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In this month’s Aircraft Comparative Analysis- we’ll weigh-up information on a selection of pre-owned business jets in the $3.7m-$6.8m range for the purpose of valuing the pre-owned Hawker 800XP. We’ll consider our usual productivity parameters that include payload/range- speed and cabin size- and we’ll cover current and future market values. The field in this ...

Mike Chase   |   1st September 2009
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Mike Chase Mike Chase

Mike Chase has thirty-five year's extensive global managerial experience in marketing,...
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Hawker Beechcraft 800XP Pre-owned market realities in a worldwide recession. by Michael Chase In this month’s Aircraft Comparative Analysis- we’ll weigh-up information on a selection of pre-owned business jets in the $3.7m-$6.8m range for the purpose of valuing the pre-owned Hawker 800XP. We’ll consider our usual productivity parameters that include payload/range- speed and cabin size- and we’ll cover current and future market values. The field in this month’s study includes Bombardier’s Learjet 60- Cessna’s Citation VII- the Gulfstream/IAI Astra SP- and Hawker Beechcraft’s 800A and 800XP. Here we’ll look to uncover what some of the new pre-owned aircraft market realities are in this current worldwide recessionary period that has resulted in increased inventory and reduced demand. BRIEF HISTORY The Hawker 800XP is a derivative from the design of the UK built de Havilland/Hawker Siddely and British Aerospace 125 that was first built in 1962. The Hawker 125 evolved into the Series 400 to 800 produced up until 1993- at which time Raytheon purchased the Series 800 program- and the aircraft was renamed the Hawker 800. The 800 series has a number of modifications and changes over the 700 series such as improved payload capabilities- updated systems and enhanced performance from an improved wing by incorporating new outer wing sections. The wing improvement helped reduce drag and improve aerodynamic efficiency. The 800A (230 built) was specifically built for the US market and the 800B (62 built) for non-US markets. All told- there were 292 Hawker 800 series aircraft built before final production in 1995- at which time the 800XP entered service. The 800XP features an upgraded engine- enhanced aerodynamics- increased weight and system upgrades. The Hawker 800XP was manufactured from 1995 to 2005 with 426 aircraft built. Of that total- 424 are still in service today. 71% of the Hawker 800XPs are operated in the United States- 12% in Europe- and 10% in Asia. Additionally- 72 or 17% of the Hawker 800XPs are currently in service as fractionally owned aircraft. PAYLOAD AND RANGE The data contained in Table A (top left) is published in the B&CA- May 2009 issue- but is also sourced from Conklin & de Decker. As we mentioned in past articles- a potential operator should focus on payload capability as a key factor. The Hawker 800XP ‘Available payload with Maximum Fuel’ at 1-750 pounds has the second highest payload capability in this field of study- behind the Astra SP at 2-055 pounds. CABIN VOLUME According to Conklin & de Decker- the cabin volume of the Hawker 800XP- at 604 cubic feet- is larger than all the aircraft in this field of comparison- as shown in Chart A (center left). The Astra SP at 375 cubic feet has the smallest cabin volume of the aircraft in this comparison. POWERPLANT DETAILS The Hawker 800XP is powered by a pair of Honeywell TFE731-5BR-1H engines- each offering 4-660 pounds of thrust. The closest competitor in terms of engine thrust is the Learjet 60 at 4-600 pounds of thrust from its Pratt & Whitney Canada PW305A engines. The other competitors in this field of comparison all operate Honeywell TFE731 engines with less thrust ranging from 4-300 to 3-700 lbst. Using data published in the May 2009 B&CA Planning and Purchasing Handbook- and the August 2009 B&CA Operations Planning Guide we will compare our aircraft. The nationwide average Jet-A fuel cost used from the August 2009 edition was $4.25 per gallon at press time. For the sake of comparison we’ll chart the numbers as published. COST PER MILE COMPARISONS Chart B (bottom left) details ‘Cost per Mile’- and compares the Hawker 800XP to its competition factoring direct costs and with all aircraft flying a 1-000nm mission with an 800 pound (four passengers) payload. The Hawker 800XP at $5.35 cost per mile is in the middle of the comparative field of aircraft with regards to cost per mile; less costly than the Hawker 800A (which tops the group) and Citation VII- but more than the Astra SP and Learjet 60. The Learjet 60 has the lowest cost per mile at $4.34 cost per mile. In a direct comparison of the Hawker 800XP- the Learjet 60 costs $1.01 less per mile. TOTAL VARIABLE COST COMPARISONS The ‘Total Variable Cost’- illustrated in Chart C (top right)- includes Fuel Expense- Maintenance Labor Expense- Scheduled Parts Expense- and Miscellaneous trip expense. The total variable cost for the Hawker 800XP at $2-214 again places it in the middle of the group- with the Learjet 60 at $1-869 again showing the lowest variable cost in the field of comparison. PRODUCTIVITY COMPARISONS The points in Chart D (center right) center on the same group of aircraft. Pricing used in the vertical axis is as published in the B&CA 2009 Purchase Planning Handbook and Vref. 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. 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 jet aircraft are considered the “r” squared factor would equal a number above 0.9. 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 800XP as shown in the productivity index Chart D- is highly productive compared with the other aircraft shown. Indeed- in a direct comparison to the field in this study- the Hawker 800XP: has the largest cabin volume; and has the second highest ‘Available payload with Maximum Fuel-’ helping its competitiveness. Table B (previous page) contains the average retail prices from Vref for each aircraft with the latest model produced with the price year in parentheses. The average speed- cabin volume and maximum payload values are from Conklin and De Decker and B&CA. The number of aircraft in-operation- percentage ‘For Sale’- and the number ‘Sold’ over the past 12 months are from JETNET as of the end of July 2009. As shown- the Hawker 800XP has averaged 2.9 sold aircraft per month in the past 12 months. This average is the highest number sold- and the lowest fleet percentage for sale at 13.7% among the aircraft being compared. AVERAGE LENGTH (IN YEARS) OF AIRCRAFT OWNERSHIP The average length of ownership for the Hawker 800XP from new (‘original’) is 4.1 years- while “pre-owned” owners average 2.4 years ownership with the aircraft according to JETNET’s Evolution and STAR reporting systems. AVERAGE ASKING PRICES The 10-year summary in Table C (left) shows Hawker 800XP sales activity trends from August 1999 to present- and- it is hoped- should provide some historical perspective. The Hawker 800XP aircraft continues to be very popular in the pre-owned market today- but continues to face the new pre-owned market realities that have resulted in substantial asking price reductions lately. Over the past 12 months the Hawker 800XP aircraft has shown the highest number of full retail sales transactions of all preowned business aircraft primarily as a result of the large decrease in the average asking prices by $3.1 million (or 33%). SUMMARY 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- time to climb performance- and maximum transition altitude levels that might factor in a buying decision- however. The Hawker 800XP aircraft fares well against its competition- so those operators in the market should find the preceding comparison of value. Our expectations are that the Hawker 800XP aircraft will continue to do very well in the pre-owned market. ❯ For more information: Michael Chase is president of Chase & Associates- and can be contacted at 1628 Snowmass Place- Lewisville- TX 75077; Tel: 214-226-9882; Web: www.mdchase.aero

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