In this month’s jets comparison, Mike Chase provides information on the remanufactured Nextant 400XTi and Cessna Citation CJ4 Light Jet. Has Nextant really breathed new life into an older jet? Find out below...
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In this month’s jets comparison, Mike Chase provides information on the remanufactured Nextant 400XTi and Cessna Citation CJ4 Light Jet…
Over the following paragraphs we’ll consider key productivity parameters (including payload, range, speed and cabin size) and current market values for the Nextant 400XTi and Citation CJ4.
Which is the better option for a buyer to take – remanufactured or new? This is one of the questions that we will consider...
About the Competitors
In October 2011 Nextant Aerospace received FAA certification for the 400XT – a remanufacturing program for the Beechjet 400A and Hawker 400XP that offered significant improvements in performance, range and fuel efficiency over the original models.
The Nextant 400XTi was subsequently introduced by Nextant and is an upgraded version of the original 400XT featuring a new cabin design, new acoustic insulation, raked winglets and auto throttle capability.
Meanwhile, the Cessna Citation CJ4 is the largest, longest-range CJ family member, adding an additional two feet on the CJ3 cabin. Introduced back in 2006, and in production since 2010, the CJ4 introduced a different wing design than earlier models in its family, adopting the moderately swept wing design of the Citation Sovereign.
As of this writing, there are 34 Nextant 400XTi jets in operation, 27 of which are wholly-owned. One is in shared ownership and six are in fractional ownership programs. There are an additional 28 Nextant 400XTs in operation.
In December 2018, North America had the largest Nextant 400XTi fleet percentage (68%), followed by Europe (29%). Together, they accounted for a combined 97% of the total fleet.
By comparison, there are 285 Citation CJ4 jets in operation. A vast percentage of those (275) are wholly-owned, while ten are in shared ownership (none are fractionally owned).
North America was home to the largest Citation CJ4 fleet percentage (80%), as of December 2018, followed by Europe (13%), accounting for a combined 93% of the total fleet.
Payload & Range Comparison
As we have established previously, a potential operator should focus on payload capability as a key factor in selecting the right aircraft for their need.
Table A shows the Nextant 400XTi ‘Available Payload with Maximum Fuel’ is 638lbs, which is substantially less than the 1,122lbs offered by Cessna’s Citation CJ4.
Table A: Nextant 400XTi vs Cessna Citation CJ4 Payload & Range Comparison
Cabin Cross-Section Comparison
Chart A shows a cabin cross-section comparison with the Nextant 400XTi offering the same 4.75ft height as the Citation CJ4 but slightly greater width at 4.92ft vs 4.83ft. Also depicted by our UPCAST JETBOOK graphic, the Nextant 400XTi offers a flat cabin floor.
According to Conklin & de Decker’s data, although the Nextant 400XTi has a shorter cabin length (15.5ft) than the Citation CJ4 (17.3ft), the 400XTi offers a slightly larger overall cabin volume at 305cu.ft compared to the Citation CJ4 (293cu.ft).
The Citation CJ4 does offer greater overall baggage volume with 6cu.ft of internal, and 71cu.ft external baggage space, versus the Nextant 400XTi which has 31cu.ft internal, and 25cu.ft external baggage space.
As depicted in Chart B using Cleveland, Ohio as the origin point, the Nextant 400XTi (1,801nm) shows slightly less range coverage than the Citation CJ4 (1,927nm).
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.
Chart B: Nextant 400XTi vs Cessna Citation CJ4 Range Comparison
The Nextant 400XTi is powered by a pair of Williams FJ44-3AP engines, each offering 3,052lbst. The Citation CJ4 also offers a pair of Williams FJ44-4A engines with 3,621lbst each. The Time Between Overhauls (TBO) for the Nextant 400XTi and Citation CJ4 is 5,000 hours.
Cost Per Mile Comparison
Chart C details ‘Cost per Mile’ for our comparative jets (per JETNET data), 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 February 2019 was $4.94 per gallon.
The Nextant 400XTi shows a lower cost per nautical mile at $4.34, compared to $4.92 for the Citation CJ4. That’s a difference of 11.8% in favor of the Nextant 400XTi.
Chart C: Nextant 400XTi vs Cessna Citation CJ4 Cost Per Mile Comparison
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 (hangar, crew and catering).
The Total Variable Cost for the Nextant 400XTi computes at $1,580/hour compared to the Citation CJ4 at $1,814/hour, difference of $234 (or 12.9%) in favor of the Nextant 400XTi.
Table B contains the 2014 used prices (per Vref) for the Nextant 400XTi and Citation CJ4, while the long-range cruise speed, ranges, number of aircraft in-operation, percentage ‘For Sale’ and average sold are as reported by JETNET.
The Nextant 400XTi fleet had 11.8% of its fleet for sale as of the end of December 2018, while the Citation CJ4 had 2.9% for sale. The average number of new and used transactions (sold) per month is less than one for the Nextant 400XTi and five for the Citation CJ4 over the past 12 months.
Table B: Nextant 400XTi vs Cessna Citation CJ4 Comparison Table
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 (see Table C).
Table C: MACRS Schedule for Part 91 and Part 135 Operators
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.
Table D and Table E depict examples of using the MACRS schedule for a 2014 Nextant 400XTi and Cessna Citation CJ4, respectively, that are in private (Part 91) and charter (Part 135) operations over five- and seven-year periods.
The current used market for the Nextant 400XTi aircraft shows a total of four jets ‘For Sale’, with none stipulating an asking price. For the Citation CJ4, a total of six aircraft are listed for sale, two of which display asking prices ranging from $5.950m to 5.995m.
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 E are centered on the same aircraft. Pricing used in the vertical axis is as published in the Vref Pricing Guide (2014 models). 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 E: Nextant 400XTi vs Cessna Citation CJ4 Productivity Table
The Nextant 400XTi demonstrates a higher level of productivity (though a 2014 model is priced $3m lower than a 2014 model Citation CJ4).
The Nextant 400XTi slightly edged out the Citation CJ4 in terms of cabin volume. However, it has the lowest cost per mile and variable cost per hour. Meanwhile the ‘Available Payload with Maximum Fuel’ is nearly double for the Citation CJ4 compared to the Nextant 400XTi, and the Citation CJ4 offers greater range than the Nextant 400XTi (which is quicker).
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.
Operators should weigh up their mission requirements precisely when picking which option is the best for them.
It is important to note that to date only 62 Nextant aircraft (34 Nextant 400XTis and 28 Nextant 400XTs) have been remanufactured. Currently there are 285 Beechjet 400A and 220 Hawker 400XP jets in operation that have not been remanufactured. So only 11% of that possible fleet have had their lives extended.
This is a low percentage when one considers that a remanufactured Nextant 400XTi adds to the aircraft’s value in the resale market and, as shown in this report, provides an operator with a jet that competes very well with a Citation CJ4.
As equipment mandates impact the aging fleet of Beechjets/Hawkers, it will be interesting to see what proportion of operators favor scrapping their jet versus those who may seek to give their older jet new life through remanufacture.