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Aircraft Comparative Analysis - Cessna Citation CJ3

This month we compare the Cessna Citation CJ3 with the Hawker 400XP and the Bombardier Learjet 31A, all pre-owned business jets in the $1.6m-4.0m range.

Mike Chase   |   13th September 2014
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Mike Chase Mike Chase

Mike Chase has four decades of extensive global managerial experience in the Corporate Aviation,...
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Cessna Citation CJ3

In this month’s Aircraft Comparative Analysis, we provide information on a selection of pre-owned business jets in the $1.6m-4.0m range for the purpose of valuing the preowned Cessna Citation CJ3 for sale. 

We’ll consider the productivity parameters - payload/range, speed and cabin size, and cover current and future market values. The field in this study also includes the Hawker 400XP and the Bombardier Learjet 31A.

Current History
The CitationJet is a low-wing aircraft with a T-tail pressurized cabin, and powered by two turbofan engines pylon-mounted on the rear fuselage. The Model 525 CitationJet was the basis for an entire subsequent family of jets encompassing the CJ1, CJ1+, CJ2, CJ2+, CJ3 and CJ4 models.

The CJ3 light jet is powered by two Williams International FJ44-3A turbofans, offering a remarkable power-to-weight ratio (up to 2,820 pounds of take-off thrust per engine). The aircraft is typically configured with eight seats and an enclosed lavatory. With an exceptional interior, highly sophisticated flight deck, powerful engines and longer wings than other aircraft in its class, the CJ3 is permitted to operate with a single pilot (under US registry only). It received full FAA type certification in October 2004. Today, there are 411 CJ3s in operation, the highest total number of units built for any specific CJ model. A total 1,329 CJ-series aircraft are currently in operation, as shown in Table A.

 

Table A - Cessna Citation CJ3 In Operation Comparison

Market Share
Chart A represents the in-operation aircraft Market Share (as of July 2014) for the Cessna CJ3 (48%), Hawker Beechcraft 400XP (28%), and Bombardier Learjet 31A (24%). There are currently 859 total aircraft in operation for these three models.

Chart A - Cessna Citation CJ3 Market Share Comparison

Payload and Range

The data contained in Table B is sourced from Conklin & de Decker and also published in the B&CA May 2014 issue. As we have mentioned in past articles, a potential operator should focus on payload capability as a key factor. 

Table B - Cessna Citation CJ3 Payload & range Comparison & Analysis

The Citation CJ3 ‘Available Payload with Maximum Fuel’ at 775 pounds is greater than that offered by the Hawker Beechcraft 400XP (603 lbs), but significantly less than the Bombardier Learjet 31A (1,873 lbs). However, according to Aircraft Cost Calculator, also represented, the CJ3 burns just 155 gallons of fuel per hour (GPH), which is 22.5% less than the Hawker 400XP (200GPH), and 15% less than the Learjet 31A (182GPH).

Cabin Volume
According to Conklin & de Decker, the cabin volume of the CJ3 is 286 cubic feet. This is 1.8% greater than the Learjet 31A (281 cubic feet) and 6.2% less than the Hawker 400XP (305 cubic feet). The CJ3 cabin length, at 15.67 feet, and the Hawker 400XP (15.5 feet) are nearly the same, and both are longer than the Learjet 31A (12.9 feet) by about 2.7 feet.

As represented in Chart B (illustrated by UPCAST JETBOOK), the CJ3 and Hawker 400XP height are also greater than the Learjet 31A, however, the cabin width for the CJ3 is less than the other two.

Chart B - Cessna Citation CJ3 Cabin Cross-section Comparisons

Range Comparison
Chart C shows the ranges from Wichita, Kansas, for the business jets in our field of study, as sourced from Aircraft Cost Calculator (ACC). The CJ3 shows more range coverage than either the Hawker 400XP or the Learjet 31A.

Chart C - Cessna Citation Range Comparison

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.

Powerplant Details
As mentioned above, each of the CJ3 Williams FJ44-3A engines offer a thrust rating of 2,820 pounds. The Hawker 400XP is powered by a pair of Pratt & Whitney JT15D-5R engines, each with a thrust rating of 2,965 pounds, while the Learjet 31A is powered by two Honeywell TFE731-2 powerplants, each offering 3,500 lbst. 

Cost Per Mile Comparisons
Using data published in the May 2014 B&CA Planning and Purchasing Handbook and the August 2014 B&CA Operations Planning Guide we will compare our aircraft. The nationwide average Jet A fuel cost in the August 2014 edition was $6.18 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 D details ‘Cost per Mile’, and compares the CJ3 to the Hawker 400XP and Learjet 31A factoring direct costs, and with each aircraft flying a 1,000nm mission with 800 pounds (four passengers) payload. The CJ3 cost at $3.23 per nautical mile is lower compared to both the Hawker 400XP at $3.49 and the Learjet 31A at $3.84 on a cost per mile basis.

Chart D - Cessna Citation CJ3 Cost Per Mile Comparison

Total Variable Cost Comparisons
The ‘Total Variable Cost’, illustrated in Chart E, is defined as the cost of Fuel Expense, Maintenance Labor Expense, Scheduled Parts Expense and Miscellaneous Trip Expense. The total variable cost for the CJ3 at $1,354 is considerably less than the Learjet 31A ($1,843) and the Hawker 400XP ($1,860).

Chart E - Cessna Citation CJ3 Variable Cost Comparison


Aircraft Comparison Table
Table C includes the average pre-owned retail price from Vref for each aircraft. The last two columns of information show the number of each aircraft in-operation, and the percentage ‘For Sale’ (per JETNET).

Table C - Cessna Citation CJ3 Comparison Table



It is interesting to note that of the 411 CJ3s in operation today (54% new and 46% pre-owned), only 5.6% of the fleet is ‘For Sale’ (traditionally representing a seller’s market). 

Considering the whollyowned CJ3 aircraft fleet only, according to JETNET North America is home to the majority with 74%, followed by Europe with 17%. Currently, 13 CJ3 aircraft are in shared ownership, and there are two in fractional ownership arrangements.

Depreciation Schedule for Business Aircraft
Aircraft that are used in a trade, business, or for the production of income that are primarily operated domestically, and not used in common or contract carriage (e.g. Part 91) may be depreciated over a five-year Modified Accelerated Cost Recovery System (MACRS) schedule. Aircraft used in common or contract carriage (e.g., Part 135) are depreciable under seven-year MACRS (see Table D).

Table D - Cessna Citation CJ3 Part 91 & 135 MACRS Schedule



Table E, meanwhile, depicts an example of using the MACRS schedule for a 2004 model Citation CJ3 in private (Part 91) and charter (Part 135) operations over five and seven-year periods assuming a Vref retail value of $4.0 million.

Table E - Cessna Citation CJ3 MACRS Depreciation Schedule



Asking Prices vs AFTT, Age & Engine Thrust

Chart F, sourced from the Multi-dimensional Economic Evaluators Inc. (www.meevaluators.com), shows a Value and Demand chart for the pre-owned CJ3, Hawker 400XP, and Learjet 31A business jets. The current pre-owned market for these aircraft shows a total of 81 units ‘For Sale’.

Chart F - Cessna Citation CJ3 Value/Demand Comparison



Forty-seven of the 81 have an asking price - thus, we have plotted those 47. 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. Demand and Value are on opposite sides of the same Price axis. The market treats the CJ3, Hawker 400XP and Learjet 31A in much the same way.

The Demand Equation for these vehicles is Price $m = 23.7 Quantity-1.09. The slightly steep slope (exponent <-1.0) indicates that there is slightly more revenue in the two uppermost bins than there is in the two lowermost bins. This equation is very well correlated, with an adjusted R2 of 99.3%, a Pearson’s2 of 99.7% a P-Value of 0.02% and a Standard Error of $17,400.

Their Value Equation is Price = 0.00352 *Years -0.445 *Volume/Passenger 6.180 *AFTT -0.282. We find that the Value Equation for these vehicles is well correlated, with an Adjusted R2 of 83.5%, a Pearson’s2 of 89.1% and a Standard Error of $465,000 (with P-Values of 0.01%, 1.79E-07 and 0.16% for Years, Volume/Passenger and AFTT, respectively). The influence of the Volume per Passenger term, at 6.18, is especially strong, and seldom seen.

In this case, given that all of the vehicles have similar speeds and passenger capacities (and that range in this case did not impact value in a statistically significant way), the market price equation makes a strong distinction in the available space per passenger.

In this market, unlike others we have witnessed, aircraft age and the Total Time on the Airframe (TTAF) are too highly correlated with one another to use them at the same time. However, with the addition of Range and Max Mach, we can include other important influencing features.

Thus, the market for used Cessna Citation CJ3s, Hawker 400XPs, and Learjet 31As respond to at least the five features depicted here: Years, AFTT, Volume/Passenger, Price and Quantity 

Productivity Comparisons
The points in Chart G center on our field of aircraft. Pricing used in the vertical axis is as published in the 2014 Vref pricing guide. The productivity index requires further discussion in that the factors used can be somewhat arbitrary.

Chart G - Cessna Citation CJ3 Productivity Comparison



Productivity can be defined (and it is here) as the multiple of three factors.
1. Range with full payload and available fuel;
2. The long-range cruise speed flown to achieve that range;
3. The cabin volume available for passengers and amenities.
The result is a very large number so for the purpose of charting, each result is divided by one billion. The examples plotted are confined to the aircraft in this study. A computed curve fit on this plot would not be very tight, but when all business jets are considered the “r” squared factor would equal a number above 0.9. Others may choose different parameters, but serious business jet buyers are usually impressed with price, range, speed, and cabin size.

After consideration of the value and fuel savings, we can conclude that the CJ3, as shown in the productivity index is productive and has been popular with a high market share. The CJ3 offers significant operating cost saving with greater range.

Overall, the greater range, speed and cabin capacity will weigh in favour of the CJ3 for many operators – although purchase prices are proportionally higher.

So, ten years after first delivery, the CJ3 is set to be replaced by the CJ3+. History tends to show that after an aircraft model has been in production for ten years – especially one that sells as well as the CJ3 – that the introduction of an improved model (the CJ3+ in this case) will continue to maintain that success in the face of the everincreasing sophistication of Business Aviation technology.

Summary
Within the preceding paragraphs we have touched upon several of the key attributes that business jet operators value. However, there are often other qualities such as service and support that factor in a buying decision, but which are beyond the scope of this article. The Cessna Citation CJ3 business jet has its advantages at its price-point - so those operators in the market should find the preceding comparison of value.

Our expectations are that the CJ3 will continue to do very well in the pre-owned market for the foreseeable future, but it’s worth keeping a watch for how the new aircraft market develops with the CJ3+. The entire story of the CJ family has been remarkable.

Watch Insiders' Guides Ep 1: Cessna Citation with Andrew Gratton

 


Read more about: Citation CJ3 | Hawker 400XP | Learjet 31A | Cessna Citation | Hawker Beechcraft | Learjet | Bombardier Learjet | Jet Comparison | Operating Costs | Jets for Sale | New Jets for Sale | Used Jets for Sale | Mike Chase

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