““CEOs go to their vacation homes just after companies report favorable news, and CEOs return to headquarters right before subsequent news is released. More good news is released when CEOs are back at work, and CEOs appear not to leave headquarters at all if a firm has adverse news to disclose. When CEOs are away from the office, stock prices behave quietly with sharply lower volatility. Volatility increases immediately when CEOs return to work.” —David Yermack, a New York University finance professor, whose recently released study shows a correlation between when CEOs take their private jets on vacation and movements in their companies’ stock price ”
Used Jet Review: Gulfstream III
Hush kits quiet the critics, while other upgrades add the latest bells and whistles.
In this age of $7-a-gallon Jet A fuel, what would you call someone who buys a 12-passenger airplane that burns more than 550 gallons an hour? Crazy? Masochistic? How about...smart?
That’s what Vann White calls the owners of the Gulfstream IIIs managed by his company, Nonstop Aviation, in Boca Raton, Florida.
Gulfstream made 202 GIIIs between 1979 and 1987. A descendant of the legendary GII, the GIII features the same virtually indestructible, loud and fuel-thirsty Rolls-Royce Spey turbofans bolted on the back. Fill up the seats (12 to 19, depending on cabin configuration) and you can fly more than 3,000 nautical miles at 45,000 feet at speeds up to 500 knots. Depending on load and conditions, the GIII can generally use 5,000-foot runways and it climbs at a brisk 3,800 feet per minute.
The 1950s-designed Spey was one of the first turbofans to enter wide military and civilian service. It proved more economical than the “straight pipe” turbojet engines of the day and, at 11,400 pounds of thrust each, the engines give the 69,700-pound GIII plenty of reserve power, even at high altitudes. The two Speys drink an average of 556 gallons per hour, or about 20 to 25 percent more than the engines on a 1990s-vintage GIV. Reflecting the durability of their airliner heritage, the Speys have a time-between-overhaul (TBO) limit of 8,000 hours.
(A business jet’s fanjet engine typically has a TBO of 3,500 to 5,000 hours.)
The GII and the GIII appear similar until you look closely. The GIII weighs 69,700 pounds, 7,700 more than its predecessor. It has a more aerodynamic windshield and radome, a two-foot-longer fuselage, a six-foot-longer wingspan and a tweaked wing design that reduces high-speed drag. Factory-installed winglets—decidedly new technology in 1979 but now commonplace—reduce drag and increase fuel efficiency.
The GIII shares the rugged construction of the GII. That is to say, it is overbuilt. The GII was designed by Grumman, the company that made carrier-based naval aircraft, including the F-14 Tomcat. (In 1978, Grumman sold its Gulfstream division, which subsequently passed through three civilian owners. General Dynamics, another defense contractor, owns it today.) A lot of this carrier-based durability made its way into the GII and later the GIII.
One of Nonstop Aviation’s GIII owners bought his 9,500-hour aircraft out of a bank repossession after it had been idle for almost 30 months. Even after repeating many of the required maintenance inspections just to be extra cautious, the company found few problems—unusual for an aircraft sitting fallow for so long. Nonstop stripped the airplane down to bare metal and looked at everything, including the inside of the fuel tanks. “This tells you how well it was built, considering this is a 30-year-old airplane,” White says. “This airplane is not prone to have a lot of problems. It’s a great airplane.”
IDG Interiors in suburban Atlanta gutted the airplane and replaced the interior. The six-month refurbishment incorporated a paint job, a galley installation and addition of all the latest bells and whistles to the cabin, including LED lighting, Wi-Fi and a touch-screen entertainment system.
Nonstop overhauled all the flight controls. “We were able to get parts all the time and were not restricted to one vendor like you are with other Gulfstream models,” White says. During what amounted to a $3.5 million restoration (including the aircraft purchase price, which was in the range of $500,000 to $750,000), Nonstop partnered with Quiet Technology Aerospace (QTA), maker of engine noise-reduction hush kits for the GII and GIII, and holder of an FAA Part 145 repair station certificate.
QTA has sold 92 hush kits to date, approximately 60 percent of them for the GIII. The kits enable older aircraft to meet the stringent anti-noise standards that have been adopted by most airports. The kits cost $800,000, which includes installation and overhauling of thrust reversers, says QTA vice president Ben Brown, an expert on maintenance of used Gulfstreams. Installation takes about a week.
A competing kit from Hubbard Aviation Technologies also sells for less than $1 million, but includes a different style cascade thrust reverser. Hubbard, which claims its kit is quieter than QTA’s, has sold a handful of them to date.
Partly because of the Speys’ thirst, some operators are scrapping their GIIs and GIIIs, driving down the price of used models. Today a used GIII runs $750,000 to $1.8 million, according to White, who says that “most of the parts on the GII are common to the GIII.” (Gulfstream built 258 GIIs between 1967 and 1979.) Because of scrapping, Brown says, most parts for the GIII “cost less than half what they did five years ago.” And that includes parts needed for engine overhauls and midlife inspections, says White.
However, because of the glut of used Speys on the market with plenty of useful life, many operators are forsaking overhauls in favor of buying used engines. In December 2010, White sent out a Spey for a 10-year, 4,000-hour midlife inspection costing $692,000. Today he can do two engines with that same vendor for less than $800,000, he says. “These engines are bulletproof.
“At the end of the day, this owner has an airplane that is good for 10 years,” White comments. “His first major event with the engines is 10 years away. His first major airframe inspection is in 72 months. His maintenance costs for the next five or six years are minimal.
“There’s not an airframe out there that competes with this airplane,” White adds. “You can take this airplane with full fuel and full seats and go right to 43,000 feet. You would have to spend another $4 million [on a used Gulfstream GIV] to go another 400 miles.”
White says the GIII’s comparatively shorter range actually works out on trips from New York to places such as Paris, by forcing a fuel stop in Ireland where the price per gallon is less than half of what you’d pay in France. “When I take the GIII to Paris, I’m going to leave France without buying a gallon of gas. With the hush kits, I can land at the same Stage III noise-restricted airports that a GIV can,” White notes.
QTA’s Brown says hush-kit-equipped GIIIs meet the “marginal compliance” noise standard being enforced by many European airports.
For White’s GIII owners, it comes down to value. “Some people don’t value money,” he says, “but all my owners do.”
Mark Huber welcomes comments and suggestions at email@example.com.
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