In this month’s Jets Comparison, Mike Chase provides information on the Cessna Citation Latitude. How will it compare against its Citation Sovereign stable-mate and the older Hawker 850XP?
Over the following paragraphs we’ll consider key productivity parameters, including payload, range, speed and cabin size, and the current and future residual values for the Cessna Citation Latitude, Cessna Citation Sovereign and Hawker 850XP. Among the questions posed is whether a prospective buyer should purchase a new or used jet from this field?
About the Competitors
First announced in 2011, the Cessna Citation Latitude design incorporates the Citation Sovereign wing design, utilizes twin Pratt & Whitney Canada PW306D turbofans and a cruciform tail. Its clean sheet, all metal stand-up circular fuselage comes with a flat floor design.
The Citation Latitude first flew in 2014 and was certified in 2015. Since deliveries began this model has proven very popular with fractional ownership operators.
The Citation Sovereign, meanwhile, was first delivered in 2004 and its strongest feature is its range. Offering the coast-to-coast capability of larger jets, it retains the features that make Mid-size Jets so advantageous, taking off in under 4,000 feet (still unmatched by other Mid-sized Jets today).
Cessna Citation Sovereign
The Citation Sovereign was replaced on the production line in 2013 by the Sovereign+ (providing winglets, and an improved flight deck and engines).
The Hawker 850XP’s greatest feature is in its design; specifically, the addition of winglets. That slight modification improved the jet’s overall performance by creating a more aerodynamic aircraft over the Hawker 800XP that it is otherwise identical to. Production of the Hawker 850XP ended in 2009.
As of this writing, there were 174 Citation Latitude business jets in operation, 86 of which are wholly-owned, four are in shared ownership, and a striking 84 are in fractional ownership.
In January 2019, North America had the largest Citation Latitude fleet percentage (79%), followed by Europe (12%), accounting for a combined 91% of the fleet.
By comparison, 348 Citation Sovereigns are in operation, and 287 are wholly-owned, while 17 are in shared ownership and 44 are fractionally owned. North America was home to 72% of the Citation Sovereign fleet in January 2019, followed by Europe (10%), and Asia and South America (6% each), accounting for 94% of the world’s fleet.
Ninety-nine Hawker 850XP business jets remain in operation today. Of those, 97 are wholly-owned and two are in shared ownership. North America had the largest Hawker 850XP fleet percentage (64% as of January 2019), followed by Asia (15%) and Europe (12%). Together, these regions account for a combined 91% of the total fleet.
Payload & Range Comparison
A potential operator should focus on payload capability as a key factor when selecting the right aircraft for their need. Table A shows the Hawker 850XP has an ‘Available Payload with Maximum Fuel’ of 1,790lbs. That is substantially more than the 1,177lbs offered by the Citation Sovereign and the Citation Latitude (1,000lbs).
TABLE A: Cessna Citation Latitude vs Citation Sovereign vs Hawker 850XP Payload Comparison
Cabin Cross-Section Comparison
Chart A shows a cabin cross-section comparison of the Citation Latitude, Citation Sovereign and Hawker 850XP (courtesy of UPCAST JETBOOK). As depicted, the Citation Latitude has the greatest cabin height and width of the field.
CHART A: Cessna Citation Latitude vs Citation Sovereign vs Hawker 850XP Cabin Comparison
According to OEM data, the Citation Latitude has a shorter cabin length (21.08ft) compared to the Hawker 850XP (21.3ft) and the Citation Sovereign (25.25 ft). However, the Citation Latitude has a greater overall cabin volume (587cu.ft). By comparison the Citation Sovereign has 571cu.ft and the Hawker 850XP has 551cu.ft cabin volume, per Conklin & de Decker. Working in the Latitude’s favor is its flat-floor, stand-up cabin design.
The Citation Latitude and Citation Sovereign share the same external baggage volume (100cu.ft) whereas the Hawker 850XP offers no external baggage space. What it lacks externally, is made up for internally though: The Hawker 850XP offers greater internal baggage volume (50cu.ft) than the Citation Sovereign (35cu.ft) and the Citation Latitude (27cu.ft).
As depicted in Chart B, using Wichita, Kansas as the origin point, the Citation Latitude (2,678nm) shows slightly more range coverage than the Hawker 850XP (2,642nm) but less than the Citation Sovereign (2,871).
CHART B: Cessna Citation Latitude vs Citation Sovereign vs Hawker 850XP Range Comparison
For business jets, ‘Four Pax Range’ represents the maximum IFR range of the aircraft at long range. Cruise with NBAA IFR fuel reserve calculation is for a 200nm alternate. This range does not include winds aloft or any other weather-related obstacles.
The Citation Latitude and Sovereign are each powered by a pair of Pratt and Whitney engines. In the Latitude’s case, 5,907lbst PW306D engines were utilized and in the case of the Sovereign, 5,770lbst PW306Cs were selected. The Hawker 850XP flies on a pair of Honeywell TFE 731-5BR engines, each with 4,750lbst.
The Time Between Overhauls (TBO) for the Citation Latitude and Citation Sovereign powerplants is 6,000 hours, whereas the TBO for the Hawker 850XP is 5,000 hours.
Cost Per Mile Comparison
Chart C details the ‘Cost per Mile’ for our comparative jets (per JETNET), and factors direct costs (no depreciation) and with each aircraft flying a 1,000nm mission with an 800lbs (four passengers) payload. The average US Jet-A fuel cost used for March 2019 was $4.85 per gallon.
CHART C: Cessna Citation Latitude vs Citation Sovereign vs Hawker 850XP Hourly Cost Comparison
The Citation Latitude shows a lower cost per nautical mile at $6.72, compared to $7.02 for the Citation Sovereign and $8.00 for the Hawker 850XP.
Total Variable Cost Comparison
The ‘Total Variable Cost’ illustrated in Chart D (sourced from JETNET), is defined as the cost of fuel expense, maintenance labor expense, scheduled parts expense and miscellaneous trip expense (including hangar, crew and catering costs). As depicted, the Latitude is the least expensive of the field on an hourly basis.
CHART D: Cessna Citation Latitude vs Citation Sovereign vs Hawker 850XP Variable Cost Comparison
Aircraft Comparison Table
Table B contains the new and used prices from Vref for the Citation Latitude (2018/new price), Citation Sovereign (2013/last year of production), and Hawker 850XP (2009/last year of production).
TABLE B: Cessna Citation Latitude vs Citation Sovereign vs Hawker 850XP Productivity Comparison
The long-range cruise speed is from Conklin & de Decker, while the ranges, number of aircraft in-operation, percentage ‘For Sale’ and average sold are reported by JETNET.
For the Citation Latitude, just 1.2% of its fleet was for sale as of the end of January 2019, while the Citation Sovereign had 4.6% for sale. The Hawker 850XP, meanwhile, had 10.1% of its fleet for sale.
The average number of new/used transactions (sold) per month is six for the Citation Latitude over the past year. By comparison, an average of five used Sovereign transactions and two used Hawker 850XP transactions were recorded over the past 12 months.
Maximum Scheduled Maintenance Equity
Chart E depicts, and projects the estimated Maximum Maintenance Equity the Citation Latitude has available based on its age. The Maximum Maintenance Equity figure was achieved the day the aircraft came off the production line since it had not at that point accumulated any utilization toward any maintenance events.
CHART E: Cessna Citation Latitude Maximum Scheduled Maintenance Equity
Here, the percent of the Maximum Maintenance Equity that an average aircraft will have available based on its age, assumes average annual utilization of 400 flight hours, and that all maintenance has been completed when due.
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 can use accelerated depreciation of assets by taking a greater percentage of the deductions during the first few years of the applicable recovery period.
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 any given year.
The US enacted the 2017 Tax Cuts & Jobs Act into law on December 22, 2017. Under the new Act, taxpayers may be able to deduct up to 100 percent of the cost of a new or pre-owned aircraft purchased after September 27, 2017 and placed in service before January 1, 2023.
This 100% expensing provision is a huge bonus for aircraft owners and operators. After December 31, 2022 the Act decreases the percentage available each year by 20% to depreciate qualified business jets until December 31, 2026.
TableC, D and E depict an example of using the MACRS schedule for a 2018 Cessna Citation Latitude, Citation Sovereign and Hawker 850XP, respectively. Incorporated are MACRS schedules for private (Part 91) and charter (Part 135) operations over five- and seven-year periods.
TABLE C: Cessna Citation Latitude Sample MACRS Tax Schedule
TABLE D: Cessna Citation Sovereign Sample MACRS Tax Schedule
TABLE E: Hawker 850XP Sample MACRS Tax Schedule
Asking Prices & Quantity
The current used market for the Citation Latitude aircraft shows a total of two jets ‘For Sale’, with asking prices of $13.8m and $13.9m. For the Citation Sovereign, 16 aircraft are listed for sale, seven of which display asking prices ranging between $4.995m and $9m. For the Hawker 850XP used market, there are 10 aircraft for sale with eight displaying asking prices ranging from $2.5m to $3.85m.
While each serial number is unique, the Airframe Total Time (AFTT) 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 F center 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:
- Four Passenger Range (nm) with available fuel;
- The long-range cruise speed flown to achieve that range;
- The gross 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.
CHART F: Cessna Citation Latitude vs Citation Sovereign vs Hawker 850XP Productivity Comparison
The Citation Latitude demonstrates a high level of productivity, at a higher price. In summary, the Latitude slightly edged out the Citation Sovereign and Hawker 850XP in terms of cabin volume, and it also has the lowest cost per mile and variable cost per hour.
Meanwhile, the ‘Available Payload with Maximum Fuel’ for the Hawker 850XP was much greater compared to rest of the field, while the Citation Sovereign offers greater range than either the Citation Latitude or the Hawker 850XP.
Future Residual Values
In Chart G (courtesy of Asset Insight) all three of the business jets’ current residual value is projected for the next five years. While all three business jets show declining future residual values from 2019 to 2024, the Citation Latitude is expected to decline by $5.6m (35.6%), the Citation Sovereign by $3.033m (38.2%), followed by the Hawker 850XP by $1.567 or 42.2%.
CHART G: Cessna Citation Latitude, Citation Sovereign & Hawker 850XP Residual Value Forecast
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, though.
Operators should weigh up their mission requirements precisely when picking which option is the best for them.