Which light jet will come out on top?
In this month’s Aircraft Comparative Analysis, Mike Chase provides information on several popular business jets for the purpose of valuing Textron’s Cessna Citation CJ3/CJ3+.
How do the Citation CJ3 and CJ3+ compare in the business aircraft market today? Over the following paragraphs, we’ll consider productivity parameters (payload, range, speed and cabin size) and cover current market values. The field in this study includes the Hawker 400XP and the Bombardier Learjet 31A.
The CitationJet family comprises a series of low-wing, T-tail aircraft with pressurized cabins. They are powered by two turbofan engines pylon mounted on the rear fuselage. The Model 525 CitationJet family encompasses the CitationJet; CJ1 and CJ1+; CJ2 and CJ2+; CJ3 and CJ3+ and the CJ4 models. Today, the CJ2+, CJ3+ and CJ4 remain in production.
Classified within the Light Jet category, and offering eight seats and an enclosed lavatory, the CJ3 and CJ3+ are powered by a pair of Williams International FJ44-3A turbofans that offer a remarkable power-to-weight ratio, delivering up to 3,000 lbst each.
The CJ3 is permitted to operate with a single pilot under US registry only, and received full FAA type certification in October 2004, and ended production in 2014 with the CJ3+ replacing it on the production line, offering more range and incorporating an all-new LED lighting suite allowing for reduced power consumption and reduced weight.
Currently, there are 412 CJ3s in operation worldwide. Of those, 395 are wholly-owned, 15 are in shared ownership and two are in fractional ownership.
Interestingly, 23 CJ3s are leased. According to JETNET, 6.1% of the fleet is ‘For Sale’, with 86% of those aircraft under an exclusive broker agreement. The average days on the market for a CJ3 is 310 days.
Meanwhile, there are 75 CJ3+ aircraft in operation worldwide, 72 of which are wholly-owned, two are shared and one is in fractional ownership. Six (or 8.1% of the fleet is leased). Although this aircraft is proving popular in 2017 on the new market, only 2.8% of the used fleet is currently ‘For Sale’, half of which are under an exclusive broker agreement.
Used CJ3+ jets ‘For Sale’ are selling quickly, and according to JETNET the average time on the market is just 62 days. This may account for the low number available ‘For Sale’.
By continent, North America has the largest CJ3 and CJ3+ fleet percentage (82%), followed by Europe (11%). The largest CJ3 fleet owner is US-based JetSuite, Inc. (eight aircraft), while the largest CJ3+ fleet owner is US-based VMI Enterprises, LLC (four aircraft).
Status of ADS-B Out Equipage
Of the 412 CJ3 business jets based worldwide, 111 (27% of the fleet) have ADS-B Out installed currently, leaving 73% of the fleet yet to comply. This is an important point for prospective buyers to consider when looking to purchase a CJ3 on the market. All 74 CJ3+ aircraft are compliant.
Payload & Range
As mentioned in past articles, a potential operator should focus on payload capability as a key factor. As represented in Table A, the Citation CJ3/3+ ‘Available Payload with Maximum Fuel’ at 775 lbs is greater than that offered by the Hawker 400XP (603 lbs) but significantly less than the Learjet 31A (2,000 lbs).
Cabin Cross-Section Views
Chart A offers a cabin cross-section comparison. The CJ3 and CJ3+ offer the same cabin volume. While they offer less width (4.83 ft.) than the Hawker 400XP and Learjet 31A (4.92 ft. and 4.95 ft. respectively), the CJ3/CJ3+ and Hawker 400XP offer the same height (4.75 ft.). The Learjet 31A has the lowest cabin height (4.36 ft.).
Meanwhile, the CJ3/CJ3+ has a greater cabin length compared to the Hawker 400XP (15.57 ft. vs 15.5 ft.). The Hawker 400XP offers the larger cabin volume (305 cu. ft.) over the CJ3/CJ3+ (286 cu. ft.), owing to its greater width. The Learjet 31A has the smallest cabin volume (281 cu. ft.) of this field.
As depicted by Chart B, using Wichita, Kansas as the origin point the CJ3+ (1,825nm) shows more range coverage than the CJ3 (1,702nm) and the Hawker 400XP (1,333nm). While not depicted on this map, the Learjet 31A offers the shortest range at 1,251nm.
Each depicted business jet’s range offers capability to cover most of North America, including Canada, 48 States of the US, and Mexico.
Note: For jets and turboprops, ‘four passengers with available fuel’ represents the maximum IFR range of the aircraft at Long-Range Cruise with four passenger seats occupied. NBAA IFR fuel reserve calculation for a 200nm alternate is assumed. The lines depicted do not include winds aloft or any other weather-related obstacles.
As mentioned, the CJ3 and CJ3+ are powered by two Williams International FJ44-3A turbofans, each with 3,000 lbst. The Hawker 400XP, meanwhile, is powered by two Pratt & Whitney JT15D-5R turbofan engines each offering more thrust at 3,045 lbst. The Learjet 31A is powered by two Honeywell TFE 731-2 engines that offer the greatest thrust of the field at 3,500 lbst.
Total Variable Cost
The ‘Total Variable Cost’ (sourced from Conklin & de Decker) illustrated in Chart C 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 computes at $1,374 per hour, which is slightly more than the CJ3+ at $1,353 per hour. The variable costs for the Hawker 400XP and the Learjet 31A are significantly higher than either of the CJ3 models.
Aircraft Comparison Table
Table B contains the new and used prices from Vref Pricing Guide for each aircraft. The average speed and four passenger ranges are from Bombardier and Textron Aviation, while the number of aircraft in-operation and percentage ‘For Sale’ and average sold are as reported by JETNET.
As we mentioned, the CJ3 has 6.1% of its fleet currently ‘For Sale’ on the used jet market, while the CJ3+ has 2.8% of the fleet ‘For Sale’. The CJ3 demonstrates healthy buyer interest with an average 5.3 aircraft sold per month. The other candidate business jets show between 2.3 and 2.5 transactions per month in the used market.
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 C).
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 D depicts an example of using the MACRS schedule for a 2017-model CJ3+ business aircraft in private (Part 91) and charter (Part 135) operations over five and seven-year periods, assuming a new 2017 list price for a CJ3+ at $8.05m, per Vref Pricing guide.
Asking Prices & Quantity
The current used CJ3 market shows a total of 29 aircraft ‘For Sale’ with 12 displaying asking prices ranging from $3.3m to $6.15m. We also reviewed the used Hawker 400XP market (34 jets for sale) with asking prices ranging from $1.395m to $2.75m, and the used Learjet 31A market (39 jets for sale) with asking prices ranging from $475k to $1.495m.
While each serial number is unique, the Airframe (AFTT) hours and age/condition will cause great variations in price. 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 D 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:
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 CJ3 and CJ3+ display a high level of productivity.
The CJ3+ offers greater range than the other candidate aircraft but is priced higher and offers less ‘Available Payload with Maximum Fuel’ than the Learjet 31A and has a marginally smaller cabin compared to the Hawker 400XP business jet. Nevertheless, it has significantly lower hourly variable costs than the Hawker 400XP and Lear 31A.
Operators should weigh their mission requirements precisely when picking which option is the best for them.
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.
The CJ3/CJ3+ continue to be popular today. Those operators in the market should find the preceding comparison useful. Our expectations are that the CJ3 will continue to do well in the used market for the foreseeable future, and we anticipate a strengthening CJ3+ used market as the aircraft matures and current owners seek to upgrade or replace their current models.
Of course, if the CJ3 is not outfitted with ADS-B Out it cannot be placed in operation after December 31, 2019 as mandated by the FAA. Buyers should be aware of this, along with the cost of an upgrade solution if they are considering a model that is not yet equipped to meet the mandate.