Mike Chase has thirty-five year's extensive global managerial experience in marketing, sales and finance working in the corporate, commercial- airline and supplier aerospace industries. He has worked as vp-... Read More
In this month’s Aircraft Comparative Analysis, Mike Chase provides information on two popular used business jets to value the Hawker 400XP jet for sale.
How do the Hawker 400XP and the Cessna Citation V Ultra for sale compare in the used jet market today? Over the following paragraphs, we’ll consider productivity parameters (payload, range, speed and cabin size) and cover current market values.
The Hawker 400XP replaced the Beechjet 400A starting with serial number RK-354, and entered operation in 2004. Production ended in 2010. The aircraft offers an increased gross weight and several standard features that were optional on the Beechjet 400A.
Today there are 217 wholly-owned Hawker 400XPs. With an additional eight in shared ownership and seven in fractional ownership, the total Hawker 400XP fleet numbers 232 in operation worldwide. 52 (22.4%) of the Hawker 400XP in-operation fleet are leased, according to JETNET.
By continent, North America has the largest fleet percentage (70%), followed by South America (13%) and Asia (10%) for a combined total of 93%.
US Flight Activity
In a comparison of Hawker 400XP operations in 2015 versus 2014, Table A reveals a 1% decrease in the number of flights during 2015, while the distance travelled by the operational fleet declined 4.9% and flight hours decreased 5.5%.
Payload & Range
The data contained in Table B are published in the B&CA, May 2016 online edition, but also sourced from Conklin & de Decker. As we have mentioned in past articles, a potential operator should focus on payload capability as a key factor. The Hawker 400XP ‘Available Payload with Maximum Fuel’ (603 lbs) is less than that offered by the Citation V Ultra (779 lbs).
Additionally, Table B shows the fuel usage by each aircraft (sourced from Aircraft Cost Calculator). There is minimal difference in the fuel usage of the Hawker 400XP and the Citation V Ultra at 200 versus 201 gallons per hour (GPH) respectively.
According to Conklin & de Decker, the Hawker 400XP cabin volume is 305 cubic feet with 15.5 ft. cabin length. The Citation Ultra has slightly more cabin volume (310 cu. ft.) with 17.3 ft. length. Chart A, courtesy of UPCAST JETBOOK, offers a cabin cross-section comparison and shows the Hawker 400XP offers more width (4.92ft vs 4.83ft), but less height (4.75ft vs 4.80ft) than the Citation Ultra.
As depicted by Chart B and using Wichita, Kansas, as the origin point the Hawker 400XP shows slightly less range coverage than the Citation Ultra, per data from Aircraft Cost Calculator (ACC).
Note: For jets and turboprops, ‘Seats-Full Range’ represents the maximum IFR range of the aircraft at Long-Range Cruise with all passenger seats occupied. ACC assumes NBAA IFR fuel reserve calculation for a 200nm alternate. The lines depicted do not include winds aloft or any other weather-related obstacles.
The Hawker 400XP is powered by two Pratt & Whitney Canada JT15D-5R engines each offering 2,965 lbst. The Citation Ultra is powered by two Pratt & Whitney Canada JT15D-5D engines with 3,045 lbst.
Cost Per Mile
Using data published in the May 2016 B&CA Planning and Purchasing Handbook and the August 2016 B&CA Operations Planning Guide we will compare our aircraft. The nationwide average Jet A fuel cost used from the August 2016 edition was $4.90 per gallon at press time, so for the sake of comparison we’ll chart the numbers as published.
Note: Fuel price used from this source does not represent an average price for the year.
Chart C details ‘Cost per Mile’ and compares the Hawker 400XP to its competition, factoring direct costs and with each aircraft flying a 1,000nm mission with an 800 pound (four passengers) payload. The Hawker 400XP shows the lowest cost per nautical mile at $2.98 compared to $3.83 for the Citation Ultra - a difference of 22.2% cost per nautical mile in favor of the Hawker 400XP.
Total Variable Cost
The ‘Total Variable Cost’ illustrated in Chart D is defined as the Cost of Fuel Expense, Maintenance Labor Expense, Scheduled Parts Expense and Miscellaneous Trip Expense. The Total Variable Cost for the Hawker 400XP computes at $1,334 per hour, which is 11.1% less than the Citation Ultra at $1,501 per hour.
Aircraft Comparison Table
Table C contains the pre-owned prices from Vref Pricing Guide for each aircraft. The average speed, cabin volume and maximum payload values are from Conklin & de Decker and Aircraft Cost Calculator, while the number of aircraft in-operation and percentage ‘For Sale’ are as reported by JETNET.
The Hawker 400XP has 10.8% of its fleet currently ‘For Sale’ and the Citation Ultra at 10.9% ‘For Sale’. Also, the average number of pre-owned transactions (sold) per month for the Hawker 400XP is much lower, at 1 unit per month, than Citation Ultra at 3 per month.
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 are allowed to accelerate the depreciation of assets by taking a greater percentage of the deductions during the first few years of the applicable recovery period (see Table D).
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.
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 seven-year 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 a given year.
Table E depicts an example of using the MACRS schedule for a 2010 Hawker 400XP business aircraft in private (Part 91) and charter (Part 135) operations over five- and seven-year periods, assuming a pre-owned retail value of $2.4m, per Vref Pricing guide.
Asking Prices & Quantity
Chart E, sourced from the Multi-Dimensional Economic Evaluators Inc. (www.meevaluators.com), shows a ‘Demand’ chart for the used Hawker 400XP. The current pre-owned market for the Hawker 400XP aircraft shows a total of 25 aircraft ‘For Sale’ with only 13 displaying an asking price, thus we have plotted them.
We also added the pre-owned Citation Ultra with asking prices. The equation that we derived from these asking prices and other criteria used should enable sellers and buyers to compare, and perhaps adjust their offerings, if necessary.
While each serial number is unique, the Airframe (AFTT) hours and age/condition will cause great variations in price. Our research suggests that the market for used Hawker 400XPs and Citation Ultras respond to at least two features: Quantity and Asking Prices.
Of course, the final negotiated price remains to be decided between the seller and buyer before the sale of an aircraft is completed.
The points in Chart F are centered on the same aircraft. Pricing used 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:
Range with full payload and available fuel;
The long range cruise speed flown to achieve that range;
The 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. After consideration of the Price, Range, Speed and Cabin Size, we can conclude that the Hawker 400XP displays a high level of productivity.
The high level of productivity is largely due to the fact that the Hawker 400XP offers a considerably lower cost per mile and variable cost compared to the Citation Ultra but at a higher price (2010 vs 1999). The Hawker 400XP is also faster, while both aircraft are similar in many of our other comparisons, with the Ultra holding the edge in Maximum Payload with Full Fuel, Range and Cabin Volume.
Operators should weigh up their mission requirements precisely when picking which option is the best for them.
Maximum Scheduled Maintenance Equity
Exclusive to our online content, the chart below displays the Hawker 400XP and depict the Maximum Maintenance Equity has available based on its age.
Note: The Maximum Maintenance Equity figure was achieved the day the aircraft came off the production line – since it had not accumulated any utilization toward any maintenance events.
Note: The percent of the Maximum Maintenance Equity that an average aircraft will have available based on its age, assumes:
- Average annual utilization: 375 Flight Hours
- All maintenance is completed when due
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, however.
The Hawker 400XP continues to be somewhat popular today in the used jet market. Those operators in the market should find the preceding comparison useful. Our expectations are that the Hawker 400XP for sale may continue to do well for the foreseeable future.