Gulfstream lures China’s billionaires for private jet sales boost
Gulfstream Aerospace is looking to China’s billionaires and businesses to boost sales as the company targets new customers in the region. The private jet maker is offering bigger aircraft models, preferred in China, with the capacity to fly farther. Gulfstream has delivered 300 of its G650 jets so far and is striving to introduce the new-generation G500 and G600 aircraft in the nearest future.
In an interview at the Singapore Airshow, Scott Neal, Senior Vice President for Worldwide Sales at Gulfstream, stated that the demand in China is primarily for large cabin aircraft “that will allow Chinese companies to fly non-stop to many destinations around the world.” It is thought that as Chinese businesses expand around the world, they can appreciate “the utility that business jet can provide,” Neal told Bloomberg Television.
The subsidiary of General Dynamics is “still seeing good signs of activity and growth” in China, Neal assured, despite the significant decrease in demand for luxury items following President Xi Jinping’s campaign against corruption which began in 2014. Asia Pacific, and China in particular, has been the second busiest market outside the U.S. for Gulfstream.
Gulfstream started delivering the G650s in late 2012, after introducing the design in 2008. It has since sold about 300 of these jets globally. The G650 comes with the list price of $67.4 million. It is the private jet industry’s largest business aircraft and can make a Tokyo-New York trip in less than 11 hours, Bloomberg reports.
Sales of the G650s have helped make Gulfstream the most profitable private jet maker, with operating profit margins of 21 percent, according to JPMorgan estimates. This has resonated with General Dynamics which surged in January, 2018, after orders of the G650 rose to the second highest level since sales of the aircraft began. The company rose 5.7 percent to $219.27 at the close in New York on January 25, 2018. It was the biggest one-day gain since April, 2013, The National reports.
Demand for Gulfstream’s jets, including the new aircraft that begins delivery in 2018, will also get a boost from U.S. corporate tax cuts, the CEO of General Dynamics Phebe Novakovic told The National. “So we had a nice increase in large cabin orders led by the G650 and G650ER,” adding that, “As we speak, there are over 280 of these aircraft in service with many early customers returning to buy another.”
Bombardier is seeking to compete against the G650 with the debut of its Global 7000 in late 2018. The aircraft is even bigger and matches the G650’s speed at just below the sound barrier, although the G650’s extended-range version can still fly farther. The price of Global 7000 is $73 million, Bloomberg writes.
Meanwhile, Airbus said in November, 2017, that it will start marketing its A350 wide-body aircraft as a private jet in the Arabian Gulf, seeking to tap into strong growth in the Middle East business and VIP travel market. According to Airbus retiring sales chief John Leahy, certain features of the A350, such as a low cabin altitude and fresh air, made it “ideal” for private travel, The National writes.
Considering the Middle East market, Gulfstream announced on February 5, 2018, it delivered a fourth G650ER to Qatar Airways establishing Qatar Executive as world’s largest single G650ER owner and operator. “The demand from our customers for longer range private air travel continues to grow,” said Qatar Airways Group CEO Akbar Al Baker.
Gulfstream is also ready to introduce new models to spur sales. The G450 business jet is being replaced by the next generation G500 which is scheduled to enter service in 2018. Deliveries of the G600 are set to begin in 2019, the company says. For now, Gulfstream’s all-new family of business jets continue to make progress toward U.S. Federal Aviation Administration (FAA) certification. The G500 and G600 are currently being displayed at the Singapore Airshow.
Gulfstream Aerospace Corporation, a wholly owned subsidiary of General Dynamics, designs, develops, manufactures, markets, services and supports business jet aircraft. Gulfstream’s fleet is comprised of the G280, G550, G500, G600, G650, and the G650ER aircraft.
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