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The Jet Set

CEOs and Entrepreneurs Queue Up To Buy the Ultimate in Private UltraLong- Distance Jet Travel
Barry Rosenberg
From the Print Edition:
Ernest Hemingway, Jul/Aug 99

(continued from page 1)

"Quite often there are only a couple of people flying in these [aircraft]," says Boeskov. "A couple of people stepping off an airliner can cause a perception problem."

Instead of the corporations, the most active group of buyers for these transports has been high-net-worth individuals, such as entrepreneurs. Boeskov expected that market to account for about 30 percent of sales, but it's been closer to half.

The third segment for these aircraft are heads of state, VIPs and military customers. The Boeing and Airbus models are proving to be popular with governments from small countries that don't want their presidents flying around in $125 million Air Force One-type 747 aircraft, but are comfortable shuttling them about in the smaller airliners. In the Middle East, Kuwait Airways purchased three Gulfstream Vs last year for transportation of senior Kuwaiti government officials. The aircraft will be used for executive transport and emergency, long-range medical evacuation. In all, 24 countries operate Gulfstreams in government service, including the United States, which has flown the jets since 1967 and presently has 41 in service.

The superlong-range capabilities of the new aircraft are also particularly attractive to the military. In late 1998, the U.S. Air Force 89th Airlift Wing, the special missions unit that chauffeurs White House executives and members of Congress, took delivery of a VC-37A--the military designation for the Gulfstream V.

At $35 million a copy for these new superlong-range aircraft, an observer might think the selection of aircraft was limited. On the contrary, prospective buyers have never had so many choices. The fight for the world's most exclusive travelers is a battle among the golden names of aviation.

Gulfstream and Bombardier have gone head-to-head for years. What makes this competition different are the new combatants: Boeing and Airbus. Neither had produced a business jet before, but both saw the lucrative market as too rich to pass up. Gulfstream estimates total potential sales for the new class of business jets at 400 to 500 aircraft, making the market worth as much as $17.5 billion.

The first superlong-range aircraft to be announced was the Gulfstream V, followed by Bombardier's Global Express, then the Boeing Business Jet and the Airbus A319CJ (Corporate Jetliner).

Gulfstream's heritage dates back to 1958 with the twin-engine, prop-jet-powered Gulfstream I introduced by Grumman, which owned Gulfstream until 1978. The company followed the GI with the Gulfstream II in 1966, which became popular with corporations and government agencies because of its large cabin. The Gulfstream III was introduced in 1978, and by 1987 Gulfstream was producing one of the industry's most popular long-range business jets--the Gulfstream IV-SP.

Owning a Gulfstream became the epitome of success, from the hills of Hollywood to the boardrooms of Wall Street, and many of the people today who are trading up to one of the superlong-range business jets are trading in a GIV-SP.

After 1978, the company changed hands several times--from Grumman to Allen Paulson, the former owner of famed racehorse Cigar, to Chrysler and eventually to Forstmann Little, a private investment firm, which purchased it in 1990 for $850 million. In May, the Savannah-based company changed hands again as it was bought by defense contractor General Dynamics for approximately $5 billion.


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