In this month’s Aircraft Comparative Analysis- we are providing information on a selection of New and Pre-Owned business turboprops in the $2.0-2.23 million range for the purpose of valuing the Piper Meridian for sale. With nearly 550 units sold- how does the Meridian measure with its competition?
We’ll consider the usual productivity parameters - payload/range- speed and cabin size- and cover current and future market values. The field in this study includes Quest’s Kodiak 100 which started delivering in 2008. The Kodiak 100 is a 10-place single-engine turboprop utility airplane- designed for Short Take-Off and Landing (STOL) use and offering float capability.
In 1997- Piper announced its intention to market a pressurized turboprop-powered version of the piston-powered Malibu- and flew a prototype the following year naming it the Meridian. The Meridian is powered by a single Pratt & Whitney Canada PT6A-42A powerplant. Certification was achieved in September 2000 and deliveries began in November.
Changes were made to the airframe to allow for turboprop power including larger wings and tail surfaces- and the Meridian has one pilot and 5 passenger seats in a pressurized cabin with the maximum flight ceiling operating level being 30-000 feet. Designed at the outset for owner-operators stepping up from single engine piston airplanes- the Meridian has built-in features that aim to minimize pilot workload and maximize flying enjoyment.
The Meridian also offers a gross weight increase modification- which is the result of adding vortex generators and re-certifying the stall speed. Since certification- Meridian upgraded the avionics panel in its airplane to keep it competitive.
In 2009- Piper began offering the Meridian with a three-screen version of the Garmin G1000 - including the Garmin GFC 700 autopilot - as a replacement for the Avidyne Entegra system. In 2012 Piper Aircraft commemorated its 75th anniversary as well as celebrated the 500th delivery of its popular Piper Meridian- and in 2013 the Meridian was the best-selling model for New and Pre-Owned deliveries combined- according to JETNET.
Payload and Range
The data contained in Table A is sourced from Conklin & de Decker and also published in the B&CA- May 2014 edition. As we have mentioned in past articles- a potential operator should focus on payload capability. The Meridian’s ‘Available payload with Maximum Fuel’ is 331 pounds. The Kodiak 100- meanwhile- has a much greater payload capability at 1-220 pounds.
However- sourced from Aircraft Cost Calculator and also represented in Table A- the Meridian burn 43 gallons of fuel per hour (GPH)- 4.4% less than the Kodiak 100 (45 GPH).
According to Conklin & de Decker- the cabin volume of the Meridian (106 cubic feet) is significantly less than the Kodiak 100 (248 cubic feet).
The Kodiak 100 is more than three feet longer and the cabin height is almost one foot taller than the Meridian. Also- the Meridian cabin width dimensions are slightly smaller than the Kodiak 100 aircraft- as shown in the Chart A cross-section that is illustrated by the UPCAST JETBOOK. The volume of the Kodiak 100’s cabin is highly attractive to owners seeking aircraft that could be used to transport cargo as well as passengers.
As mentioned- the Meridian aircraft has a single PT6A-42A offering 500 shp- with the Hartzell HC-E4N-3Q propeller. By comparison- the Kodiak 100 aircraft also operates a single Pratt & Whitney Canada engine (PT6A-34 model)- offering more output at 750 shp.
Cost Per Mile Comparisons
Using data published in the May 2014 B&CA Planning and Purchasing Handbook and the August 2013 B&CA Operations Planning Guide we will compare our aircraft. Jet A fuel cost used from our source publications was $6.08 per gallon at press time for the August 2013 edition- so for the sake of comparison we’ll chart the numbers as published.
(Note: The fuel price used from this source does not represent an average fuel price for the year.)
Chart B- which details ‘Cost per Mile’- compares the Meridian to its competition factoring direct costs and with both aircraft flying a 600nm mission with 800 pounds (four passengers) payload. The Meridian ($1.74) shows the cost per mile comparisons are considerably less expensive to operate (by 33%) per mile than the Kodiak 100 at $2.61 per mile.
Total Variable Cost Comparisons
The ‘Total Variable Cost’- illustrated in Chart C- is defined as the cost of Fuel Expense- Maintenance Labor Expense- Scheduled Parts Expense and Miscellaneous trip expense. The total variable cost for the Meridian at $428 per hour is slightly less expensive to operate compared to the Kodiak 100 at $431 per hour.
Table B shows the relative retail prices from Vref for each aircraft. The number of aircraft in-operation- the percentage “For Sale”- and the average monthly number “Sold” over the past 12 months are from JETNET.
As shown- the Meridian averages 15 aircraft sales per month over the past 12 months. Chart D- sourced from the Multi-dimensional Economic Evaluators (MEE) Inc.- (www.meevaluators.com)- presents a Value and Demand chart for the Meridian and Kodiak 100 Turboprop aircraft. The current pre-owned market for these turboprop aircraft shows 46 aircraft ‘For Sale’. Twenty seven of the 46 have an asking price with 19 inviting offers. Thus- we have plotted the 27 with asking prices.
Demand and Value are on opposite sides of the same Price axis. The market treats the Kodiak and Meridian in much the same way. The Value Equation states that each vehicle loses $86-200 for every year since it was built (with a standard error of $71-300). The two equations have an adjusted ‘Value Space’ R^2 of 87.1% and an adjusted ‘Demand Plane’ R^2 of 96%- meaning that it is an excellent predictor of value and demand.
Location by Continent
The major based-at locations for the Meridian- per information compiled by JETNET in its STAR reporting system- are in the United States (77%)- Europe (15%) and South America (5%) – an aggregate of 97% of the fleet.
Depreciation Schedule for Business Aircraft
Aircraft that are used in a trade- business- or for the production of income that are primarily operated domestically- and not used in common or contract carriage may be depreciated over a five-year Modified Accelerated Cost Recovery System (MACRS) schedule. Aircraft used in common or contract carriage (e.g.- Part 135) are depreciable under seven-year MACRS. See Table C.
Table D depicts an example of using the MACRS schedule for a 2014 Piper Meridian in private (Part 91) and charter (Part 135) operations over five and seven-year periods assuming a Vref retail value of $2.2 million.
Chart E shows the circle ranges from Kansas- USA- for the business jets in this field of study- as sourced from Aircraft Cost Calculator. The Kodiak 100 shows slightly more range coverage than the Meridian.
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 200 nautical mile alternate (100 nm for turboprops). The lines depicted do not include winds aloft or any other weather-related obstacles.
The points in Chart F center 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.
The result is a very large number so for the purpose of charting- each result is divided by one billion. The examples plotted are confined to the aircraft in this study. A computed curve fit on this plot would not be very tight- but when all business turboprops are considered the “r” squared factor would equal a number above 0.9. 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 Meridian as shown in the productivity index Chart D is productive compared to the Kodiak 100. In a direct comparison to the Kodiak 100 model- although the Meridian has considerably smaller cabin volume and available payload with maximum fuel- it costs about one-third less to operate per mile and has a slightly smaller variable cost per hour- while offering much greater speed (262 ktas vs. 154 ktas).
The Meridian offers less range but comes at a higher retail price ($223k more- according to Vref). As is so often the case- an operator needs to evaluate the factors they most value in an airplane – and these two turboprops excel in different areas.
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- that are beyond the scope of this article.
The Meridian aircraft fares well against its competition- so those operators in the market should find the preceding comparison of value. Our expectations are that the Meridian aircraft will continue to do very well in the pre-owned market.