In this month’s Aircraft Comparative Analysis, Mike Chase provides information on two popular business jets for the purpose of valuing the Citation CJ4 for sale. A 2015 Citation CJ4 has a list price of $9.414m.
We will consider productivity parameters (payload/range, speed and cabin size) and cover current and future market values for Textron Aviation’s Citation CJ4. The field in this study includes Bombardier’s Learjet 31A/ER business jet.
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 was the basis for the family, which encompasses the CJ1, CJ1+, CJ2, CJ2+, CJ3, CJ3+ and the CJ4 models.
The CJ4, which was introduced in 2005, is a stretched version of the CJ3, adding another two feet to the CJ3 cabin. The first CJ4 business jet flew on May 5, 2008, with initial deliveries starting in 2010. This model also introduces a different wing design than the earlier CJ models, employing a moderately swept wing design similar to the Citation Sovereign.
With more powerful engines (two Williams International FJ44-4As) than its predecessors, longer wings, and among the most advanced flight decks in its class, the Citation CJ4 became the largest member of the CJ family, but remains in the Light Jet category with eight seats. A total of 1,382 CitationJet-series aircraft are currently in operation, as shown in Table A, and of those, a total 187 units are Citation CJ4 models.
There are 178 wholly-owned Citation CJ4 aircraft in operation worldwide with nine in shared ownership and none in fractional ownership. By continent, North America has the largest fleet percentage at 79%, followed by Europe (14%, for a combined total of 93%). Thirteen CJ4s (7% of the fleet) are leased, according to JETNET.
Payload & Range
The data contained in Table B are sourced from Conklin & de Decker and B&CA’s May 2015 issue. A potential operator should focus on payload capability. The ‘Available payload with Maximum Fuel’ for the Citation CJ4 is 1,052 lbs, which is less than the Learjet 31A/ER (2,000 pounds).
In addition, fuel usage by each aircraft in this field of study is depicted. The Citation CJ4, burning 188 gallons per hour (GPH), burns six gallons of fuel more than the Learjet 31A/ER (182 GPH), according to data from Aircraft Cost Calculator.
According to Conklin & de Decker, the Citation CJ4 cabin volume is 293 cubic feet and its cabin length is 17.3 ft. The Learjet 31A/ER has slightly less cabin volume at 281 cu ft – (4.3% less). The cabin length of the Learjet 31A/ER, at 12.9 feet, is over four feet less than the CJ4’s.
Note from Chart A (courtesy of UPCAST JETBOOK) that the Citation CJ4 offers greater cabin height but less cabin width than the Learjet 31A/ER.
As depicted by Chart B and using Witchita, Kansas as the origin point, the Citation CJ4 shows more range coverage than the Learjet 31A/ER, reaching most of the lower 48 states and Mexico non-stop, according to 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.
As mentioned, the Citation CJ4 is powered by two Williams International FJ44-4A engines, each offering 3,621 pounds of thrust (lbst). The Learjet 31A/ER, meanwhile, uses two Honeywell TFE731-2 engines, each offering 3,500 lbst.
Cost Per Mile
Using data published in the May 2015 B&CA Planning and Purchasing Handbook and the August 2015 B&CA Operations Planning Guide we will compare our aircraft. The nationwide average Jet-A fuel cost used from the August 2015 edition was $5.25 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 Citation CJ4 to its competition, factoring direct costs and with each aircraft flying a 600nm mission with an 800 pound (four passengers) payload. The Citation CJ4 shows a cost per nautical mile at $3.08, which is 11.5% less than the Learjet 31A/ER at $3.48.
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 Citation CJ4 computes at $1,273, which is 22.4% less than the Learjet 31A/ER at $1,641.
Aircraft Comparison Table
Table C contains the prices from Vref Pricing Guide for each aircraft. The average speed, cabin volume and maximum payload values are from Conklin & de Decker, while the number of aircraft in-operation and percentage ‘For Sale’ are as reported by JETNET.
The Citation CJ4 at 4.4% has less than 10 percent of its fleet currently ‘For Sale’. However, the Learjet 31A/ER at 13.6% is in a buyer’s market. The average number of new and used transactions per month is nearly the same for both models at four, and three respectively, as shown in the last column of Table C.
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 2015 Citation CJ4 aircraft in private (Part 91) and charter (Part 135) operations over five- and seven-year periods, assuming a used retail value of $9.414m, per Vref Pricing guide.
Asking Prices vs Age, Quantity and Engines
Chart E, sourced from the Multi-dimensional Economic Evaluators Inc. (www.meevaluators.com), shows a Value and Demand chart for the new and pre-owned Citation CJ4 including the Learjet 31A/ER. The current pre-owned market for Citation CJ4 shows a total of nine aircraft ‘For Sale’ with two displaying an asking price, thus we have plotted those two.
We also added other pre-owned business jets of similar ilk with asking prices ranging from $1.5m-9m 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. As evidenced, the market for new/used Citation CJ4s responds to at least four features: Years, Cabin Height, Quantity and Price.
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:
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.
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 Citation CJ4 displays a high level of productivity.
Popular attributes of the CJ4 are range, cabin size, plus lower hourly and variable costs. However, the CJ4 has the higher acquisition price and significantly lower payload capability of the aircraft in our analysis. Operators should weigh their mission requirements precisely when picking the option that 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, however.
The Citation CJ4 continues to be very popular today. Those operators in the market should find the preceding comparison useful. Our expectations are that the Citation CJ4, which started delivering in 2008, will continue to do very well in the new and pre-owned markets for the foreseeable future.
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