In this month’s Jets Comparison, Mike Chase provides information on a pair of Mid-size business jets, asking what are the value points of a used Hawker 850XP compared with a new Cessna Citation Latitude?
Over the following paragraphs, we will consider the productivity parameters (payload/range, speed and cabin size) and cover current market values for the Hawker 850XP
(manufactured between 2006 and 2009) and Cessna Citation Latitude
(manufactured between 2015 and present).
Certified in 2006, the Hawker 850XP’s greatest feature is the addition of winglets, distinguishing it from the preceding Hawker 800XP. This slight modification improved overall performance of the aircraft by making it more aerodynamic.
Consequently, the Hawker 850XP climbs to 39,000 feet two minutes faster than its predecessor and can travel almost 100nm further (with four passengers). The winglets also increase the aircraft’s basic inspection interval from 300 to 600 hours.
Production of the Hawker 850XP ended after a short three-year production run when Hawker Beechcraft was sold to Textron.
Though its production run was relatively short, the total number of manufactured Hawker 850XP aircraft is 100, with 99 still in operation globally. Of those, 97 are wholly-owned with two in shared ownership.
Of the Hawker 850XP aircraft in-operation by continent, North America is home to the largest fleet percentage (65%), followed by Asia (15%) and Europe (11%) for a combined total of 91%. Just 8% of the Hawker 850XPs in operation today are in fleet ownership, and 12% of the Hawker 850XP fleet is leased.
As of May 2018, the Hawker 850XP market is comprised of 26% aircraft remaining with the same owner since new, versus 74% bought as used. The current percentage ‘For Sale’ on the used market is 13.1% of the fleet, with an average time of 291 days on the market.
Of the 99 Hawker 850XP business jets in operation, 57% of the fleet have ADS-B Out installed, leaving 43% of the fleet yet to comply. The FAA has mandated that all US-operated business jets must comply by January 1, 2020.
Payload & Range
As mentioned in past articles, a potential operator should focus on payload capability as a key factor. Table A shows the Hawker 850XP ‘Available Payload with Maximum Fuel’ at 1,790lbs is significantly greater than that offered by the Citation Latitude (1,000lbs).
TABLE A: Hawker 850XP versus Citation Latitude Payload Comparisons
Cabin Cross-Section Views
Chart A shows a cabin cross-section comparison. The Hawker 850XP (6ft) offers less width than the Citation Latitude (6.42ft). The height of the Hawker 850XP (5.75ft) is also less than the Citation Latitude (6ft). Note, too, that the Citation Latitude offers the advantage of a flat floor cabin design. Nevertheless, the Hawker 850XP cabin length is marginally longer (21.3ft) compared to the Citation Latitude (21.08ft).
CHART A: Hawker 850XP vs Citation Latitude Cabin Comparison
Overall, the Hawker 850XP has a smaller cabin volume (551cu.ft.) compared to the Citation Latitude (587cu.ft.), or 6.5% less overall volume.
The typical seating configuration for the Citation Latitude offers one more passenger seat (nine seats and two crew members), compared to the Hawker 850XP (eight seats and two crew members).
According to Conklin & de Decker, the Hawker 850XP has 50cu.ft. of internal, but no external baggage space. The Citation Latitude has 27cu.ft. of internal baggage space and 100cu.ft. external baggage space.
As depicted by Chart B using Wichita, Kansas as the origin point, the Citation Latitude (2,870nm) shows more range coverage than the Hawker 850XP (2,710nm). Each business jet’s range covers all of the US, Canada, Mexico and Central America, however.
CHART B: Hawker 850XP vs Citation Latitude Range Comparison
Note: For business jets, ‘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.
The Hawker 850XP is powered by two Honeywell TFE731-5BR engines, each offering 4,750lbst. The Citation Latitude, meanwhile, offers a pair of Pratt & Whitney Canada PW306D engines with 5,902lbst each.
Total Variable Cost
The ‘Total Variable Cost’ illustrated in Chart C, sourced from Conklin & de Decker, is defined as the Cost of Fuel Expense, Maintenance Labor Expense, Scheduled Parts Expense and Miscellaneous Trip Expense. The Total Variable Cost for the Hawker 850XP computes at $2,811 per hour, which is more expensive by 10.4% than the Citation Latitude ($2,546/hr).
CHART C: Hawker 850XP vs Cessna Citation Latitude Variable Cost Comparison
Aircraft Comparison Table
TABLE B: Hawker 850XP versus Cessna Citation Latitude Comparison Table
The Hawker 850XP has 13.1% of its fleet ‘For Sale’ as of the end of May 2018, whereas the Citation Latitude has 3.1% of its fleet ‘For Sale’. The average number of new/used transactions per month shows two for the Hawker 850XP and five for the Citation Latitude over the past 12 months.
Maximum Scheduled Maintenance Equity
Chart D displays the Hawker 850XP and depicts/projects the Maximum Maintenance Equity available, based on the aircraft’s age.
- The Maximum Maintenance Equity figure was achieved the day the aircraft came off the production line since it had not accumulated any utilization toward any maintenance events.
- The percent of the Maximum Maintenance Equity that an average Hawker 850XP will have available, based on its age, assumes:
- Average annual utilization of 300 flight hours
- All maintenance is completed when due.
CHART D: Hawker 850XP Maximum Scheduled Maintenance Equity
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).
TABLE C: Part 91 and Part 135 MACRS Schedule
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.
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% of the cost of a new or used 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.
Table D depicts an example of using the MACRS schedule for a 2009-model Hawker 850XP business jet in private (Part 91) and charter (Part 135) operations over five- and seven-year periods, assuming a list price at $3.6m (per Vref).
TABLE D: MACRS Depreciation Sample For 2009 Model Hawker 850XP
Asking Prices & Quantity
The current used market for the Hawker 850XP shows a total of 13 aircraft ‘For Sale’, with six displaying asking prices ranging between $2.595m to $4.9m. There are also four Citation Latitudes ‘For Sale’, none of which display an asking price.
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.
Interior Photo of a Hawker 850XP Private Jet
The points in Chart E 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:
- Four/Eight 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. After consideration of the Price, Range, Speed and Cabin Size, we can conclude that the Hawker 850XP displays a high level of productivity.
CHART E: Productivity Comparison
The Hawker 850XP business jet offers greater speed compared to the Citation Latitude and much greater ‘Available Payload with Maximum Fuel’ numbers. However, the Citation Latitude has considerably lower variable cost per hour, slightly more range, and greater cabin (and baggage) volume with a flat floor cabin. Nevertheless, there is a substantial price difference between the two aircraft.
Operators should weigh up 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 Hawker 850XP
continues to be popular today. Those operators in the market should find the preceding comparison useful. Our expectations are that Hawker 850XP will continue to do well in the used market for the foreseeable future. Of course, if an aircraft is not outfitted with ADS-B Out after December 31, 2019, it cannot be placed in operation.