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Pre-owned Market Spotlight: Citation Sovereign/Sovereign+ – Asian Sky Quarterly 2021 Q3

Pre-owned Market Spotlight: Citation Sovereign/Sovereign+ – Asian Sky Quarterly 2021 Q3

Model Introduction

As a mid-sized jet, the Citation Sovereign borrows from its several successful Citations predecessors. Using the same fuselage cross section from Citation XLS and Citation X, but with a brand-new wing, the Sovereign was designed to carry more passengers than its smaller siblings (Ideally 5-7 passengers). Over the years it has established its own characters in cabin comfort, maintenance reliability, and needless to say – its remarkable short field capabilities.

Introduced during the 1998 NBAA, the Sovereign spent six years in development before the first aircraft was finally handed over to the first customer in 2004. At its time of service entry, the Sovereign had a price tag of $14 million, roughly on par with its competitors of the time – the Hawker 850XP (and later the Hawker 900XP) and the Gulfstream G150.

 The PW306 engines installed on Sovereign offer 6,000 hours TBO (Time Between Overhaul), which is 1,000 hours longer than its main competitor, the Honeywell TFE731.

The avionics platform on the Sovereign – the Primus Epic suite is the same that Gulfstream used on its G450/G550.

One option for the Citation Sovereign does stand out. Transitional winglets were certified in 2017, offering an additional 300 nautical mile range at a price of 400,000 USD for modification.

In 2012, with 349 Sovereigns in service, Cessna announced an upgraded Sovereign called the Sovereign+, with uprated PW306D engines and a longer wingspan with what Cessna calls “Swooplets” as opposed to traditional Winglets. A higher maximum fuel capacity helps boost the range of the Sovereign+ to almost 3,000nm, and the cockpit was modernized with the Garmin G5000 touch-screen avionics platform.

From a market perspective – Cessna Citation Sovereign has always been a great product for continental flyers. It can fly for seven hours non-stop, with its 3,000nm range being enough to cover most domestic city pairs in the US.

Aircraft Deliveries

Much like with the rest of the Citation line of business jets, the US market has always been strong for Citation sales. Overall, 71% (318 aircraft) of all Sovereigns and Sovereign+ aircraft globally were delivered to customers in the US.

According to Amstat, NetJets is one of the largest operators of the Citation Sovereign, with 38 aircraft currently in its fleet.

The Sovereign has not been as successful in Asia-Pacific, partly due to regional preferences for larger cabin aircraft, but also because the Sovereign’s range means it would be difficult to fly international routes in the region.

Fleet Age Distribution

Regional Distribution

Operating Cost

According to Conklin & de Decker, for 500 hours flight time per year, the Citation Sovereign’s hourly variable cost is around $4,500 USD per flight hour. For the Sovereign+, it’s slightly less at around $4,400 USD per flight hour.

Taking market depreciation into account, the annual fixed cost for the Citation Sovereign is around $3.5M USD and due to a higher slope of depreciation rate for newer aircraft, for the Sovereign+ model it is $4.3M USD per year.

Hourly Variable Cost

Total Annual Cost with Market Depreciation

Pre-owned Market

For the past five years the Sovereign market has been very active for both the baseline version, as well as the Sovereign+. Inventory levels have varied  from a high of over 30 fleet for sale, to a current low of just over 10 aircraft for sale – vs. over 440 total fleet in operation currently. On average there have been around three Sovereign transactions completed each month, with demand being stable and high.

Another way of putting its market condition is that due to a high market demand, its supply varies from a high of 9.1% of the total fleet, to a current new low of just over 3%. Looking at the inventory value chart, you could notice that the inventory value has been quickly consumed since Q3 2020, similar to the market for the Gulfstream G550.

Due to natural aging and depreciation, the average asking prices for Sovereign’s has varied from $8 million USD in Q3 2016, to lower than $6 million today. As we entered into a sellers’ market we’ve seen newly listed Sovereign being labeled with relatively higher pricing, which caused the asking price to be slightly increased.

For the Sovereign+ model, due to fewer aircraft being put on market for sale (on average four listings per month, with a high of ten aircraft) and fewer asking price points available, its market has not been as active as its older model, and we’ve seen less transactions completed per month.

Challenger 650

Challenger 650: Fleet for Sale Vs. Sold

Currently, there are only four Challenger 650 listings – around 3.5% of the total fleet (over 110). The newer model in the series enjoys relatively lower days on the market to find a deal – around 100 days.

Aircraft values are affected by airframe hours, whether the aircraft is enrolled on a maintenance program, and whether the aircraft has the latest technology onboard, like High-Speed Internet, etc. The average asking price was around 18 million USD in late 2018 when the first Challenger 650 was put on the market. Today the average asking is around 16.5 million USD.

On average there has been one Challenger 650 transaction completed every two months. For the past six months, we have seen three Challenger 650s, with or without engine programs, being sold.

*Special Thanks to Market Insight Support from Guardian Jet.