by Doug Gollan

Tracking from both Argus and WingX shows that private aviation is continuing its strong rebound, particularly in North America.
According to the latter’s weekly Global Market Tracker, through June 9, private flight levels approached 70% compared to the same period in 2019.
Argus found during the first seven days of June, Part 135 flights reached 68% of 2019 levels while fractional flying was at 65%.

Part 135 represents on-demand charters and jet card flights. Fractional activity was driven by NetJets and Flexjet, two of the market’s largest players, although their totals also include flights they operate for jet card customers in addition to share owners.
During the same period, TSA data has airline passengers at 15% of last year’s totals, although on an upswing.

The good news for the private jet industry is likely to continue. Richard Koe, managing director of WingX notes, “With commercial airline capacity severely cut back, and the airline passenger experience complicated to say the least, business aviation could see a belated surge in July.”

Airline CEOs have said it could take three years to restore their networks to pre-COVID-19 levels. A poll during a recent webinar by Aviation Week found 55% of respondents believe private jets will get back to pre-crisis activity within a year, and more than 80% think that it will take less than two years. If the airlines continue the reduced schedules for an extended period, that may give more folks who need to get somewhere the opportunity to see what they’ve been missing.

As an example, the 336 mile flight from Miami to Jacksonville takes about 47 minutes on a light jet. American Airlines blocks the same trip at around 80 minutes, accounting for various delays. However, there is now only one daily nonstop per day in each direction between the two Florida cities. Prior to the coronavirus pandemic, there were up to 16 daily flights on the route. The trend for private jet travel has been headed up since mid-April when levels plunged by as much as 80%. More recently, the industry found pent-up demand during the extended Memorial Day weekend despite the fact that many hotels, resorts and beaches were still closed, including holiday hotspots Las Vegas and Miami.

Flights by charter operators achieved 59% of activity levels on a year-over-year basis. During the period there were 13,742 departures, down from 23,453 in 2019. That includes key players such as Gama Aviation Signature, Delta Private Jets, and TMC Jets, all part of the Wheels Up group, Executive Jet Management, a division of NetJets, Vista Global Holdings’ XOJet, Jet Linx, Solairus Aviation, JetEdge, and Fly Exclusive.

On Memorial Day Saturday, Part 135 flights ended up at 71% of last year’s level while the fractional operators were at 68% of 2019 activity. During those same days airline passenger count was at 12%.

A good chunk of the demand for private travel is of course driven by consumers who want to reduce exposure to a deadly disease with no vaccine or cure. And while the airlines and their trade associations have been mainly on the defensive, raising eyebrows by arguing that there is no benefit to social distancing on their airplanes, in other words, they intend to sell every seat whenever they can, private aviation has astutely positioned itself as a safer alternative. In fact, the International Business Aviation Council (IBAC), which audits safety standards of private jet operators and terminals, FBOs in industry lingo, even issued a self-audit program to help members ensure the most sterile environment. At the same time, business aviation companies have been proactive in spending extra money to ensure cleanliness.

NetJets says it is spending over $1 million dollars per month on enhanced procedures. Directional Aviation’s Flexjet treated its entire fleet with a COVID-19 repelling application and has given its pilots an app enabling them to report temperature and blood pressure multiple times daily. Sister Sentient Jet, which is a broker for jet cards, is extending the same scrutiny to the operators that fly its customers.

Over two dozen private aviation providers have announced heightened procedures reducing possible COVID-19 exposure. And while the airlines dither on whether flights should be dirt cheap or expensive, private aviation companies have been striving to make getting into the market more attractive.

Today you can’t pry private jets from owners’ hands despite crazy economic gyrations that would normally spook them into selling, and a business jet fleet that’s essentially been sitting idle awaiting lockdown orders to be lifted.

This is in stunning contrast to the financial crisis of 2007-2008 when business aircraft owners stampeded for the exits. Before that, 10%-12% of the fleet was typically for sale at any given time. As the floor of financial markets fell out, it quickly ballooned to 18%, meaning that nearly 1 in 5 of all the world’s jets had a for sale sign taped in their windshield.

Not so this time around. Despite stock markets again plunging due to the worldwide pandemic, the number of business jets on the used market have remained remarkably steady. According to private aircraft fleet statistic provider AMSTAT, roughly 9.8% of the world fleet was for sale pre-virus. Today, after more than a month of economic whipsawing and uncertainty, that number has blipped up to just 10.3% – effectively unchanged and still on the low end of used aircraft supply even in normal times.

This stark contrast in the number of aircraft for sale in each downturn comes with a few plausible explanations. First, the 2007-08 dip revealed a fragile financial system that sent irreparable shockwaves through markets, corporate balance sheets and personal portfolios. This was coupled with loose lending terms allowing aircraft to be purchased by those without solid finances to keep making payments. Add to that an economy that was already on a downward trajectory and owners could no longer afford or justify keeping the corporate jet.

This time around the situation is markedly different. The economy was going strong prior to the pandemic, lending standards were stricter, the stock market hasn’t continually free falled and there isn’t the fear of a banking collapse. This has given owners the fortitude to stand pat and look beyond the current environment to a presumably brighter financial future. But that’s not their only reason for not selling.

As air travel begins to more widely resume, those who can afford to avoid the public airport crowds and fly privately will do so. One typically travels on a private jet at most with a couple of people they know, handily beating the alternative of being trapped for hours in an airliner with multitudes of strangers of unknown health pedigrees.

For this reason, it’s assumed that the business aviation industry will recover more quickly than the airlines since those travelling on private aircraft will feel safer taking to the skies sooner. While new business jet sales aren’t expected to surge due to the large capital commitment, it’s likely charter and other non-ownership business models will see an uptick from well-heeled newcomers willing to pay a premium to avoid the airliner petri dish experience. While many will eventually return to scheduled airlines once the hysteria subsides, a few will remain in the folds of private aviation having sampled the wares.

Those who own jets now have the ability to travel in a proverbial plastic bubble, less exposed to airborne nasties to be endured by public air travelers for the foreseeable future. Aircraft owners will find a way to justify keeping these once discretionary assets for as long as they can, as they now view them to be just as valuable and coveted as that last package of toilet paper at the grocery store.

Those looking for silver linings in the dark clouds over business aviation this week found themselves squinting to see any. If the Covid-19 pandemic’s repercussions for the industry still seemed ambiguous at the end of last week, there is now little doubt that the sector’s engines are spooling down and the industry is bracing for a period of inactivity. The only remaining questions seem to be for how long this might last and whether it could prove to be more than just a temporary interruption to what until now has been a rising tide for business aviation.

For now, the prospect of restrictions on domestic U.S. flights seems, mercifully, to have been averted. But elsewhere, the past few days have brought more worrying signs, such as business aircraft factory closures at Bombardier and Embraer, on the heels of Textron’s earlier furlough announcement.

In the UK, Harrods Aviation announced the temporary closure of its FBOs at London Luton and Stansted Airports, and London City Airport has closed at least until the end of April. The British Business and General Aviation trade group on March 26 warned that by the end of the month the country’s entire business aviation fleet will likely be grounded.

More discouragingly, there are signs that Asia is bracing for a second wave of coronavirus cases and taking steps to block new sources of infection by further restricting travel from other countries. From March 26, the Chinese government was effectively closing its border to all foreign travelers, bringing the crisis full circle from early February when it was Chinese citizens who found themselves persona non grata in a world that then largely saw the outbreak as a local problem.

As demand for passenger repatriation flights began to tail off towards the end of this week—an activity complicated by the need to navigate tightening government restrictions—operators found themselves increasingly shifting to cargo-carrying roles and flights in support of emergency medical operations. Charter broker Chapman Freeborn yesterday reported a surge in demand for aircraft to move humanitarian cargo and medical supplies. However, according to the European Business Aviation Association, some were adversely impacted by overly-rigid interpretation of rules by some national authorities, even though these missions are permitted under most current travel bans.

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