AvBuyer Magazine - July 2018

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 C(left) depicts an example of using the MACRS schedule for a

2003 Learjet 60 business jet aircraft in private (Part 91) and charter (Part

135) operations over five and seven-year periods, assuming a list price

for a 2003 model Learjet 60 at $2.15m (per Vref Pricing Guide). Table D

(left) depicts an example of using the MACRS schedule for a 2013

Learjet 60XR, assuming a list price of $4.8m.

Asking Prices & Quantity

The current used market for the Learjet 60 shows a total of 38 aircraft

‘For Sale’ with 15 displaying asking prices that range from $1.395m to

$2.95m. There are a total 13 Learjet 60XRs ‘For Sale’, displaying asking

prices ranging between $3.25m and $4.55m. Two Gulfstream G100s

currently are showing ‘For Sale’ with one displaying an ask price of

$2m.

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.

Productivity Comparisons

The points in Chart F (above) 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:

1. Four/Eight Passenger Range (nm) with available fuel;


2. The long-range cruise speed flown to achieve that range;


3. 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 Learjet 60 and Learjet 60XR display a high level

of productivity. The Learjet models offers a much larger cabin volume,

but less range and speed compared to the Gulfstream G100. (The

production run of the Gulfstream G100 was limited before Gulfstream

presented the G150 model with a larger cabin volume.)

Also, the Learjet 60 and Learjet 60XR have a higher ‘Available

Payload with Maximum Fuel’ offering, while the Learjet 60XR has

considerably lower variable cost per hour, but higher purchase price.

Each aircraft has its pros and cons, and operators should weigh up their

mission requirements precisely when picking which option is the best

for them.

Summary

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 Learjet 60 and Learjet 60XR continue to be popular today.

Those operators in the market should find the preceding comparison

useful. We expect both models to continue to do well in the used

markets for the foreseeable future.

Of course, if your aircraft is not outfitted with ADS-B Out, it cannot

be placed in useful operation after December 31, 2019. 

Index

(Speed x Range x Cabin Volume / 1,000,000,000)

0.0000

Price (Millions)

$0.0

0.4000

Gulfstream G100 ‘05

Learjet 60XR ‘13

0.8000

$2.0

0.2000 0.6000

$4.0

$6.0

Learjet 60 ‘03

L

Chart F - Productivity Comparison

Mike Chase’s analytical and consultancy services are

highly valued within the Business Aviation industry. He

is founder and president of Chase & Associates, and

works closely with several respected sources to compile

his unique Aircraft Comparative Analysis feature.

Contact Mike via [email protected]

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