AIRCRAFT SPOTLIGHT BOEING BBJ Launched as a joint venture between Boeing and General Electric in 1996, the Boeing Business Jet (BBJ) was created in response to the demand for an airliner-sized business jet. Based on the 737 airliner — one of the best-selling commercial aircraft of all time — the BBJ is specially modified to provide for the private jet sector. The BBJ prides itself on a luxury configuration that comfortably fits up to 60 passengers and its long-range is often deemed a main selling point.
AIRCRAFT SPOTLIGHT The first and most popular aircraft of the series, the BBJ is based on the 737-700 airframe with the wing from the 737-800, which is very practical combination for corporate travelers. The BBJ offers plenty of space with a typical configuration consisting of four cabin areas: a boardroom, a lounge, a VIP bedroom, and business office. This aircraft is also a popular choice among government entities and corporations, which generally require a higher density configuration. Alternatively, privately owned BBJs typically have a more luxurious configuration, designed to carry only around 20 passengers. The ability to customize each BBJ is additionally a major selling point for the aircraft. The cabin volume for this aircraft is 5,396 cubic feet and can fly passengers up to 6,235 nautical-miles, including nine auxiliary fuel tanks. After the worldwide success of the BBJ came the BBJ 2, offering even more cabin space than the BBJ, with a 21% increase in cabin volume. The airframe of the BBJ 2 is based off the Boeing 737-800 and it also offers an increased payload capability. It has the capacity for up to seven auxiliary fuel tanks and the BBJ 2 can fly 5,620 nautical-miles. The first delivery of a BBJ 2 was in 2001. In 2005, Boeing announced an even larger BBJ 3 that was produced a year later. The BBJ 3 is based off the 737-900ER and has 35% more cabin volume than the original BBJ. It is also 28 feet longer than the original and weighs 16,700 pounds more at takeoff. The BBJ 3 has up to eight auxiliary fuel tanks and a range of 5,495 nautical miles. The first edition of the BBJ series is the most popular of the three BBJ models — with 130 jets in the worldwide fleet. The BBJ 2, produced in 2001, has a worldwide fleet size of 21 jets and the BBJ 3 has a fleet size of 6. Currently, there are 13 BBJs available on the market and 2 pending transactions. The 15 aircraft range in age from 1998 to 2011. The lowest asking price is 21.75M USD and the highest is 59.5M USD, with an average asking price of 41.7M USD. Two BBJ 2s are also available: a 2001 model, priced at 38.9M USD, and a 2012 model, priced at 95M. The average days spent on the market for the BBJ is 607 and 529 days for the BBJ 2. Asking prices have slowly depreciated over the last year and a half. In September of 2015, the average asking price was 46M USD and in October of 2014, the average asking price was 50M USD. The biggest factor driving asking prices tends to be which completion facility did the cabin outfitting. When examining the overall fleet, there are 157 worldwide in operation with the majority of these based in the US, followed by Saudi Arabia, the United Arab Emirates, and China. Of those available for sale, six are based in the Middle East. Overall, the demand for large-cabin, long-range business jets is down from previous years, a decline that can be attributed to dropping prices in the oil industry and the strengthening of the US dollar against other currencies. While the market is down across the board, pre-owned BBJs still have increasing interest, particularly in greater China, where largecabin, long-range jets are favored. When comparing the BBJ family to comparable sized aircraft (ACJs, CL850, and Lineage 1000E), BBJ is leading the market. In the past 12 months, eight BBJ 1s have been sold and one BBJ 2. This is exceptionally well, compared to the ACJ 319 which sold five, the Challenger 850 which sold five as well and the Lineage 1000/E which sold only two. The Max 7, the BBJ Max family member replacing the BBJ, formally launched in July 2016, will be ready for delivery in 2022. As the delivery date is too far out, the Max 7 is not expected to impact prices on the preowned market. However, a pre-owned BBJ is deemed an ideal interim aircraft for any of the new members of the BBJ Max family. So, it is likely that when the Max 8, Max 9 or Max 7 start deliveries, many owners will look to exit their pre-owned aircraft and enter the latest Max, expanding the pre-owned market even further. As prices continue to drop for older pre-owned BBJs, there is a corresponding increase in BBJ purchases indicating it is a buyer’s market. Prospective buyers now have the luxury to wait for the best opportunities. FLEET AGE DISTRIBUTION 30 Year of Manufacturing BBJ 1 BBJ 2 BBJ 3 25 20 15 10 5 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 30 Year of Delivery BBJ 1 BBJ 2 BBJ 3 25 20 15 10 5 0 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 THIRD QUARTER 2016 — ASIAN SKY QUARTERLY | 29
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