Business-jet demand may be down from a macro perspective, but Gulfstream Aerospace is seeing some light at the end of the tunnel, driven in part by the pending entry-into-service of its two newest models.
"The G500 and G600 continue to build backlog in advance of their entry into service, sufficient to ensure the success of these programs,” said Phebe Novakovic, CEO of Gulfstream parent General Dynamics, speaking to analysts in late July. "Interestingly, the G550 built backlog as well in the [second] quarter. While we read the reports of weak demand and reduced deliveries across the industry, our experience is reasonable and steady demand for our products. We will deliver as many airplanes this year as we did last, on an entry-into-service basis.”
Gulfstream delivered 115 outfitted aircraft last year, 88 large-cabin and 27 midsize jets, down from 154, 120 large and 34 midsize, in 2015.
"We are comfortable with anticipated third-quarter orders based on early contract activity and contract discussions,” Novakovic continued. "The interest in the G650 and 650ER as well as the G550 remains quite good and supportive of next year's operating plan. In this quarter, we had the highest number of orders that we've had in the last six quarters for the G650 and G650ER. So that airplane continues to generate an awful lot of interest in the marketplace. In short, we expect a good third quarter and a second half from an orders perspective."
Gulfstream’s most visible programs of late are the G500 and G600, which are being developed in parallel, and following what the company says was extensive input from customers. Among the notable features derived from the feedback: the interiors offer wide cabins and flexible cabin comfort, ample storage and a multitude of configuration options, including work, entertainment, living and sleeping spaces, the OEM says. The G500 can accommodate three distinct living areas, and the G600 accommodates up to four.
The aircraft feature the same large oval windows and cabin environment as the G650 and G650ER. Both are capable of Mach 0.90, with a Mach 0.85-cruise range of 5,000 nm for the G500 and 6,200 nm for the G600.
Novakovic believes the new products are helping Gulfstream ride out the challenging business-jet demand environment.
"Parts of the market are very active, particularly those market segments where there is new product,” she said. "There are also market segments that are slow, largely because of the absence of product introduction, so we believe that the market is not only differentiated by segment, but also by the innovative offerings within the segment. We believe this is why demand for our products remains fairly consistent."
The G500 has accumulated more than 3,000 hours on about 800 flights since making its first flight in May 2015. Five aircraft, including one with a full cabin, are in the test program, which is expected to lead to certification this year.
“We continue to work closely with our suppliers to complete all component-level testing this year,” said Novakovic. "Once we have completed certification, the interior test aircraft, P1, will enter service as our G500 demonstrator."
Meanwhile, the G600 program saw its fourth aircraft enter flight testing in late June. Gulfstream says it is on schedule to receive FAA type certification for the G600 in 2018, with customer deliveries scheduled to start later that year.
"To have four first flights and fly more than 570 hours in less than six months is a remarkable achievement,” said Dan Nale, senior v-p, programs, engineering and test. “The rapid maturity of this program is due to the work we did before the flying even started—the strategic planning, the research, the lab development—combined with the success we’ve had in the similar G500 program. Thanks to our concurrent flight-test programs, we can apply lessons learned from the more mature G500 program to the G600, resulting in a more streamlined certification effort.”
Opportunities in Latin America
The new models are expected to bolster an already-strong demand in Latin America. Gulfstream has more than 200 based aircraft in the region, a figure that has increased about 20 percent since 2012, said Scott Neal, the company’s senior v-p, worldwide sales. Its largest markets are Mexico, Brazil and Venezuela, with 90, 40 and 30 aircraft, respectively.
The fleet growth has been backed by investments on the sales and support sides. Three years ago, the company expanded its service center in Sorocaba, Brazil, opening a larger, more modern and centrally located hangar at Aeroporto de Sorocaba-Bertram Luiz Leupolz. Gulfstream’s regional service network also includes two company-authorized warranty facilities, Aerocentro de Servicios, C.A., in Caracas, Venezuela, and Aerovics, S.A., in Toluca, Mexico. It also boasts a parts distribution center in Sorocaba, and a total of three field service representatives in Brazil and Mexico.
"Gulfstream is committed to the Latin American market as evidenced by recent investments we have made in the region,” Neal said. "Each investment has enabled Gulfstream to better support the demands of our growing fleet in Latin America.”
Neal sees the region as one that’s emerging as a business-aviaiton market, hence Gulfstream’s investment. He believes that other sectors of the industry will follow suit, driving more expansion.
"One of the opportunities we see in Latin America is the aviation infrastructure in the region,” he said. "Continued infrastructure improvements for business aviation—airport access, FBOs, hangars, etc.—would definitely be helpful as the fleet of business aircraft grows in the region.”
Part of the challenge goes well beyond the industry. Macro-economic conditions in the region, exacerbated by political tensions, have helped hold down business growth.
“Because business aviation is tied closely to the worldwide economy, any shifts in the political or economic landscape are likely to have some effect on business aviation,” Neal said. "Even with the current economic and political climate, we continue to have sales activity in the region; it’s just taking longer to close those deals.”
Gulfstream plans to have its G550 and G280 on hand throughout LABACE. Those two, along with the G650/G650ER, make up the company’s line of current-production aircraft in service. The G500 and G600 will expand that list to five distinct models.