (popular for a very good reason)! The GIV-SP is very comparable to other Gulfstream products, but represents the fine-tuning that the Savannah-based company did to improve their product line.

For instance, Honeywell advanced flight deck displays, electrical power generation, cabin temperature control and pressurization were added to this particular model.  Additionally, improved Automatic Power Unit (APU), flap system, redesigned landing gears, and other systems were improved in this particular model.

#1: Gulfstream 650 (G650)

Quite possibly my favorite Gulfstream is that of the G650.  Sleek, shiny, and the largest of the Gulfstream family, this aircraft has the ability to take you just about anywhere.  True to the company’s tagline for this aircraft, “Farther faster, first of its kind,” the G650 more than lives up to its standard.

It has done just that with a maximum range of 7,000 miles (you read that right), and an operating speed of 0.925 Mach.  It also has the heaviest takeoff weight at almost 100,000 pounds (that’s a lot of golf clubs, or fuel).

Besides the G650 being visually stunning, the wingspan is the most noticeable at approximately 100 feet which is nearly as long as the aircraft itself.  It also features the most advanced avionics developed by Gulfstream – the PlaneView™ II flight deck.  Like the G550, it has four displays with the EVS, HUD, Synthetic Vision as well as fly-by-wire technology which is computer-controlled and highly redundant – this is advanced as the technology gets.

A Clear Winner?

While Globair.com has their favorite picks which have proven to be popular among used aircraft owners, be sure to do your research when it comes picking the business jet that works for your company.  Remember to read our tips about purchasing an aircraft – while focused on single-engine aircraft, there are some excellent tips to consider.  However, you might want to consider going to a jet broker when it comes to your business needs.

Hopefully you now have a better idea of the common business aircraft on the market – just remember to save your pennies as these sleek, used aircraft run anywhere from $6.4 to $52.9 million!

 

Searching for your next private jet? Click here to visit Globalair.com’s listings. 

 

 

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Aircraft Sales | Aviation Technology | Flying | GlobalAir.com | Aircraft For Sale | Lydia Wiff | NBAA

Buying an Airplane: Tidbits and Tips

by GlobalAir.com 27. December 2016 16:28
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Buying an aircraft can definitely be a daunting task. Then again it can also be one of those life’s experiences that can be a lot of fun. Of course the main element is financially what can you afford? The other requirement to decide on before you even start is what will you use the airplane for business or pleasure or a combination (otherwise known as the mission profile). These two elements will govern the sensibility of the equation and answer the question are you ready for aircraft ownership. I can tell you from personal experience that just because you love flying and love airplanes does not mean you are ready to own one and the financial risk associated with it.

There are many factors to consider when buying an aircraft least of which is the purchase price. Just as you shop for a car in the beginning it may seem complex with all of the different choices. Though it seems complicated by doing your research and knowing what your mission profile is narrows the choices considerably. Believe it or not it may very well be more affordable than you thought.

One of the biggest mistakes when buying anything is not thinking the whole process through. Yes the purchase price is the largest out of pocket financial risk. But, you must look at the sum of the total. One of the largest “Opps” moments I have ever seen has been when the buyer thinks he has made a steal on the purchase of an aircraft only to find out LATER that they did not do a Title Search on the aircraft and there is a lean (such as a mechanics lean) which cost the buyer thousands of dollars. Folks, spending $100 bucks in the beginning for something as little as a title search could save you big bucks in the end. Never, ever buy an aircraft without having a Title Search completed. It would also be to your advantage to purchase a copy of any 337’s done on the aircraft. The 337 form is what an A&P mechanic must fill in when they have made any structural modifications to an airframe. Generally done when there has been damage or mods done to the airplane.

Speaking of Title Searches and 337’s I would also recommend that you use a Title Search company. These companies based in Oklahoma (where the FAA is) serve many tasks. Not only completing Title Searches most also serve as a holding or escrow company. An escrow company holds deposits, pre purchase maintenance fees and in general the middle man in the transaction. You don’t see a lot of the smaller transactions using an escrow but for the life of me I can’t figure out why. Yes they cost money like everything else in this world but they make sure your transaction is conducted correctly and as smooth as possible (peace of mind).

So we’ve addressed a couple of the pitfalls and the easy button that takes care of them, what’s next. Flight Mission is the most over looked aspect of buying an aircraft and unless you have money to burn for over kill (in this context yes literally kill you) it should be the first thing you look at. Everyone one wants to buy the P-51 Mustang but in reality what would that accomplish. Yes the cool factor is out of this world but when you look at what will I be using this aircraft for and the cost to operate it the P-51 is also impractical. For one it is a deadly aircraft, buying a big motor fast airplane is a bad idea. When you buy an aircraft look at what you will really use it for and what you can fly safely. If you are on a limited budget, pure pleasure and the $100 hamburger then depending on your level of training you might try a Cessna 172 or Piper Cherokee. For the more experienced pilot you might want a little more speed and space you might try a Mooney, Saratoga or Cessna 182.

If your flying is going to be more business with a little pleasure mixed in then you will probably want to look at an aircraft that can fly cross country. The Cirrus SR22 is a nice cruiser at about 200 knots has all the next gen avionics and can carry a couple of guys with luggage 800 miles or so. Probably the Cadillac of single engine piston aircraft will be the Bonanza G36. This aircraft can carry a load so yes the wife, the kids, the dog and just about all the luggage will fit just fine. In addition it has retractable gear so performance and mileage move up the scale also. Remember though these aircraft also come with a price. New out of the factory Cirrus SR22, Bonanza G36, Cessna TTX and the Piper Matrix prices can fly upwards of 700K fast.

Then there are the special mission aircraft. Again you will still need to study what your mission is. For instance in Alaska where you live and die with short gravel runways you need to have Short Take Off and Landing (STOL) capabilities. When you are flying in bush country you generally want to also have tundra tires. Keep in mind these will effect the performance of the aircraft. The Husky A-1B, Cessna 185, Cessna T206 are good for these missions.

So now you have figured out what the mission is. Before you ever sign on the dotted line here are a couple more tidbits that you need to investigate.

  1. Purchase price – Simple, low time aircraft that have been hangered all their life or new overhauled engines are always going to be at a premium. Higher time, with good avionics, new paint and interior will be next in the line of pricing. High time, runout engine (or close to it), steam gauges and god help you if it has damage is at the bottom. Globalair.com has a loan calculator that you can choose your payment and loan percentage points and will calculate an entire payment schedule.
  2. Maintenance – One of the first things to look at is where the aircraft is based. It seems almost every aircraft in its life span has spent some time near a sandy beach. Bad for airplanes, if they have been stationed there for some time corrosion sets in. A loving caring owner will sometimes do undercoating’s or rust prevention, that’s the one you want. Start a maintenance program from the start. Calculate the cost for every hour you fly (cost per hour). Put that specific dollar amount into a maintenance program. Hopefully you will never need it until the engine is ready for overhaul.
  3. Upgrades – Avionics, interior and paint. Every pilot has a favorite color or radio! This boils down to what you are accustomed to and what you feel safe to fly with.
  4. Legal work – purchase agreement takes lawyers, partnerships agreements. As the saying goes pay me now or pay me later. Your choice.
  5. Fuel – generally 30-40 percent of ownership.
  6. Insurance
    • New pilot – fly as much as you can and build your hours up, more time less cost.
    • Old pilot – with no incidents, several endorsements of other aircraft, couple thousand hours, type ratings. All of these bring your insurance cost down.
  7. Hangar cost – Most pilots make this their getaway home.

What to look for in a plane.

  1. Always the first thing to look for is there Damage History?
    • Buying an aircraft is always Buyer Beware. It is your life after all.
    • It is your due diligence (responsibility) to read the airframe log books, maintenance logs, engine logs thoroughly. This is when you bring in your local A&P or an expert in that particular aircraft.
  2. If Damage
    • What you determine is damage might not be to the seller – Define it with them from the beginning.
    • Is there a copy of the 337 form in the log books. If not walk away. Just because it is a line item written in the logs does not mean there wasn’t a ton of other work not mentioned.
    • Was the damage fixed by an authorized manufacture facility, local FBO or field repair.
      • If field, use your common sense, if the repair was a wire tie on a bolt OK, if the landing gear collapsed then oh no, walk away.
    • If the damage was repaired several years ago by a reputable maintenance facility. Then it falls under the category of your call. You will never be able to sell the aircraft for what the market is bearing for one that does not have damage, but if you plan on keeping the aircraft until you quit flying then why not. (Check with your insurance company also).
  3. Current condition – again now is the time you to have a good mechanic with you – pay the price for a good one.
    • Paint and Interior
    • Avionics
    • Current maintenance condition, again checking all logbooks determine how the owner(s) took care of the aircraft. Changed the oil regularly?
      1. Have all AD’s and SD be complied with.
      2. Has annual or other scheduled maintenance be done on regular basis
        • Radios been certified in a while
        • Other instruments needing certs.
  4. Check the engine
    • Compression, compression, compression

So we’ve gone through just about all the basic’s the final step is hit the market and find the aircraft that meets your budget and your eye. There are thousands of different aircraft to look at that fit almost any mission profile. From experimental aircraft to one from the manufacturer. This can be almost as fun as flying itself. Finding a needle in the hay stack is a rare find, but if you keep your wits and shop you can find any aircraft. For those that are a little shy on buying one themselves it is highly recommended to find an aircraft broker that specializes in what you are looking for. The reason for this is twofold. One the broker is always going to know more about the market than you will. Second if you find a brokerage firm that specializes in the type aircraft you are looking for they are also going to know more about that aircraft than you ever will which will come in handy on a pre-purchase.

Now while this article has been written for single engine piston aircraft purchases the general outline can be used for twin piston aircraft also. With jet and turbine aircraft there are a few more precession items such as turbine discs and the number of cycles on the blades that are important. For the most part the cost are higher because these aircraft are made heavier, fly higher and faster. There are also believe it or not worldwide rules that must be completed before you can complete the purchase.

Alan Carr is a thirty year veteran in the general aviation business. Bought and sold corporate aircraft and now runs a successful aviation website. To contact please email alan.carr[@]globalair.com

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Aircraft Sales | Aircraft For Sale

2017 Thoughts - No Recovery Quite Yet?

by David Wyndham 8. December 2016 14:51
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I recently returned from the excellent Corporate Jet Investor CJI-Miami conference. The two-day conference was attend by over 200 financiers, brokers, lawyers, manufacturers, appraisers, consultants and others involved in the transactions of buying and selling corporate aircraft. This includes helicopters, too (see footnote) . There were individual speakers and panel discussions. And way too much good food. Congrats to the CJI team for putting on a great event. Much of the discussion centered around the state of aircraft sales, residual values, and when the "recovery" is coming and where. Here are some things that stood out for me.

Flying is still down. There were three sets of data points supporting this. Jet Support Services (JSSI) has their Business Aviation Index built from the utilization of about 2,000 aircraft flown by their program customers. For third quarter 2016 (2016Q3) flight activity was up 1.4% versus 2015Q3. Sounds good until you see the number, about 29 hours per month, is only 84% of the overall peak utilization. Separating out Part 91 operations showed utilization of 22.5 hours per month - only 270 hours per year. That is not high utilization for the business jet fleet. 

Wingx, using FAA data, was not promising either. They show an average of 101 hours per year for all light jets and 159 annual hours for heavy jets. Not sure how accurate the FAA data is, but trends are trends and they are well off peak levels. Promising is that turboprop and light jet activity is on the rise. 

JetNet's JetNetIQ report also showed increasing aircraft fleet cycles. But total fleet cycles flown this year are only at about 2003 levels even though we have 50% more aircraft in 2016 versus 2003. So we have more business aircraft flying fewer hours and cycles versus peak periods. But flying is slowly increasing. The utilization trend is positive.

Aircraft sales, new or pre-owned, are still flat and pre-owned values overall show no signs of recovering. Several commentators blamed an over supply of business aircraft and buyers in general just not being all that interested in acquiring aircraft.  A couple brokers did note increasing sales activity in turboprops and light jets here in the US. 

Here is a tidbit I got from looking at AMSTAT's data. For business jets globally, about 25% of the fleet, 4,140 jets, is aged over 25 years. Heavy jets are the youngest fleet with only 17% of their number aged over 25. For midsize jets, 24% and for light jets, 33% of the fleet are aged 25 years or older. On the surface, I'd say the time is ripe for those older jet owners to upgrade. Why aren't they doing so in big numbers? 

Data that we see at Conklin & de Decker suggest that as aircraft age, they require increased maintenance to maintain their reliability. This increased maintenance is in dollars and downtime.  As aircraft age, the increase in unscheduled maintenance associated with scheduled inspections also requires a great deal more maintenance down time. Similarly it will take more and more maintenance to achieve any kind of acceptable dispatch reliability. Both detract from the availability of the aircraft for flight operations. Data shows that availability drops from the 95% range for aircraft up to 15 to 20 years of age to an average of 70% at age 25 and 55% at age 30. 

    Aircraft Age        Availability

      0 – 20 years up to 95%

      25 years up to 70%

      30 years up to 55%

By age 30, many aircraft are spending as much time in the shop as being available to fly. Normally this is a big problem and justification enough to acquire younger, more productive, aircraft. But if utilization is low, then maybe this is not such a big deal. The JSSI data are for aircraft under their guaranteed hourly engine maintenance plans. This aircraft are likely to be newer models. Even so, 270 annual hours for a Part 91 business aircraft is not a lot of flying. The Wingsx analysis of the FAA data showing 100-160 annual hours also shows there is plenty of downtime left in the year for scheduled maintenance while meeting g the required flight schedule. 

If operators with these older aircraft are able to meet the flying schedule and they realize the residual value of their aircraft is likely close to spare parts' values, maybe they see little need right now to upgrade. What about FAA NextGen? ADS-B is due by 2020, but for many of these older aircraft with analog equipment, the upgrade may only require a new transponder. If they cannot upgrade, then they might as well fly them until December 31, 2019 and park them. If this is the case for these operators, they may see little benefit to upgrading for another year or two.  

Overall, the general mood at CJI was that things are very slowly improving. But pay close attention to the US. Europe is moribund for business aircraft. As long as oil prices stay low, along with political instability in the Middle East, sales activity there will be slow. Same for Africa.  China and India, although they have the highest rates of GDP growth globally, are growing more slowly than in the past and account for a very small percentage of business aircraft sales. Mexico? Trump, NAFTA, and other trade worries impact there. Brazil's economy isn't promising right now, but Argentina, small a market as they are, is promising. Oceana, another small market for aircraft, is stable. The US has the globe's largest business aircraft fleet. The US, with a pro-business president and Congress combined with the current economic growth that's already underway offers the best hope for the next few years' aircraft sales. 

Personally, I think as 2020 approaches, we will see an uptick in aircraft sales for those aircraft with the ADS-B mods already installed. As supply of these aircraft may be limited, that may help with new aircraft sales.  But given the supply of pre-owned aircraft, that uptick might not be noticeable for another year, or 2018. Food for thought (as if after both Thanksgiving and the CJI buffets I have any room left). 

 

Footnote 1. Most of the helicopter manufacturers are highly dependent on large multi-turbine helicopter sales. Most of those are in oil & gas.  The CJI panel offered little hope for sales unless the price of oil goes up further. However, a recent energy find in West Texas combined the shale oil recovery and fracking technologies getting cheaper point to more land-based oil exploration. Stay tuned.

 

 

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Consultants Can't Make Your Decision

by David Wyndham 5. October 2016 14:32
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A consultant is just that—a consultant, not a decision maker. When we work with people on an analysis of their aircraft needs, acquisition or tax strategy, we give them options. Its up to the decision-maker to make the decisions. 

Recently a client asked, "If it were your money, which aircraft would you purchase?" I replied, "It is not my money, so you need to be happy with what you choose. All three aircraft under consideration will do the job. Take the demo flights and go from there."  If I really thought there was a clear best answer, I'd of pointed her in that direction, but since it is not my money, the final call is always the client’s to make. 

Consultants can be (more) objective. We all have preconceived concepts and ideas, and sometimes those ingrained opinions blind us to what is going on. Especially when the choice of outcome is important to us. A consultant should be objective. They don’t have a vested interest in any one outcome.  A good consultant looks at the issue from different angles and may offer fresh insights to a situation. Getting the complete picture and exploring competing points of view are reasons to work with consultants.

In a typical scenario, an Aviation Manager recommends to the CEO that they replace their current aircraft.  “Great,” said the CEO.  “Get me a report making the case for your recommendation, and do so as soon as you can.” The Aviation Manager had all the data—in his head, not in a document! He knew that with his busy schedule, he did not have the time to prepare a thorough report outlining the follow-on aircraft that was addressed all the concerns of the CEO and the Board of Directors. Furthermore, he felt that a second opinion from an independent third party added credibility to the recommendation./span>

He called us in, we asked the questions, listened intently and talked with the boss. Then we did the analysis, and in the end we delivered a report stating that the company indeed needed a new aircraft and confirmed that the selection the Aviation Manager suggested indeed was the best option. 

Did our client waste his money? The Aviation Manager saved himself a few weeks of his time, got a third party review of his requirements, and had all the documentation needed to secure the CFO’s and Board’s support for the new aircraft.  I think that was a good value.

When selecting a consultant, beyond the technical qualifications, remember it is a relationship.  Consultants need to relate to you and be able to understand what you and your company executives are really asking. In some ways, the consultant is your “aircraft therapist—one who listens, asks questions and keeps your best interests (and that of the company) in mind.  How far do you want the consultant to go in the analysis? Is it just an advisory consult or will this relationship extend all the way through contract negotiation and aircraft delivery?  You decide.

A consultant’s recommendations should be objective and focused on the choices you need to make. A consultant who also sells aircraft can be very knowledgeable and a source of valuable insight, but there is at the very least the appearance of conflict of interest in the relationship. If the consultant is also brokering a great mid-size business jet and your company’s need might be met by such a jet, maintaining objectivity is paramount.  Be sure the aircraft being offered is right for your firm.  Trust is the key issue in a successful engagement with a consultant, whether independent or part of a brokerage.    

When dealing with the Aviation Department and Executive team, the consultant must be “bilingual”.  They need to be able to talk with the pilots and discuss operational issues like runway lengths and range. Just as important as the “plane talk” is the need to speak the language of business to address the financial concerns and the business management decisions needed in making the aircraft decision. 

Consultants can add value in the acquisition process, but also can add value to the staffing, training, operations and safety of the operation. When done well, relationships with consultants give an impartial perspective, add value and save time.

 

 

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Aircraft Sales | David Wyndham | Flight Department

When to replace an aircraft is more than just simple math

by David Wyndham 2. September 2016 11:22
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Our company co-founder, Bill de Decker, and I recently finished a major aircraft review for a government entity. They had several missions and several types of aircraft that were necessary for the mission. We looked at the missions and their current aircraft. We identified shortfalls in capability and desired utilization. We looked at the current costs, the reliability, and projected out future costs. We identified future mission changes as best we could. We did look at whether it was cost effective for the government or a contractor to own and or operate the aircraft. At the end was a series of business cases for each aircraft and an overall acquisition plan for their aviation operation. None of the missions were simple passenger-carrying missions and, given their requirement to look out 20 years, a lot of long term assumptions had to be inferred. What they now have is a plan with dates and actions that are needed, along with mission and financial justification. All this work was fun and the folks we worked with were a joy. It all came down to this:

There are two major reasons to replace your current aircraft. One reason is the mission has changed and the current aircraft is no longer capable of effectively supporting that mission. The second reason is the economics of owning and operating the aircraft render it too costly as compared to the alternatives. Both can combine to demonstrate and support the value of a business aircraft. 

Both reasons are simple but involve a lot of complexities. 

With respect to missions of a business aircraft, changes tend to fall into sub sets

1. Passenger loads change requiring a different aircraft. If you need nine seats, six won't do. Or perhaps decreasing passenger loads make the idea of a smaller aircraft appealing.

2. Trips change requiring either longer range aircraft or aircraft with different capabilities such as operations from shorter runways or flights into and out of high altitude airports.

3. Utilization also factors into the equation. Either the need for more hours or simultaneous aircraft can drive the decision to add additional aircraft.

Upsizing in capability tends to have an upsizing in budget. What needs to be considered is the added value the aircraft change will bring. Will more passengers enable greater benefits to the company? Does avoiding that fuel stop, and the time avoided, add enough value to make the acquisition and operational costs of the larger aircraft worthwhile? 

I did one analysis that showed Jet B with greater range than the current Jet A. To meet the non-stop range Jet B had to fly at long range cruise. Allowing an hour for a fuel stop, Jet A can fly the two legs at high speed cruise and still arrive within 20 minutes of Jet B. We looked for another option as the value of replacing Jet A with Jet B didn't deliver enough value. 

When looking at costs, make sure to look at all the costs: acquisition, operating costs, fixed costs, taxes, and depreciation (tax and market). Balance that against the mission for a "best value." 

Age is a factor, too. As aircraft age, their maintenance requirements, and costs tend to increase. With that comes decreased availability as the aircraft spend more days in maintenance. What makes this difficult to analyze is the cyclical nature of maintenance can hide this long term increase. 

Many operators when they do a major event like an engine overhaul or heavy airframe maintenance do paint, interior and even avionics upgrades. The costs are significant and not seen again for many years. One decision point here is whether to sell the aircraft a few years before those costs occur, or incur those costs and operate the aircraft for a few more years. This is because most buyers prefer not to have significant costs for the first few years when the acquire a pre-owned aircraft. But if you do the overhaul, etc. the market is not likely to award you with 100% of the cost in an increased value. See, not so easy to decide?

Having a plan in place makes the process easier. Then every year, review the plan, and when appropriate, update it. When to replace is not a simple equation, and it can involve qualitative and quantitative measures. Be proactive and work with the owners/stakeholders in the aircraft to be ready with the justification well in advance of any issues arising. 

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Aircraft Sales | David Wyndham



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