January 2012 Aviation Articles

The Economic Impact of a Lone Business Jet

For the purpose of this article, I shall use the ‘Gulfstream GIV’ as the example ‘Business Jet.’

The Gulfstream GIV is a member of a family of business jet aircraft that was first designed Grumman Aircraft Engineering Corporation (GAEC) on New York’s Long Island at Bethpage in the early 1960’s. Since this first aircraft (the G1159 – Gulfstream GII) first flew in 1966, almost 1,900 variations of this aircraft design have been produced. Of this continuing production run, 213 aircraft were built with the designation of Gulfstream GIV and 287 aircraft of GIVSP (500 in-total.)

A standard version of this aircraft normally seats 13 passengers (4-place club seating, a 4-Place conference/dining cluster, a 3-place side-facing couch, and a 2-place half-club which are all arranged in a ‘stand-up’ headroom cabin. There is a galley, and two enclosed lavatories/vanities at opposite ends of the cabin. It is flown by a 2 to 3 person crew, powered by two Rolls-Royce 611-8 Tay engines which will power the GIV up-to a service ceiling altitude of 45,000 feet and at a maximum cruising speed of 505 KTAS/581 MPH.

The economic figures quoted at the end of this article are my best-educated guess, so I ask for your forgiveness now before you start aiming your shot at me for being either low, or possibly even missing important data that increases my claims.

The raw materials

Working backwards in the way the Gulfstream IV is constructed: The Empty Weight of a GIV is circa 35,500 Lbs. With the interior and engines removed this drops down to about 15,000 Lbs. Remove the Landing Gear and this figure drops down to about 12,000 Lbs. With the avionics, electrical pumps, wiring looms, switches, relays, circuit breakers, windows and various plumbing components, you end up with a little-less than 6,000 Lbs of Aluminum. The list of materials that must be procured to construct and assemble a Gulfstream GIV includes, but is not limited to: Aluminum, Steel, Plastic, Rubber, Leather, Wool, Cotton, Silicon, Glass, Titanium, Nickel, Copper, Zinc, Gold, Paint, Solvent, Hydraulic Fluid, Oil, Grease, Paper, Chromium, Carbon, Nitrogen, Oxygen, Neon, Xenon, etc. All of these materials must be procured from somewhere. Fortunately all of these raw materials are native to the United States, thus for many present-day manufacturers, these items can be sourced at home, thus adding to the Economic Impact of a Business Jet to the bottom-line of this country’s Gross National Product.

The Build

Unfortunately I do not have any reliable statistics on the effort required to construct and build a Gulfstream GIV, however my best guess is that it would take at least 15,000 hours to build from start to finish, which equates to 375 single-man-weeks or 7.5 single-man-years, plus Engineering, Design, Inspection, completion, testing, etc. As an example, according to data supplied by the Boeing Company, a decade or so before, a Boeing 747 requires the support of 1,600 suppliers who ship component parts from 14 countries and 44 U.S. states. It takes 6,000,000 individual parts to complete a 747 which includes 3,000,000 fasteners which include 1,500,000 rivets; 2,403 pieces of tubing that if placed end-to-end would be 2.4 miles long; 145 miles of wire in 1,750 separate bundles. It takes between 18 to 24 months to build and an additional 40 weeks for final assembly, outfitting and testing before it can be delivered ready for the customer. Normally the Engines themselves constitute 20% of the raw cost of a pre-delivered aircraft regardless of the aircraft make and model being manufactured.

Remember that in addition to the raw materials mentioned new the beginning of this article, separate companies are called upon to sell and supply Rivets, sealers, glues, paints, screws, bolts, fasteners, tools, etc. along with Electricity, Water, all associated Taxes local, state, federal, etc. and the Economic Trickledown provided by a highly skilled and well-paid American workforce.

The Owner/Operator

To take full advantage of the capability of the Gulfstream GIV, the owner will need to employ at least 3 three pilots as well as a flight attendant and a mechanic. This is at least five high skilled and qualified employees who will be compensated well above the U.S. government’s idea of the standard minimum wage. The employer of these flight-department employees will be paying 60% more than their gross salaries combined in both benefits and taxes, while the employees themselves shall be paying at least 35% of their gross income in taxes.

Even though the Gulfstream GIV is designed to weather the elements well, without the need for a hangar, most owners choose to either rent or buy their own hangar building to house their aircraft. This facility then allows the flight department employees to have a permanent place to maintain an office and working space. Real-estate ownership or space rental all comes at a cost, which this too is added to the overall Economic Impact of a Business Jet. Expenditure does not stop there. The flight department and the aircraft have all to be insured against loss and liability. Fuel, Oil, Hydraulic Fluid, Cleaning Supplies, Outside Contracted Maintenance, and Service Contracts all must be ordered and kept on-hand to keep the aircraft flying.

A Gulfstream GIV, on average consumes about 500 U.S. Gallons of Jet Fuel an hour in-flight. That is $3,000 worth of Jet A at $6.00 per U.S. Gallon. $109.50 of which goes directly to the U.S. Government in Federal Excise Taxes in-place of a User Fee System.

Operating the Jet

Unless the Gulfstream and its owner only flies exclusively from his privately owned (by him) Airport, to another of his privately owned (by him) Airports, the Economic Impact of this Lone Business Jet continues to spread its fingers all-through-out this country, and also the World (well it does have at least a 4,200 NM/4,830 Mile range.) It will achieve this by arriving and departing from a selected Fixed Base Operation (FBO) at various airports. Catering will likely be requested and purchased, Hotels, Rental Cars, Weather Services, Flight Planning and General Handling will all be required during the operational life of this aircraft - the average age of a GIV is currently sitting at 22 years, so that is already a massive amount of Economic Impact Dollars that this aircraft model has generated over its service life!

Excluding Bank Financing and Loan Costs, on average a typical Gulfstream IV costs about $4,800 per-hour to operate with a typical annual budget required to fly 400 hours a year, or the equivalent of about 201,000 miles a year (about 8 times around the World) costing $2.5 Million U.S. Dollars a year.

So let’s add it all-up to see if we can come close to producing a near-accurate approximation of the Economic Impact of a Lone Business Jet.

First let us calculate the Trickle-Down Economics of the Build:

3,000 people involved in the build. Let me use $40,000 as the average annual salary, thus 3,000 x 40,000 = $120,000,000 per year. Let’s say that 50 people are dedicated to the construction of a single Gulfstream GIV (we are going back to 1980’s and 1990’s now.) Thus 50 x 40,000 = $2,000,000. Then we shall add 25 more people at supply companies, sub-assembly manufacturers, raw material producing companies, etc. who also can be counted as being dedicated to the construction of a single copy of a GIV. We shall say that they earn $30,000 annually, thus this group shall add an additional $750,000. Now let’s figure that it took two years to build a GIV therefore we do the following calculation:

($2,000,000 x 2) + ($750,000 x 2) = $5,500,000. Then we add an additional 60% to make a total of $8,800,000 as the total Economic Contribution made by the Laborers and companies who built an individual copy of a GIV (I would love to hear from someone who was in upper management and accounting at Gulfstream when the GIV was actually being built to see if my figures are even close.)

In 1990 the purchase-price of a new Gulfstream GIV averaged out to $24,000,000.

If you add $10,000,000 in engines, avionics, components, raw materials and the like, to the labor cost calculated above, you can see that the earned profit works out to amount that is about 40% of the final price of the finished aircraft, i.e. $17,000,000 Cost for roughly a $7,000,000 return. Hey, that’s the most American thing that can happen: ‘Spending Money to Make Money!’


Now we need to add 21 years of annual-operational expenditure that has been contributed to the economy by this lone 1990 year-model Gulfstream IV:

To adjust for rising and falling commodity prices, inflation, etc. I will average the annual expenditure out to $1,500,000.

The final number now shows itself:

(21 x $1,500,000) + $5,500 = $37,000,000 U.S.D.

Alternatively $37,000,000 divided by 21 = $1,760,000 approximately per annum.

The Economic Impact of a Lone Business Jet = $1,760,000 per annum.

In closing, I beseech you to remind everyone that you come into contact during your day, every day that:

The United States Invented the Airplane. Aviation was born in the U.S.A. in 1903. Aviation is a very American Industry. The United States has led the World as the foremost producer of Business, General Aviation, Airliner and Military Aircraft. The largest fleet of Business and General Aviation aircraft also exists in the United States. This country also still has the largest economy on this planet. Contrary to what many Socialist and Ignorant thinkers and orators might try and make the general public believe; it is fact number one that the liquid that flows through the economic veins of this country is Jet A1.

It is about time that all American Citizen’s learn about these facts so they can begin to take on as their own, the pride that this industry has always known but has never been recognized for, that: “The roots of the Global Aviation Industry is 100% All-American; and Aviation is absolutely Vital to the Economic Prosperity of all American Citizens.”

So why doesn’t the Government and Media know this, if they are as smart as they want us to believe they are?

We shall talk next month.

FAA Needs Specific Proof For An Independent Violation of FAR 91.13(a)

Recently the NTSB remanded a case back to the administrative law judge ("ALJ") for a hearing on an independent charge of violating FAR 91.13(a) (careless and reckless). In the case, Administrator v. Hollabaugh, the FAA suspended the airman's airline transport pilot certificate for alleged violations of FARs 135.263(a) and 135.267(d) (flight and duty time regulations), as well as FAR 91.13(a) which the FAA alleged was a residual violation based upon the other violations. Based upon the airman's admission of all allegations except the careless and reckless charge, the FAA moved for summary judgment on all counts.

In response to the FAA's motion, the airman argued that the residual FAR 91.13(a) charge was inappropriate since violations of FARs 135.263(a) and 135.267(d) were not operational violations. The FAA then filed an "errata" to its motion which stated that reference to the FAR 91.13(a) violation as a residual charge was an error "because the factual allegations in the [c]omplaint effectively charge [r]espondent with an independent charge of carelessness under FAR 91.13(a). The ALJ accepted the errata and then granted the FAA's motion on all counts.

On appeal to the full Board, the airman again argued that "granting summary judgment on the FAR 91.13(a) charge was inappropriate because FAR 91.13(a) only applies to operational violations" and since neither FAR 135.263(a) nor FAR 135.267(d) is an operational violation, his admissions concerning those violations did not prove that he also violated FAR 91.13(a). Recognizing that the Board had not faced this issue before, it initially reiterated that the FAA needs "to plead explicitly in the complaint whether a charge under FAR 91.13(a) is residual or independent."

However, accepting that the charge against the airman was an independent charge, the Board then determined that the FAA had failed to produce facts supporting an independent violation of FAR 91.13(a) and, as a result, summary judgment was inappropriate. The Board observed that the FAA's "correction" to allege an independent violation did not operate to the prejudice of the airman because the independent charge then required "a higher threshold of evidence than a residual charge." Consequently, since the FAA had not provided proof, the Board remanded the case to the ALJ to hold a hearing solely on the independent FAR 91.13(a) charge.

Nice to see the FAA's untimely attempt to fix its pleading error backfire in favor of the airman. At least now the FAA will have to prove the independent violation of FAR 91.13(a) rather than simply tacking it on, although I don't know that the hearing will result in a different outcome since it will still be in front of Judge Geraghty. However, hopefully the FAA will at least take note of the Board's admonition and draft careless and reckless allegations more accurately in the future.

Aircraft Performance for “Dummies.”

Today's modern business jets are at the leading edge of aerodynamic design. These aircraft fly faster, further and consume less fuel than their first generation predecessors. What they are capable of is amazing. Within aviation, we tend to focus on and discuss all the maximum performance capabilities. However, when we are dealing with the non-aviation person, these limits of the aircraft’s capabilities can lead to much confusion, and sometime to acquiring the wrong aircraft for the job. Consider this to be in the vein of those wonderful “Dummies” books!

The confusion will often start with the sales brochures which list the maximum capabilities of the aircraft. Typically they focus on range, speed, and payload (or seats). It is important to realize that when the brochure states “Maximum Range: 2,350 nm; Executive Seating: 8 passengers; Maximum Speed: 470 knots,” it does not mean that this aircraft is capable of taking eight people 2,350 nautical miles at a speed of 466 knots! It simply states that the aircraft can fly 2,350 nautical miles, it can fly with eight people on board, and it is capable of reaching speeds of up to 470 knots - just not all at once.

Think of it like you would your car. You wouldn't expect your family sedan to get 28 MPG at 130 MPH! Most non-aviators can understand that analogy.

Following are some explanations of salient terms for those who don’t share in our world.

Aircraft can carry people, baggage, and fuel, but not the maximum of all three. Fill up the tanks with fuel for that maximum 2,350nm range trip, and you may only have enough useful payload left for three or four people. Conversely, fill up the seats and baggage capacity of the same aircraft, and you may have enough useful payload left to fly a 1,800nm trip.

Best economy speeds are slower than the maximum speeds. Our aircraft is capable of traveling at very high speeds. But the best fuel economy is found at a much lower speeds. With our car, to get 28 MPG we may need to drive at 40 MPH as opposed to 130 MPH. With the aircraft, we may need to slow to 430 knots as opposed to 470. 

Runway length required for takeoff will vary depending on many parameters. Again, the brochure may list a runway length of 5,000 feet. But that is with very specific parameters. Can you remember that time you drove to the mountains? Pulling onto the highway with a car full or people and bags it took a while to accelerate to the required speed. With the aircraft, it is similar. In a nutshell:


  • Heavier weights = more runway length
  • Hot days = more runway length
  • High altitude airport = more runway length


With a relatively short runway, at altitude, on a warm day, we may need to reduce the weight of the aircraft below its "maximum" weight in order to safely depart on the runway. Come back after dark when it is cooler and you may be able to add more weight.  So the extreme may be an aircraft that can take-off at sea-level from a 5,000 foot runway with four people and fly 2,350nm, but  may only be able to manage a trip of 850nm from an 8,000 foot long runway in the mountains on a warm day.

Regarding the performance of aircraft, they are a series of compromises. They can offer speed, range and payload but often require trade-offs in two of those areas to maximize the third. We pride ourselves in knowing the maximum capabilities of our aircraft. We also need to pride opurselves in our ability communicate to non-aviators the trade-offs inherent in our aircraft.

A New Year’s Resolution for an Aircraft Acquisition

Lots of us come up with New Year’s Resolutions. While most experts agree that the Dead of Winter Post-Christmas Doldrums are not the best time for these things, they live on as strong as ever. So here are a couple resolutions if you are in the market for an aircraft.

Resolution #1. I will do my research. I will have my mission performance parameters defined. I will be realistic – we all want more speed and more range. What do I truly need versus what would I like to have? I will know the difference between the two. I will use "required" and "desired" criteria. This typically involves things like payload, range, speed and take-off/landing capability. They are measureable. Required criteria are those performance items that the aircraft must meet in order to be successful at accomplishing the mission. Desired criteria are the nice-to-have items that, although not necessary for mission accomplishment, will enhance the ability of the aircraft to perform the mission. Desired criteria enable you to better differentiate between the various aircraft.

Resolution #2. I will look at the total costs of owning and operating the aircraft, not just the acquisition price. Older aircraft cost less to acquire, more to operate. The bargain price on that used model may not reflect the true cost of getting it into service. Does the aircraft have a low acquisition price but need paint, interior, and avionics upgrades and have high-time engines?

What about sales taxes? Property taxes? Will the aircraft be used for business so that we can take tax depreciation expenses?

If my engines are not on a guaranteed maintenance program, have I enough of a reserve to cover the major inspection or overhaul? Don’t forget rental engines and the possibility of unscheduled maintenance.

What am I going to do once I have this plane to maintain its value? Will those new avionics add value, or just add “fun” to my aircraft?

Resolution #3. Am I prepared to place the aircraft into service? Do I need training? Do I have the hangar space? Am I prepared for the maintenance requirements of the aircraft? Do I need to get spares or additional tooling or ground support equipment?

Resolution #4. I will get my acquisition team together sooner than the day of closing! I will need technical expertise in aviation and finance. I will also need legal and tax advice. If trading/selling one business aircraft for another can I take advantage of a tax-deferred exchange? Have I talked with my insurance broker to inform them of the aircraft choice?

Overall, I resolve to make my next aircraft acquisition go as smooth as possible. I realize that this takes advance planning and preparation.

Remember the 5 P’s: Prior Planning Prevents Poor Performance! (OK, some of you can add a sixth “P” if you know what I mean).

Resolutions I Would Like To See In 2012

Since it is the time of year for resolutions, I thought I would propose some resolutions that I think would go a long way towards making 2012 a happy new year for aviation:

Resolutions by the FAA

Resolve to be consistent: Let's get rid of the inconsistent interpretation and application of the regulations not only between inspectors, but that also differ between FSDOs and even regions. If compliance is a goal, then making sure everyone is working from the same page can only enhance understanding and compliance.

Resolve to use common sense: We shouldn't waste agency funds and resources pursuing actions that do not further the goals of safety and compliance. For example, pursuing a civil penalty action against an airman for conduct that occurred before the agency revoked all of his airman certificates, when the revocation already caused the airman to file for bankruptcy, simply does not make sense. Similarly, initiating an enforcement action because an inspector has an axe to grind with an airman, should be avoided.

Resolve to actually use remedial training (and not just when a U.S. Senator is the alleged violator): If safety truly is one of the FAA's mandates (and it is), then it is unclear how a suspension that allows a pilot's skills to lapse for a period of time makes that pilot, or the aviation system as a whole, safer. For operational violations, why not require additional training to make sure the pilot will have the skills and knowledge to ensure future compliance?

Resolutions by Aircraft Buyers

Resolve to trust, but verify: Trust is an honorable quality. But don't trust blindly. When a seller tells you something, don't just take the seller at his or her word. Verify that what you are being told is actually the truth. For example, perform due diligence including a title search and name searches for the seller to discover any judgments, liens, bankruptcies or security interests

Resolve to use a purchase agreement: Using an aircraft purchase agreement can help prevent confusion and misunderstandings. If the agreement clearly explains how the transaction will happen, when it will happen and what is included in the deal, the greater the likelihood that the buyer and seller will each know the other party’s expectations and the less chance for surprises or misunderstandings. Additionally, the law in most states requires that a contract for an amount greater than $500.00 be in writing in order for it to be enforceable. This is called the statute of frauds. Although exceptions to this legal doctrine exist, complying with the law is usually safer than hoping you will be able to take advantage of an exception.

Other Resolutions

Resolve to file NASA/ASRP forms: If you are involved in an incident or something happens during a flight that makes you worried the FAA may become involved, make sure you file within 10 days in order to preserve your right to argue that any sanction the FAA may wish to impose should be waived. Since the program does not limit the number of times you can file, take advantage it, often.

If I am asked to "call the tower" or to talk to an FAA inspector or if I receive a letter of investigation from the FAA, I resolve to talk with an aviation attorney before I respond: Rather than wasting the opportunity to mitigate damage, minimize investigation or avoid providing admissions or other evidence that will later be used against you by the FAA, consult with an aviation attorney to find out where you stand or, at a minimum, to have an aviation attorney run interference between you and the FAA. Although FAA enforcement actions are not criminal proceedings, they have the potential to significantly limit, if not revoke, your privilege to operate an aircraft. Protect that privilege

Wishing everyone in the aviation industry a happy and prosperous new year!

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