““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 ”
The GIII cemented Gulfstream's reputation as the leading business jet provider of the 1980s. It set speed and distance records in its category; easily traversed both the Atlantic and Pacific without a fuel stop (Savannah, Ga., to Hamburg, Germany, or Honolulu to Chicago nonstop); could be configured to seat 15 passengers; and was the first business jet to feature winglets as standard equipment.
Compared with its predecessor, the GII, the III could fly farther and faster and posted 15- to 20-percent better fuel economy. The speed improvement shaved an hour off east-to-west transcontinental flights. The GIII had more aerodynamic wings and nose, a sleek wrap-around windshield and a fuselage that was two feet longer.
It was also the first business jet to break through the $10 million price barrier-way through. By 1987, it was selling for $16 million, and despite better fuel economy, it still burns substantially more fuel than other aircraft in its class. While the GIII's Rolls-Royce Spey engines (11,400 pounds of thrust each) were somewhat quieted with redesigned exhaust nozzles, they are still plenty loud and suck down 550 gallons per hour, easily a third more than the fuel consumption of a Falcon 900A (see chart on page 42).
This airplane also costs a lot to maintain and requires almost six hours of maintenance per flight hour. The Speys, with technology that dates back to the 1950s, are nothing if not robust and need to be overhauled only every 7,000 hours-equal to at least 10 years of average service and probably a lot more for most owners. However, the overhauls can run more than $1 million per engine.
Maintenance and fuel requirements drive the airplane's variable cost per hour to nearly $5,000, annual fixed costs to almost $700,000 and a cost-per-mile to nearly $20. While you can find a good used late-serial-number GIII for less than $6 million, compared with $33 million for a new G450, make sure you have plenty of cash reserved for operations. This is an old airplane and components will break. The older models have an electrical system that is DC-based and non-VSCF (variable speed, constant frequency), as opposed to an AC, VSCF system on the newer ones.
The good news is that Gulfstream/General Dynamics still supports the GIII with parts and service that are best-in-class, according to an annual survey by our sister publication, Aviation International News. Conversely, these high operating costs have driven GIII resale values substantially below those of comparable aircraft.
An Ambitious Start
Work began on the GIII in 1976, when Grumman American, a division of defense contractor Grumman, still owned Gulfstream. Grumman's initial plans for the airplane were ambitious-too ambitious, it turns out-and costs rapidly spiraled out of control. The company burned through nearly $130 million without even producing a prototype. Furious shareholders forced divestiture of the division, which, at the time, seemed like a financial black hole.
Enter Allen Paulson, an entrepreneur who had made a fortune converting old derelict airliners into freight-haulers and had plans to build a turboprop/jet hybrid called the "Hustler." Paulson bought Grumman American in 1978 and renamed it Gulfstream Aerospace. He proceeded to slice through the organization's bureaucratic culture, scale back some of Grumman's whiz-bang plans for the GIII and infuse the company with a sense of showmanship. (The showmanship has been toned down a bit over the years through subsequent company ownership changes, but it's still very much in evidence.)
The GIII made its first flight in December 1979 and received FAA certification less than 10 months later. Paulson gained publicity and built the aircraft's order book by having it break records: altitude (52,000 feet), speed (around-the-world in 47 hours, 39 minutes in 1982) and distance (5,005 miles nonstop). With seats full, this airplane will still fly 3,400 nautical miles.
Speed sells. The Pentagon lined up to buy a fleet of GIIIs for VIP and special-mission transport (C-20s) and the airplane quickly became a must-have item among Fortune 500 companies, celebrities and foreign dignitaries, many of whom still fly on GIIIs today.
The GIII was fast and flew far to be sure, but it also was capacious. It had a true stand-up cabin (just over six feet tall) that was 41 feet long and more than seven feet wide. It was typically configured to seat 12 passengers in a forward four-place club, mid-cabin four-place conference with table, and aft three-place divan opposite a half-club grouping-although there are many variations on this theme. The large forward galley opposite the 4-foot-2-inch-tall main cabin entry door can handle most long flights and an attendant's seat can be positioned nearby. The aft lavatory was equipped with a vacuum flushing toilet, vanity with sink and hang-up wardrobe. The GIII continues the GII's signature large oval windows, with five per side. The Speys are loud and you will hear them in the cabin.
The right completion center can refurbish the interior of a GIII to the point that it is virtually indistinguishable from a new G450, though the price generally starts around $1 million and can go a lot higher. If you are going to pull out the ceiling and the sidewalls anyway, look seriously at acoustic sound-dampening options ($50,000 to $100,000). As for cockpit avionics, glass-panel retrofits will make your pilots happier, but at prices approaching $1 million, they may give you and your accountant heartburn. Considering the GIII's resale value, most owners are reluctant to over-invest in upgrades beyond new carpet and recovering the seats. This is particularly true of earlier-serial-number models with the old electrical system.
Many GIIIs already have been retrofitted with sound-suppression systems or hush kits installed on the engines. These will enable the aircraft to meet most international and community noise standards through Stage 3. However, Stage 4 requirements (adopted in 2006) may be more problematic for this aircraft's operations where enforced. Consider that you may not be able to operate a GIII everywhere you want and when you want.
Given the Spey's fuel burn and noise, Gulfstream moved quickly to develop a follow-on aircraft that addressed both of these shortcomings, announcing the GIV program in 1982. The GIV has quieter, more fuel-efficient Rolls-Royce Tay engines and was first delivered in 1987.
GIII production stopped in 1987 after 206 were made. The airplane was in the news earlier this decade after two well-publicized crashes, one in Aspen, Colo., in 2001 and the other in Houston in 2004. The Houston airplane was on its way to pick up former U.S. President George H.W. Bush for a trip to Ecuador. Both crashes occurred on approach in marginal weather and were attributed to pilot error.
Because of its low acquisition cost, the GIII continues to fill a popular niche in aircraft charter. If you can stomach the cost of ownership, it is a lot of airplane for the money.