AINsight: Predictions for Next Month's NBAA-BACE

 - September 20, 2019, 8:05 AM

What do Detroit, Frankfurt, Paris, Tokyo, Geneva, Farnborough, Las Vegas, and Orlando all have in common? Among other things, these are popular sites for major industry conventions that bring automotive and aerospace innovations and new products to the public eye. Original equipment manufacturers (OEMs) in these and other industries have become masters of event planning and execution, highly skilled at creating just the right mix of buzz and bubbly to excite crowds and grab the show daily headlines.

When expertly accomplished, all that marketing pizazz motivates prospective customers and drives sales momentum, which is vital to market share, profitability, and business valuation. Away from the bright lights and big marketing budgets evident at these trade shows, the real work begins on the long and winding road to generate ROI on all those hundreds of millions or even billions of dollars of product development investment.

Business aviation’s premier gathering (sorry, Orlando Regional Chamber of Commerce) occurs biennially in the not-so-sleepy enclave of Las Vegas—this year from October 22 to 24. Despite the economic storm clouds billowing on the horizon, speculation is running rampant of at least one or more major business jet product announcements. With solid new aircraft orders and book-to-bills well above 1.0 at most OEMs through the first eight months, a new announcement or two could provide the ingredients for a party that goes on right through the desert night.

According to the good people at Merriam-Webster, speculation is simply an idea or a guess about something that is unknown. In Vegas, they have other names for such ponderings, including crapshoots, all-in wagers, wild-eyed bets, and gambles. Is it wise to speculate? Some would say no, that the future is by nature unknowable, so why bother? Why would anyone roll the dice or pull the slot machine handle if they don’t know how that is going to turn out?   

The famous American philosopher Yogi Berra once said, “It’s tough to make predictions, especially about the future.” Forecasting is a curious mix of science and art, and there are some people who do it much better than others. Those who do it best are curious by nature. They are good at asking questions and then listening for answers. They are deep thinkers and puzzle-solvers who systematically invest the time to stay apprised of environmental changes. They tend to read a lot, work easily with large data sets, and be good at pattern recognition. They are ideally “left- and right-brainers” who combine creative and reasoning skills to connect the dots and derive powerful insights about the present and the future. They are humble enough to know that if they don’t get things right, they at least can learn something valuable for the next time around.

Horse racing is often called the sport of kings, with Triple Crown-winning Citation (1948) amongst a field of just 13 thoroughbreds to make their owners proud—and wealthy. More than 70 years later, a family of business jets named Citation is the most sold business jet is history, with many more to come. Aircraft development, the true sport of kings, is where big investments bets and long payback periods are the rule rather than the exception. Despite millions of dollars on the table, experience suggests that many aircraft are actually conceptualized on the backs of envelopes, sometimes with limited reliance on market research and demand forecasting. At Gate 0 in the “fuzzy front-end” of an aircraft development program, leadership teams need to get the design and engineering right and make determinations about sales and delivery forecasts long before any program revenues are accrued. Having market research and forecasts that are logical, defensible, and sensible can provide some assurance that all those millions and even billions will be wisely invested.

At NBAA-BACE 2019, I speculate that Gulfstream will finally come forward with the news that it is adding one and possibly two new models to its large-cabin family. I suspect that the much anticipated “G700” will be designed to seize back the industry high ground occupied by the G650/G650ER from 2012 through the end of 2018, when Bombardier began delivering its Global 7500. Bigger, longer, faster, farther, with fly-by-wire flight controls, the Global 7500 has changed the calculus at the top of the market, and customers have been noticing—and bringing along their checkbooks to place firm orders.  Although supplier details are not known, we would not be surprised to learn that the new Gulfstream will be powered by a version of the Pearl family, once again reuniting the Gulfstream and Rolls-Royce brands.

Another aircraft, nominally the “G400,” could also be revealed, bracketing the lower end of Gulfstream’s large cabin family. A true replacement for the company’s venerable G450, the G400 could be positioned in a sweet spot in the market for a fast, large cabin, FBW and transatlantic-capable aircraft with a price point in the mid-$30 millions. A “G300” upgrade to the super-midsize G280 is also believed to be in the works, providing Gulfstream with a once-in-a-generation opportunity of a triple product announcement that will be the talk of the town in Las Vegas at NBAA-BACE 2019.