In this month’s Aircraft Comparative Analysis- we provide information on a selection of Pre-Owned business jets in the $9.5-11.5 million range for the purpose of valuing the Gulfstream GIV-SP.
We’ll consider the usual productivity parameters - payload/range- speed and cabin size- and cover current and future market values. The field compared to the Gulfstream GIV-SP in this study encompasses Dassault’s Falcon 900 (including the 900B).
Design work on the original GIV began in early 1983- with the first of four production prototypes making first flight on September 19- 1985. FAA certification was awarded on April 22- 1987. The improved Gulfstream GIV-SP (SP representing Special Performance)- with higher payload and landing weights and improved payload range performance- replaced the GIV from September 1992- (there is- however- an ASC190 that allows an owner/operator to upgrade a GIV to a GIV-SP).
The Gulfstream GIV is a significantly improved- larger- longer-ranged and advanced development of the earlier GII and GIII. The most significant improvement with the GIV over the earlier Gulfstream models are the Rolls-Royce Tay turbofans- which bring significant fuel burn and noise emission improvements despite their higher thrust output than the GII and GIII’s Speys.
Indeed- the GIV continues a Gulfstream and Rolls-Royce association that dates back to the original Dart powered Gulfstream GI. Other changes included a stretched fuselage- and an aerodynamically and structurally improved wing with 30% fewer parts- greater fuel capacity and range- increased span tail- and an advanced EFIS avionics suite with six color CRT displays.
In 1990- Gulfstream’s then-CEO Allen E. Paulson and a Gulfstream flight crew set 35 international records for around-the-world flight in a Gulfstream GIV. Both the Gulfstream GIV and GIV-SP have since set a number more records.
As mentioned- the GIV was upgraded to the GIV-SP and was later re-designated the G400. A short-ranged variant was created based on the original GIV and designated the G300. With the introduction of the G500/G550 (an upgrade to the GV)- the GIV received an upgrade based on the newly created G550 which became the G450 and its short-ranged variant the G350.
Chart A represents the in-operation aircraft Market Share as of August 2013 for the Gulfstream GIV-SP (63%) and the Dassault Falcon 900 & 900B (37%). There are currently 482 total aircraft in operation for these two models.
Payloads and Ranges
The data contained in Table A is published in B&CA and is also sourced from Conklin & de Decker. As we have mentioned in past articles- a potential operator should focus on payload capability. The GIV-SP ‘Available payload with Maximum Fuel’ at 2-019 pounds is greater than the Falcon 900 (at 1-850 pounds) by 9.1%.
According to Conklin & de Decker- the cabin volume of the GIV-SP at 1-525 cubic feet is 20.6% greater than the Falcon 900 at 1-264 cubic feet. As mentioned previously- both the Gulfstream GIV and GIV-SP have two TAY 611-8 Rolls-Royce engines each offering 13-850 pounds of thrust. By comparison- the Falcon 900 utilizes three Honeywell TFE 731-5AR-1C powerplants with 4-500 pounds of thrust.
Table B- sourced from the Aircraft Cost Calculator (ACC) shows the fuel usage by each aircraft model in this field of study. The Gulfstream GIV-SP – at 447 gallons per hour (GPH) - uses 146 gallons per hour (or 48.5%) more fuel than the Falcon 900 (301 GPH).
Using data published in the May 2013 B&CA Planning and Purchasing Handbook and the August 2013 B&CA Operations Planning Guide we will compare our aircraft. The nationwide average Jet A fuel cost in the August 2013 edition was $6.08 per gallon at press time- so for the sake of comparison we’ll chart the numbers as published.
Note: Fuel price used from this source does not represent an average price for the year.
Cost Per Mile Comparisons
Chart C details “Cost per Mile” and compares the Gulfstream GIV-SP to its competition factoring direct costs and with each aircraft flying a 1-000nm mission with 800 pounds (four passengers) payload. The Gulfstream GIV-SP long range cruise at an average 445 knots shows a cost per mile at $8.53- which is 3% more expensive to operate than a Dassault Falcon 900 at $8.28 per nm.
Total Variable Cost Comparisons
The “Total Variable costs” illustrated in Chart D - is defined as the cost of Fuel Expense- Maintenance Labor Expense- Scheduled Parts Cost- and Miscellaneous trip expenses. The total variable cost for the Gulfstream GIV-SP at $3-737 per hour is 5% more to operate than the Falcon 900 at $3-549 per hour.
The points in Chart E center on the same aircraft. Pricing used in the vertical axis is as published in Vref. The productivity index requires further discussion in that the factors used can be somewhat arbitrary. Productivity can be defined (and it is here) as the multiple of three factors.
1. Range with full payload and available fuel;
2. The average speed flown to achieve that range;
3. The cabin volume available for passengers and amenities.
The result is a very large number- so for the purpose of charting- each result is divided by one billion. The examples plotted are confined to the aircraft in this study. A computed curve fit on this plot would not be very tight- but when all business jet aircraft are considered the “r” squared factor would equal a number above 0.9. Others may choose different parameters- but serious business aircraft buyers are usually impressed with Price- Range- Speed and Cabin Size.
After consideration of the Price- Range- Speed and Cabin Size- we can conclude that the GIV-SP business jet is extremely competitive against the Falcon 900 and leads in the index due to all of the factors combined (i.e. greater range- faster speed and more cabin volume- at a lower price). This all comes at a marginally higher operational cost- however.
Table C depicts the relative retail prices from Vref for each aircraft. The number of aircraft in-operation- percentage “For Sale” and the number “Sold” over the past 12 months are from JETNET. As shown- the GIV-SP has the lower percentage “For Sale” at 9.8% (seller’s market) compared to the Falcon 900 at 15.8% (buyer’s market). Over 12 months the GIV-SP is showing the largest number of Full Sales Transactions at 25 (2.1 average per month) compared to the Falcon 900 at 20 (1.7 average per month).
Depreciation Schedule for Business Aircraft
Aircraft that are used in a trade- business- or for the production of income that are primarily operated domestically- and not used in common or contract carriage may be depreciated over a five year Modified Accelerated Cost Recovery System (MACRS) schedule. Aircraft used in common or contract carriage (e.g.- Part 135) are depreciable under seven-year MACRS- see Table D.
Table E shows an example of using the MACRS schedule for a preowned 1999 Gulfstream GIV-SP in private (Part 91) and charter (Part 135) operations over five and seven year periods assuming a Vref retail value of $9.5 million.
Location by Continent
Table F- meanwhile- offers a breakdown of the location by continent for the Wholly-Owned Gulfstream GIV-SP business jet. North America is home to the majority of the fleet with 80% of the 282 wholly-owned GIV-SP aircraft- followed by Asia at 9% and Europe at 5%. Currently there are three Gulfstream GIV-SP aircraft in shared-ownership and twenty in fractional ownership programs.
Within the preceding paragraphs we have touched upon several of the key attributes that business jet operators value. However- there are often other qualities such as service and support that factor in a buying decision- but are beyond the scope of this article. According to JETNET- there are 30 pre-owned Gulfstream GIV-SP models “For Sale”. The Gulfstream GIV-SP fares well alongside its competition- so those operators in the market should find the preceding comparison of value. Our expectations are that the Gulfstream GIV-SP- which started delivering in 1993- will continue to do well in the pre-owned market.