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 Post subject: Re: Citation Jet vs. CJ1
PostPosted: 31 Mar 2021, 14:11 
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Engine time is NOT FREE. I always hear people compare the cost of being on a program to zero. That is not the correct way to look at it. You are either sending the money to Williams or saving it for an engine event or it will be subtracted from the value of the aircraft when you sell it. Obviously part of the money is "insurance" because the cost of the program exceeds what the engine events cost, but that does have value. Most operators do not want the exposure of a six figure unscheduled engine event.

When you look at airplanes that are not typically on engine programs, the value of the airplane is based on the engine time remaining. It is true that you can buy an airplane with very low engine times and cheat the system a little... but other than that you still have to pay something for every hour you fly.

This is true of all airplanes. Piston engines need some kind of accounting for engine reserves as well, whether it's via putting money in the bank or just accepting the hit on valuation when/if you sell.

The big difference is the massive reduction in flexibility that the engine manufacturers impose, and the fact that there is inevitably a fair amount of overhead to all this administration/insurance. The flexibility is reduced because of the minimum hours per year required. If I only fly 100 hours in a year, I shouldn't really be required to pay for 150 hours. That's not simply insurance or value protection, it's simply extortion. My aircraft does not gain the extra 50 hours in value, it's just vig.

The overhead is real, too, but it's hidden by the parts pricing. Since you can't source parts anywhere else, the mfr is free to put any ridiculous price on the retail parts and then "include" them at a "reduced" price with the engine program. Again, really that's not helping the owner manage a cost stream, it's just pre-paying for fairly expensive parts that in a competitive environment might be found cheaper.

So... I think the cash flow management aspects of the programs may have some value for some operators who wouldn't be able to manage a huge unexpected event. But... please don't tell me that the OEM is doing me a favor by enhancing the value of my airplane. That's like telling me the mob is doing me a favor when they shake me down in a protection racket - it's only true because they'd be the ones I need to fear otherwise.

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 Post subject: Re: Citation Jet vs. CJ1
PostPosted: 31 Mar 2021, 16:56 
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The good thing, maybe the best thing about having a Williams powered airplane on TAP is that the value of the airplane is protected.

Not really. FJ44 equipped airplanes have been losing value just like any other. Lots of them are under $1M now.

The Williams program doesn't sting so much for someone buying a $10M CJ4, but if you get a $800K CJ, it is a huge percentage of your total cost of ownership. The Williams program price is about the same for both.

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You are paying in every hour, but that money is not lost...

It can be lost in many ways.

If you fly less than 150 hours in a year, you have to pay the difference for hours you aren't using.

Stop paying for 3 months for any sort of snag, your program is terminated and all the money paid in is lost.

The airplane is in a loss event (hangar fire, stolen, etc), then you get no value for the money you paid in. Yes, you can have insurance, but now you have to pay for a hull value high enough to recover the engine payment costs, so you "paid" for that in other ways.

Someday, the plane will be retired from the fleet. On that day, any payments to Williams for future engine work are lost. Williams will, on average, be paid half a TBO cycle and never have to deliver on that promise.

Williams can change the terms of the contract when you renew. For example, they could say any engine core over 25 years old pays double the rate. They can completely say that if they wish. Now do you pay double or quit? So you are always suffering a risk that Williams can use their unilateral power to either force you off program so they don't have liability for your engine, or to get more money from you.

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Engine time is NOT FREE. I always hear people compare the cost of being on a program to zero. That is not the correct way to look at it. You are either sending the money to Williams or saving it for an engine event or it will be subtracted from the value of the aircraft when you sell it.

While this is true in general, the economics of an FJ44 on a $1M or less airframe just don't pan out. You will spend $1.6M over an overhaul cycle on the program. For half that or less, you can overhaul a pair of JT15D engines.

A lot of the jets are entering the "disposable" phase. They are going to fly out their remaining engine times and then have little to no market value. This is true even for FJ44 equipped ones at some point, and certainly true for the ones off program.

Mike C.

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 Post subject: Re: Citation Jet vs. CJ1
PostPosted: 31 Mar 2021, 20:42 
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Does anybody have any numbers for the GE/Honda engine? Can you be on a program there?


Just to be clear, in case my earlier post was not clear, AFAIK the only airplane available with those engines on it is the HondaJet. There is no aftermarket solution or STC, to my knowledge, to install an HF120 on any airplane other than the HondaJet. I'm sure someone will point me to something if I am incorrect. Sierra and GE/Honda looked at it, but abandoned that project some years ago, as I noted above.

Also, with respect to current CJ listings on Controller, the cheapest listing (with an asking price) for a CJ on programs is $949,000, none of which have the winglets. In fact, only one of the 23 aircraft on Controller is shown as having the winglets (asking price unspecified). The Swiss listing referenced above (i) is not on Controller, and (ii) the listing was last updated in November 2020 ... as my "buyer's rep" tells me, asking prices in this market have increased since that time by some measurable amount. I have some suspicion that it's no longer an active listing, but of course I could be wrong.

All very interesting stuff!


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 Post subject: Re: Citation Jet vs. CJ1
PostPosted: 31 Mar 2021, 20:55 
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The CJ series will enter the disposable phase soon unless they are on TAP, or a reasonable and sensible alternative presents itself. The CJ2's and higher have really remained strong, with the CJ2's holding the $2M+ mark for years.

It's unfortunate the stranglehold Williams has, and I wish someone would have the power to change that but in nearly 30 years since the first CJ I don't see that happening.

The experience I've had enrolling with Williams and entering the monthly data has been outstanding. Great customer service and easy to do. The engines have been ultra reliable and a joy to fly with.

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 Post subject: Re: Citation Jet vs. CJ1
PostPosted: 31 Mar 2021, 20:56 
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Username Protected wrote:

The airplane is in a loss event (hangar fire, stolen, etc), then you get no value for the money you paid in. Yes, you can have insurance, but now you have to pay for a hull value high enough to recover the engine payment costs, so you "paid" for that in other ways.


Not entirely true. I know someone whose CJ3 was lost in a hangar fire. They bought a replacement CJ3 with the insurance money and Williams agreed to transfer most or all of the TAP balance on the lost engines to their new aircraft engines.

From what I have seen Williams has been more reasonable in dealing with exceptional issues then the contract language might say. Now Williams will not acknowledge beforehand what they might do but talking with owners who have dealt with Williams they usually come away with a reasonable business solution.

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 Post subject: Re: Citation Jet vs. CJ1
PostPosted: 31 Mar 2021, 23:18 
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I know someone whose CJ3 was lost in a hangar fire. They bought a replacement CJ3 with the insurance money and Williams agreed to transfer most or all of the TAP balance on the lost engines to their new aircraft engines.

I don't know what you mean by "TAP balance". There is no such thing as far as I can tell. When you send money to Williams, it disappears, and there is no account or accumulation of that money in anything resembling a balance.

If the CJ3 was already paid up on TAP, then Williams didn't do anything extraordinary when this event happened, any new owner can keep paying the TAP bills and keep the engines in program.

If the CJ3 was off program, and Williams did NOT ask for all the back hours to be paid, then that's an extraordinary move. Given it was a CJ3, I suspect the engines were dutifully on program at time of sale.

So I am somewhat confused as to what generosity Williams showed in this case over any normal aircraft acquisition.

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From what I have seen Williams has been more reasonable in dealing with exceptional issues then the contract language might say. Now Williams will not acknowledge beforehand what they might do but talking with owners who have dealt with Williams they usually come away with a reasonable business solution.

Williams has a great reputation for supporting its customers.

That does not, however, change the basic fact they have unilateral power over you. It can be pleasant to live in a benevolent dictatorship, but the problem occurs when the dictator changes.

Mike C.

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 Post subject: Re: Citation Jet vs. CJ1
PostPosted: 01 Apr 2021, 03:14 
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:liar:
Username Protected wrote:

The airplane is in a loss event (hangar fire, stolen, etc), then you get no value for the money you paid in. Yes, you can have insurance, but now you have to pay for a hull value high enough to recover the engine payment costs, so you "paid" for that in other ways.


Not entirely true. I know someone whose CJ3 was lost in a hangar fire. They bought a replacement CJ3 with the insurance money and Williams agreed to transfer most or all of the TAP balance on the lost engines to their new aircraft engines.

From what I have seen Williams has been more reasonable in dealing with exceptional issues then the contract language might say. Now Williams will not acknowledge beforehand what they might do but talking with owners who have dealt with Williams they usually come away with a reasonable business solution.


They did the same thing with a Mustang lost in the tornado here at Tune.
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 Post subject: Re: Citation Jet vs. CJ1
PostPosted: 01 Apr 2021, 03:16 
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Username Protected wrote:
The CJ series will enter the disposable phase soon unless they are on TAP, or a reasonable and sensible alternative presents itself. The CJ2's and higher have really remained strong, with the CJ2's holding the $2M+ mark for years.

It's unfortunate the stranglehold Williams has, and I wish someone would have the power to change that but in nearly 30 years since the first CJ I don't see that happening.

The experience I've had enrolling with Williams and entering the monthly data has been outstanding. Great customer service and easy to do. The engines have been ultra reliable and a joy to fly with.

Very true! And even the old CJ’s still hold close to $1M after all of these years. Of course they depreciate... they’re getting old.

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 Post subject: Re: Citation Jet vs. CJ1
PostPosted: 01 Apr 2021, 05:55 
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They did the same thing with a Mustang lost in the tornado here at Tune.


Wow. Willams is starting to give credit to people with Pratt engines. They really are benevolent! :-)


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 Post subject: Re: Citation Jet vs. CJ1
PostPosted: 01 Apr 2021, 16:42 
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Cessna pops up every so often in crosswords but I've never seen it clued this way. I guess they're finally recognized as a legit jet builder.


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 Post subject: Re: Citation Jet vs. CJ1
PostPosted: 01 Apr 2021, 16:57 
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Cessna pops up every so often in crosswords but I've never seen it clued this way. I guess they're finally recognized as a legit jet builder.

I wonder how many people thought "cashbars" was the correct answer...

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 Post subject: Re: Citation Jet vs. CJ1
PostPosted: 02 Apr 2021, 11:27 
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Username Protected wrote:

They did the same thing with a Mustang lost in the tornado here at Tune.


Wow. Willams is starting to give credit to people with Pratt engines. They really are benevolent! :-)


Ahhh sorry, should have said Power Advantage.
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 Post subject: Re: Citation Jet vs. CJ1
PostPosted: 02 Apr 2021, 11:33 
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Mike,

First of all, thank you for your continued contribution to Beechtalk, we missed you when you went silent!

We get it. You don't like engine programs or the companies that provide them.

The great thing is there's a lot of options out there and many good and capable jets that aren't typically on engine programs.

I give honor where honor is due, Williams built a better mousetrap, their engine burns less fuel and they found a way to grab that money that otherwise would have been turned into hot air.

:clap:

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