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.
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.
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.
||Jeremy R.C. Cox|
Comm, Multi, Instrument
A&P, IA, FCC, Radar
F20, GII & GIIB
"Meum pactum dictum" trans: 'My Word is My Bond'
Jeremy Cox is the Vice President at JetBrokers, Inc; a professional aircraft sales company. In addition to his duties at JetBrokers, Inc. Jeremy is very active in the aviation industry. He currently holds valid A&P IA FCC Licenses and a Commercial and Instrument Ratings. In 1987 Jeremy was elected by the Royal Aeronautical Society as a Technician of the Society. He is also involved with the Greater St. Louis Business Aviation Association; The National Business Aviation Association; the Experimental Aircraft Association; and The Aircraft Owners and Pilots Association and the Missouri Pilots Association. Jeremy currently serves as the President of the St. Louis Air & Space Museum. Jeremy was formally the Vice President at a St. Louis based full-service FBO and Repair Station, and Aircraft Parts Manufacturing Company.
Jeremy’s thirty plus years of diverse technical and operational experience includes North Atlantic aircraft delivery experience, S.T.C. approval processing, government contract negotiation and awards, FAA coordination and extensive maintenance experience on light aircraft through Air Carrier aircraft. Jeremy has been a Director of Maintenance for several different companies and he has been employed by several airframe manufacturers’ independent Service Centres which include Dassault, Gulfstream, Raytheon and Lockheed. He also air-towed targets for the British and NATO fleets prior to immigrating to the United States from Great Britain. He is a dual citizen.