Business in private aviation is booming. At the opening lunch for media at the European Business Aviation Conference & Exhibition being held in person in Geneva, Switzerland, for the first time since 2019, Kenny Dichter, Chairman and CEO of Wheels Up Experience, told the audience he has seen a transformation from private aviation being a luxury to an essential part of the lifestyle for his over 12,000 members.
One provider says Monkeypox is already spurring calls from potential new customers who want to avoid crowded airports and commercial airplanes. Attendees at the conference bemoaned delays in getting here, the result of airlines canceling flights due to staff shortages.
David Paddock, the President of General Dynamic’s Jet Aviation, speaking at the same welcome session, said after an initial 70% drop in business at the outset of Covid, sales at its FBOs have recovered to nearly 20% ahead of pre-pandemic highs.
Globally, around 80% of the 500 operators surveyed by JetNet IQ expect increased utilization in fractional and charter operations seen over the past 12-to-18 months will continue.
However, the issues that are roiling the airlines and greater economy are also hitting the business aviation segment, somewhat misnamed as much of the boom has been spurred by leisure flyers. In fact, despite records every month, Dichter says corporate flying is still lagging.
For providers, maintaining the high level of service wealthy clients expect has become virtually impossible. Airplanes that would be back flying in four hours after minor maintenance issues are sitting on the ground for four to six days.
VistaJet was hoping to have its fleet-wide refurbishment finished by the end of the year. Ian Moore, Chief Commercial Officer, says it will now likely take until early 2023. What’s usually a four-week process can now drag on for eight weeks.
OEM delivery dates for new aircraft slip. Executives say near-complete airplanes can’t be shipped as they wait for various components stuck someplace along the supply chain.
VistaJet’s fleet, which previously could be accessed on a flight-by-flight basis, is now primarily reserved for customers of its membership program. Do not quote days when VistaJet doesn’t allow non-members to book were in effect for 90% of a recent month.
“I don’t know when a peak day is anymore. Any Wednesday could be a record day,” Moore says. Historical data and forecasting no longer works.
According to one jet membership company, when an airplane is AOG – aircraft on the ground – industry jargon for a maintenance issue, it can take calls to at least 50 operators to find a short-notice replacement.
While on-demand charter re-quotes the trip with a new price, fractional and jet card programs typically provide replacement aircraft at no additional cost to their customers.
“The operators gouge us on the price when that happens,” the CEO of one membership provider said. Recently, his company could only find a large cabin Gulfstream to replace a light jet that went AOG. A flight that generated about $25,000 in revenue cost $50,000 to fulfill. Customers were upset about being delayed.
Deliveries of new airplanes are supposed to reduce some of the system’s stress. However, one fleet operator says a new tail scheduled for delivery in March finally arrived in May. Within 10 days, it was sitting on the ground with a maintenance issue. Another operator says depleted capacity for scheduled maintenance, meaning when airplanes hit the mark for mandatory visits to the shop, they must now sit and wait.
During a press conference, Dassault Aviation CEO Eric Trappier says delaying certification for its Falcon 6X until 2023 is in large part due to supply chain issues. In a briefing from Gulfstream Aerospace, also owned by General Dynamics, its President Mark Burns said new FAA procedures to approve software for airplanes in the wake of the Boeing Max crashes are taking more time than in the past.
Michael Amalfitano, CEO of Embraer Executive Jets, said its production is hamstrung by the same issues impacting other industries, such as shortages of computer chips. That’s not stopping the flow of new customers. Nearly half of its Phenom entry-level jets were bought by first-time buyers last year. Many were introduced to the type by the numerous fractional and jet card providers that feature them in their fleets, he says.
Dichter, during his talk, urged the industry to expand the workforce by making itself attractive to a broader array of talent, targeting women and minorities.
However, it’s not clear if there are any short-term solutions. Marine Eugene, International Managing Director for Directional Aviation’s Flexjet, notes, “This is an industry that requires long-term planning. It’s not able to respond to a 40% increase in demand in such a short period.”
GlobeAir CEO Bernhard Fragner, who helped create the surge in demand by releasing a report early in the pandemic highlighting that private flights have less than 20 touch points compared to over 700 with the airlines, wants to upgrade his fleet with jets that seat five or six passengers replacing the current four-seat Citation Mustangs. He wants to accommodate the surge in family travel and groups of friends.
A new report from Global Jet Capital forecasts new and pre-owned private aircraft transactions through 2026 are expected to increase at an average annual rate of 1.5%, while dollar volume increases at an average annual rate of 5.1%.
Its Chief Marketing Officer Andrew Farrant writes in the report, “We see business aviation fitting into a broader narrative around flexibility – in how people utilize their time, and how they choose to travel to build and reinforce relationships. We see aircraft owners and operators increasing their usage, and there are new users entering the market through charter, fractional ownership, and whole ownership. It is the unique value proposition of business aviation, supported by a mature industry demonstrating balanced supply and demand dynamics, that will support sustainable growth for the foreseeable future.
Not everybody thinks there are smooth skies ahead. “I don’t believe in the current euphoria and see more risks ahead for our industry. Either the current trend lasts, and the market faces a major supply issue, or it reverses dramatically and faces a new wave of bankruptcies,” says Eymeric Segard, CEO of Geneva-based charter broker LunaJets. He says, “I don’t see any indication of a soft landing.”