Our next hypothetical mission profile is on a Milwaukee company whose President and CEO fly around 300 hours per year within the U.S., but also take two long-range international trips per year. This scenario poses the question: Is it worth it for this company to buy something like a 2011 Global XRS for around $26 million (Vref value) that can make those international trips, or would it be smarter for them to buy something like a 2014 Challenger 300 for around $14.8 million (Vref value) and charter a longer-range jet for their two international trips?
The Global XRS is no doubt a more capable plane, with a cruise speed of 485 knots and a range of 6,050 nautical miles that could easily get these execs from Milwaukee to Beijing, but it costs about $3,010 per hour to fly (close to $1,000 more than the Challenger 300), a steep price to pay for a short jaunt from Milwaukee to New York City. The Global XRS cruises at 485 knots.
To fly the XRS 300 hours, this company is looking at spending $903,000 in direct operating costs, plus the cost of their two international flights.
The Challenger 300 has a cruise speed of 440 knots and a range of just 3,100 miles, close to half that of the Global XRS, which wouldn’t even get these execs close to Beijing from Milwaukee. However, it would allow them to travel anywhere in the U.S. from Milwaukee, and it costs only $2,095 per hour to fly, saving them nearly $1,000 per hour when compared to the XRS.
To fly the Challenger 300 for 300 hours in a year, they’re looking at spending about $628,500 in direct operating costs for their domestic flights, which is nearly $270,000 less than the Global XRS.
While the Challenger 300 obviously makes more sense for domestic flights, we also have to look at their international flights.
In a Global XRS, it would take them about 11.5 hours to get from Milwaukee to Beijing, 23 hours total there and back. With the Global’s operating costs at $3,010 per hour, they’re looking at $69,230 for each round trip, or $138,460 in direct operating costs annually for their two trips to Beijing and back each year, bringing the total costs of operating the XRS, both domestic and international, to $1,041,460.
Since the Challenger 300 can’t make that trip, these execs would have to charter those flights from Milwaukee to Beijing and back, which would cost roughly $150,000 per round trip, or $300,000 for both, bringing their annual total to approximately $928,500, just over $100,000 less than the Global XRS.
Is it worth the extra $11 million at purchase and $100,000 in annual operating costs to have a more capable plane? Does the prospect of being able to fly in your own plane on those international flights push the needle, or would these execs suffer through a first-class flight twice a year to save some money?
Let us know which option you’d go with!