MAIN PHOTO - Eclipse 500
In this month’s Aircraft Comparative Analysis, Mike Chase provides information on a selection of used business jets and turboprops for the purpose of valuing the Eclipse EA500.
A new 2014 Eclipse 550 jet for sale has a list price of $2.895m, while the cost of a used Eclipse EA500 ranges between $650k (2006 year model) and $850k (2008 year model). Within this study we’ll consider productivity parameters (payload/range, speed and cabin size) and cover current and future market values.
The field in our study includes the single-engine Quest Kodiak 100 and the twin-engine King Air C90GTx turboprops. How does a VLJ business jet compare to both a single and twin-engined business turboprop as a step up into the business jet realm?
In 2002, the Eclipse 500 introduced a radically new business jet concept called the Very Light Jet (VLJ). Accommodating up to 6 seats, the original plan was for the Model 500 to use EJ22 turbofan engines from Williams, but these were found not to be “a viable solution”. Thus a pair of Pratt & Whitney Canada PW610F engines was selected to power the aircraft, necessitating a delay in the development program.
Nevertheless, in February 2006 Eclipse Aviation was named the winner of the Collier Trophy for 2005 by the National Aeronautic Association for its work with the Eclipse 500. The award was controversial because only the prototype aircraft was flying. The Model 500 was eventually FAA certified in mid-2006, and the first customer aircraft was delivered in January 2007.
During 2007 Eclipse produced 104 units and claimed a record for building its "first 100” airplanes faster than any other business jet OEM. EASA certification for private use was achieved on November 21, 2008 and then, just four days later, on November 25, Eclipse Aviation filed for Chapter 11 bankruptcy protection.
Eclipse Aerospace was confirmed as the new owner of the assets of the former Eclipse Aviation on August 20, 2009 and opened for business on September 1, 2009. The new company set out to build the Eclipse 550, and in June 2013 received FAA approval for a fatigue limit of 20,000 hours or 20,000 cycles with an unlimited calendar life. The first customer delivery of the Eclipse 550 was completed in March, 2014, and 12 EA550 units were delivered in 2014.
There are 262 wholly-owned Eclipse EA500 business jets in operation worldwide with 12 in shared-ownership and just one in fractional ownership. By continent, North America has the largest fleet percentage (87%), followed by Europe (8%), for a combined total of 95%.
Payload & Range
The data contained in Table A is sourced from Conklin & de Decker and B&CA’s May 2014 issue. A potential operator should focus on payload capability. The ‘Available Payload with Maximum Fuel’ for the Eclipse 500 is 502 lbs, which is considerably less than either the Kodiak 100 (1,220 pounds) or the King Air C90GTx (737 pounds).
Also shown in Table A is the fuel usage by each aircraft model. The Eclipse 500, which burns 68 gallons per hour (GPH), leads the King Air C90GTx (93 GPH). However, the Kodiak 100 burns 29% less fuel (at 45GPH) than the Eclipse 500, according to Aircraft Cost Calculator.
According to Conklin & de Decker, the cabin volume of the Eclipse 500 (109 cubic feet) is significantly smaller than the Kodiak 100 (248 cubic feet) and the King Air C90 GTx (218 cubic feet). The respective cabin cross-sections (Chart A) are represented, courtesy of UPCAST JETBOOK.
As depicted by Chart B, according to Aircraft Cost Calculator (ACC) the Eclipse 500 shows slightly more range coverage than the Kodiak 100. However, the King Air C90GTx has substantially more range than the other two aircraft at 880nm.
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.
Cost Per Mile
As mentioned above, the Eclipse 500 is powered by two PW610F-A engines, each offering 900 pounds of thrust (lbst). The Kodiak 100 offers less output with one Pratt & Whitney PT6A-34 engine at 750 SHP than the King Air C90GTx with two Pratt & Whitney PT6A-135A engines (550 SHP each).
Using data published in the May 2014 B&CA Planning and Purchasing Handbook and the August 2014 B&CA Operations Planning Guide we will compare our aircraft. The nationwide average Jet-A fuel cost used from the August 2014 edition was $6.18 per gallon, 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 Eclipse 500 to its competition factoring direct costs, flying a 300nm mission with an 800 pound (four passengers) payload. The Eclipse shows a cost per nautical mile of $1.93, which is considerably less than the Kodiak 100 ($2.64) and the King Air C90GTx ($3.35).
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 Eclipse 500 shows a cost at $598, which falls between the two others in this field of study. The Kodiak 100 ($436) is the lowest in the field, and the King Air C90GTx is the highest ($815).
Aircraft Comparison Table
Table B contains the used retail 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 Kodiak 100 and King Air C90GTx have less than 10 percent of their respective fleets currently ‘For Sale’. Evidently Eclipse 500s make an attractive proposition with a total of 37 units (Used) sold over the past 12 months (an average of 3.1 units monthly) compared to the Kodiak 100 with 16 units (1.3 units per month) and the King Air C90GTx with 19 units (1.6 per month).
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. Under ADS, 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 commercial 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 2008 model Eclipse 500 aircraft in private (Part 91) and charter (Part 135) operations over five and seven-year periods, assuming a used retail value of $850k (per the Vref Pricing guide).
Asking Prices Vs Range, Age & Quantity
Chart E, sourced from the Multi-dimensional Economic Evaluators Inc. (www.meevaluators.com), shows Value and Demand for the pre-owned Eclipse 500 jet and other turboprop models including the single-engine Kodiak 100 and the twin-engined King Air C90GTx.
The current pre-owned market for Eclipse 500 aircraft shows a total of 42 aircraft ‘For Sale’ with 22 displaying an asking price, thus we have plotted those 22. We also added to the mix other pre-owned turboprop aircraft with asking prices ranging from $0.750m to $5.25m. The equation that we derived from these asking prices and other criteria 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.
In essence, the market for used Eclipse 500s responds to at least four features: Years, Range, Price and Quantity.
The points in Chart F are centered on the same group of aircraft. Pricing used in the vertical axis is as published in 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.
After consideration of the Price, Range, Speed and Cabin Size, we can conclude that the Eclipse 500, as shown in the productivity index is productive compared with its Kodiak 100 competitor with which the Eclipse 500 competes head-on, offering a lower cost per mile, slightly more range, more speed and a lower purchase price.
However, the Eclipse 500 ‘Available payload with Maximum Fuel’ at 502 lbs is lowest in this field of study, and it offers considerably less cabin space compared to the two business turboprops featured. While the lower purchase price has a bearing on the aircraft’s overall strength in the pre-owned retail market, operators should weigh their mission requirements precisely when choosing the option that is best suited 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 performance that might factor in a buying decision, too, however.
The Eclipse 500 continues to be very popular in the pre-owned market today. Our expectations are that the Eclipse 500 aircraft, which started delivering in 2006 and stopped delivering new in 2008, will continue to do very well in the pre-owned market for the foreseeable future.
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