Despite Slowdown, Manufacturers Remain Optimistic On Latin American Market
Following years of growth, which recently has outpaced the U.S. and Europe in the aftermath of the global economic downturn, 2014 has proven so far to be a bit of a corrective period for business aviation sales throughout Brazil and Latin America. Despite weakening performance in some areas, however, OEMs remain bullish about long-term demand for their business aircraft offerings.
“Latin America is an important market for Textron Aviation,” Bob Gibbs, vice president of sales for Latin America for the Cessna and Beechcraft parent company, told AIN. “Although the total Latin American market has remained stable over the last year, with a slight slowing of business in Brazil while the focus of the country was on the World Cup, the economic outlook for the region remains bright, with expectations of robust growth in wealth creation over the coming decade.”
According to Gibbs, Brazil, Mexico and Venezuela remain the company’s primary markets for business aircraft, with Brazil alone home to one third of the region’s business aircraft. “We expect these markets to continue leading Latin America’s considerable demand for business air travel in the coming years,” he added, “though the steadily growing economies of Paraguay, Peru and Chile are also expected to experience a growth in demand.”
Just fewer than 3,000 business aircraft are based in South America, Gibbs added, representing 9 percent of the global business aircraft fleet. “However,” he continued, “with Latin America’s ultra-high-net-worth population growth expected to outstrip both of those regions between now and 2023, we expect there to be a surge in demand for high-quality, flexible and efficient business aircraft as Latin American businesses impose themselves on the regional and global stage.”
Those sentiments were echoed by Fabio Rebello, regional senior vice president international sales in Latin America for Gulfstream Aerospace. “Gulfstream has had a lot of success in Latin America and has increased the number of aircraft in the region in 2014,” he added. “In the past five years, Gulfstream’s fleet in Latin America has grown nearly 70 percent. In total, we have more than 175 aircraft based in Latin America, with the three largest markets in Mexico, Brazil and Venezuela. The Gulfstream fleet in Brazil has nearly tripled in the past five years making it one of the fastest growing markets in Latin America for Gulfstream.”
Dassault Falcon Jet has seen similar growth. With its line of twin- and tri-jet models, Falcons are known for their performance and flexibility, an important consideration in the Latin American market. For example, range maps centered in São Paulo show the reach of the various current Falcons, and the upcoming Falcon 5X and 8X models should also be attractive to Latin American customers.
The twin-engine Falcon 5X is planned to have a top speed of Mach 0.90 and a range of 5,200 nm. It is also planned to have the short-field operating flexibility of a much smaller jet, despite its six-foot, six-inch cabin interior. The three-engine Falcon 8X, Falcon’s newest flagship, was announced in May at the EBACE show in Geneva. It can go 6,450 nautical miles, linking São Paulo with Los Angeles, nonstop.
Tom Aniello, vice president of marketing for Pilatus Aircraft, expects sales across the region in 2014 for the company’s PC-12 NG turboprop single to be on par with those of recent years, supplemented by growing sales numbers for its upcoming PC-24 light jet.
“While the great economic expansion anticipated in Brazil has not materialized as much as many economists forecasted, we still see a lot of potential across the region,” he stated ahead of the LABACE show. “You could even argue that the PC-12 thrives in challenging economic times, as it offers a lot of capability at a lower cost relative to a traditional business jet.”
Stéphane Leroy, regional vice president of sales for Bombardier Business Aircraft in Latin America, said interest from the company’s largest regional markets–Brazil and Mexico–is consistent with last year’s numbers. “The current environment has its challenges with elections in many countries in the region this year, shifting the focus for business people,” he acknowledged. “We also see very positive news and changes in the economic landscape that may have positive effects on the business aviation sector, such as the energy sector reforms in Mexico, for example.”
Those markets are also the most popular across Latin America for Brazilian planemaker Embraer, said Marco Túlio Pellegrini, president & CEO for Embraer Executive Jets. “Latin America is a very important sector, and it will continue to play a key role over the next decade,” he noted. “The size of Embraer Executive Jets’ fleet in the region–more than 180 aircraft today– certainly reflects the economic growth of Latin America in recent years.”
Pellegrini added that the projected market for business aircraft across Latin America represents more than U.S.$16.3 billion in sales over the next decade.
Diverse Region, Diverse Missions
Although the need for regional transportation once drove the demand for business aircraft across Latin America, today’s buyers are increasingly seeking the ability to travel across borders and continents.
“Our large-cabin aircraft such as the G450 and G550 are the most popular and we have started deliveries of the new G650 to Latin America,” Gulfstream’s Rebello added. “Approximately a quarter of the fleet in Latin America are our mid-cabin aircraft such as the G150 and G280.
“As the world’s economy improves, the need for companies to travel and conduct business internationally continues to grow,” he said. “Departing out of São Paulo, the G280 can reach all of South America nonstop and can reach the U.S. and Europe with one stop. The G450 can reach Johannesburg, Lagos or Miami nonstop from São Paulo. Our G550 and G650 can reach all of Africa, Europe, the Middle East and North America nonstop from Brazil. When departing São Paulo, the G650 can reach Los Angeles, New York, London and Cairo at Mach 0.90.”
“Our Learjet aircraft has always been very popular and a leading aircraft in the region,” noted Bombardier’s Leroy. “For our customers with longer range requirements, the Challenger 605 and of course our Global jets are in high demand. Latin America was traditionally a short-range aircraft market, [but] the U.S.-LatAm route is increasingly more prevalent in the customers’ business models and even more recently we have seen an emergence of trade [between] with Europe and Asia, with resulting interest in long-range aircraft.”
However, manufacturers of smaller aircraft are quick to note that demand for transportation to remote locations–many of which are not easily accessed by ground-based modes of transportation–remains strong in the Latin American market.
According to Embraer’s Pellegrini, the company’s most popular model in the region is also its smallest turbofan aircraft, the Phenom 100 light jet, with more than 100 in service throughout Latin America. “The flexibility and range of the Phenom 100 has proved particularly attractive to industries such as manufacturing, agribusiness and construction, which require convenient, efficient travel across the large distances, and to the remote locations often required of domestic travel in Brazil,” he added.
The Phenom 300 and Legacy 600/650 comprise the rest of the manufacturer’s fleet in the region, with Pellegrini also noting strong customer interest in the upcoming Legacy 500 midsize and Legacy 450 “midlight” aircraft.
“The Legacy 500 is a game changer; it is an aircraft that redefines the midsize market segment,” Pellegrini added. Certification for the Legacy 500 by Brazil’s Agência Nacional de Aviação Civil (ANAC) is “imminent,” he said, with all ground and flight-testing completed. Embraer expects FAA and EASA type approvals to follow shortly after ANAC certification.
Pilatus’s Aniello noted that Brazil is home to the majority of PC-12s based in Central and South America, with 26 aircraft that are primarily owner-flown. “There is also a growing use of the PC-12 for charter flying,” he added. “As the market matures, just like the United States, we expect that traditional corporate operators will adopt it, both for primary use and as a stablemate to larger jet aircraft in their fleet.”
Pilatus expects Brazil to be “one of the three largest markets for the PC-24 outside the United States,” he added, further noting that Brazilian operator Synerjet has already placed orders for the “maximum number of [PC-24] aircraft that could be allocated to them.”
Textron’s Gibbs said the company’s propeller-driven aircraft are particularly well suited for the shorter missions that comprise many trips throughout the region. “It is typically this kind of journey where the King Air family of aircraft excel, offering their passengers unmatched efficiency and the ability to land on a greater number of airstrips than many of their competitors.
“Our aircraft are primarily being used for corporate transportation,” Gibbs continued, “with the exception of the [King Air] 350ER, which is the platform of choice for a very wide range of special missions from maritime patrol to medevac and surveillance platforms…[while] the King Air 350i has the range to transport eight passengers across the majority of the country– including Manaus, Salvador and Fortaleza–as well as farther afield such as Santiago, Chile or Buenos Aires, Argentina.”
That said, Gibbs noted that Textron has received interest throughout its product line from Latin American buyers. At LABACE, the company is highlighting the new Cessna Citation M2 and Sovereign+, Beechcraft Baron, King Air 350i and King Air 350ER.
Growing Market Means Need for Greater Support
Strengthening demand across a variety of market segments in Latin America also means an increased need for adequate sales and maintenance facilities in the region, and OEMs are quick to note their efforts in broadening customer support.
With something of a “home court” advantage in the area, it is not surprising that Embraer maintains an extensive support network across Latin America. The company recently announced a new 20,000-sq-m service center located in Sorocaba.
Terming the new facility “a prime example of our commitment to customers,” Pellegrini noted the new facility offers a hangar dedicated to maintenance, repair and overhaul (MRO) of Embraer aircraft.
“The size of Embraer Executive Jets’ fleet in the region–more than 180 aircraft today–certainly reflects the economic growth of Latin America in recent years, but this success would not have been possible without the continued investment in our global customer support network,” he added. “The new facility in Sorocaba expands a customer service network that already includes a company-owned service center in São José dos Campos; four authorized service centers in Belo Horizonte, Brasília, Curitiba, and Goiânia’; and a global service network of 68 owned and authorized service centers worldwide.
“We will continue to strengthen and expand our service center network to support the growing fleet of executive jets in Brazil,” Pellegrini concluded.
Gulfstream also recently announced the expansion of its Brazil service facility, also located in Sorocaba. “Gulfstream is definitely committed to Latin America and has made significant investments in the region,” Rebello stated. “The new Gulfstream Brazil service center is now in a larger, more modern and centrally located hangar. This investment allows Gulfstream to better support the demands of our growing fleet in Brazil and South America.”
The newly expanded facility supplements Gulfstream’s existing authorized warranty facilities in Caracas, Venezuela (Aerocentro de Servicios) and in Toluca, Mexico (Aerovics). The company also maintains a parts distribution center in São Paulo, with field service representatives in Brazil and Mexico.
Dassault Aircraft Services operates a company-owned service center at Sorocaba Airport in São Paulo, with 23,000 square feet of floor space under roof. The facility is approved by the aviation authorities of Brazil, Bermuda and the U.S. FAA to perform A-series checks on all current Falcon models, including the 50-series, 2000-series, 900-series and the 7X. In addition, the Dassault-owned center conducts Falcon warranty and FalconCARE service and administration, scheduled and unscheduled maintenance and off-site aircraft-on-ground (AOG) service through the Falcon Go-Team program.
To build its presence in the region, Pilatus partnered with PC-24 launch customer Synerjet to provide sales and service in Brazil and throughout Central and South America. “The Synerjet team, through their corporate connection to Avianca Airlines, has strong marketing and support capability throughout the large territory, especially in Colombia, Central America, Ecuador and Peru,” Aniello added. “In addition, Pilatus and Synerjet are making larger investments in LABACE, and sponsoring many regional activities to expose both the PC-12NG and the PC-24 to prospective customers.”
Bombardier operates a spare parts depot in São Paulo to support Bombardier and Learjet aircraft. The company has also appointed five company-authorized service facilities throughout Argentina, Brazil and Mexico.
“We have expanded our sales team in Latin America to better respond to the needs of our existing and potential customers, as well as strengthening our customer services network to better support our growing fleet in the region,” Leroy added. “In Latin America, our customer support team is anchored through two regional support offices located in São Paulo, Brazil and Toluca, Mexico. The offices coordinate the efforts of five field service representatives and three customer support account managers dedicated to the region.”
Following its acquisition of Hawker Beechcraft last year, Textron inherited that company’s service network. Gibbs noted that work is now focused on integrating support for both Cessna and Beechcraft aircraft in the region.
“Textron Aviation now has a total of 22 authorized service facilities and two factory-owned facilities through all of Latin America,” he added. “We have an ongoing process to build on the best practices developed by Beechcraft and Cessna during their many decades of supporting their individual clients, and ensure that we use this joint experience to offer customers an even better and more consistent service across the region.”