Even when the workers who build Gulfstream’s G650 business jet are on a break, it is easy to see that the world’s longest-range business jet is in demand. Every corner of the assembly building, on the edge of the historic port city of Savannah, is filled with components for new aircraft. Fuselages in various states of construction are jammed in nose to tail.
Outside, aircraft wait to be fitted with luxurious interiors before heading off to start shuttling the world’s business and political elite between continents.
The G650, introduced in 2012, is the most obvious illustration of how Gulfstream, part of General Dynamics, the military contractor, is benefiting from the resilient demand from the world’s wealthiest flyers for the most capable private aircraft.
Demand for large jets — which accounted for 117 of the 150 aircraft that Gulfstream delivered last year — continued to grow throughout the economic downturn, fuelled by new demand from China and other emerging markets. Orders for the smaller aircraft popular with US and European companies for shorter trips slumped.
Gulfstream’s focus on the large, high-value end of the market looks set to turn it soon into the world’s largest business jet manufacturer by revenues. Gulfstream produced $6.98 billion (Dh25.63 billion) of General Dynamics’ $8.65 billion aerospace revenue last year, up 9 per cent on the year before, and aerospace operating profit margins were 18.6 per cent.
The list price for each G650ER — an extended range version that can travel 7,500 nautical miles without refuelling — is $66.5 million.
By contrast, Canada’s Bombardier, which reported $7.2 billion in revenues and was far less profitable, has been forced to cut back. In January, it put development of a new, smaller jet — the Learjet 85 — on hold, citing poor market conditions.
In May, it cut back production of its flagship products, the Global 5000 and Global 6000 long-range jets. France’s Dassault Aviation, the only other competitor in the large-cabin business jet market, generated revenues from business jets of €2.68 billion (Dh103.9 billion) in 2014.
Scott Neal, Gulfstream’s head of sales and marketing, says Gulfstream stood out for its willingness to invest throughout the economic downturn.
“Even though economic conditions changed, we continued to invest in our product line,” he says.
The challenge for Gulfstream is to maintain that strong position as it shifts its focus towards developing two new, shorter-range aircraft — the G500 and G600 — designed to fly, like the G650, at 0.9 times the speed of sound. Their list prices are $43.5 million and $54.5 million, respectively.
“The feedback that we’ve heard from the customers is that they really liked the speed capability of the 650; they liked the technology of the 650,” says Steve Cass, Gulfstream’s head of technical marketing and communications. “So they wanted to see that type of technology but put into an aeroplane that didn’t fly as far and didn’t cost as much.”
One of the key reasons for Gulfstream’s strong market position relates less to what it has done than to what Bombardier has not done, according to Richard Aboulafia, an analyst at the Virginia-based Teal Group. While customers have been operating the G650 since 2012 and the G650ER since 2014, Bombardier’s competing products — the Global 7000 and 8000 — have not yet had even their first test flight.
Both aircraft are due to match the G650’s speed, while the Global 8000 is projected to have a longer, 7,900 nautical mile range.
Bombardier has instead been focused on its C Series commercial jet, which has so far cost $5.4 billion to develop, faced severe delays and won only modest orders.
Since Dassault’s Falcon 8x, its longest-range aircraft, has a range of only 6,450 nautical miles, Gulfstream has had the top end of the market to itself.
“It’s going to be another few years before Bombardier finally can respond,” Aboulafia says. “The G650 is bringing in a lot of money and earning Gulfstream a lot of market share.”
Dassault looks unlikely to tackle Gulfstream head-on in its effort to provide customers with ever faster, ever longer-range aircraft.
Olivier Villa, Dassault’s senior vice-president, says that many customers own only one or two jets and will prize efficiency over extreme high performance. He adds that one loyal customer with facilities in the US told him that high speed was less valuable to him than having a jet versatile enough to land on short runways near his company’s remote facilities.
“What we try to do is a real business jet, meaning that you can be efficient and fly long-range but that you can also land where others cannot,” Villa says. “We believe it’s our strength and strategy for the future.”
Gulfstream’s future, meanwhile, is being worked out in a series of buildings a short drive from the G650 production site, where technicians sit staring at screens amid rigs set up to mimic the flight deck of the future G500 or the G600. They are working on innovations such as a single, interconnected data system that will replace traditional wires and make the aircraft lighter.
“The goal with that is we want to deliver the most mature product from the very first one to our customer base to meet or exceed their expectations,” says Scott Evans, one of Gulfstream’s senior test pilots.
Yet, whatever the new aircraft’s technical niceties, the most important fact about the G500 and G600 may be simply that they are so close to coming into service, according to Aboulafia. The G500’s first flight was in May and deliveries to customers are due in 2018. The G600 is expected to run around a year behind.
According to Aboulafia, Gulfstream’s current advantages show that it has grasped two long-standing principles of the business jet market.
“One is: seize the high end,” he says. “Two is: don’t let your product line get old.”
Financial Times