New York: Private aviation is bouncing back more quickly from the coronavirus pandemic than it did from the 2008 recession, a blow from which it never fully recovered.
The prospect for a V-shaped recovery in private-jet flights is underpinned by a smaller base of customers who remained loyal throughout a decade of corporate cost cutting. Private-jet operators and planemakers expect to win new flyers who need an alternative to pared-back commercial routes and want to avoid the higher risk of contracting the virus at crowded airports and airplanes.
The full impact of the current downturn was delayed by an initial flurry of private flights in February and early March as people rushed to relocate to ride out COVID-19 lockdowns. Now the industry looks to recover faster than commercial airlines as businesses begin to reopen, said Mike Silvestro, CEO of Flexjet, which provides flight services with a fleet of 160 private planes.
This crisis "is completely opposite of what we've seen in the past," Silvestro said. "Private aviation is poised to actually be the beneficiary because of the inherent nature of a safer, more familial, cleaner environment."
Up in the air faster
The early numbers are encouraging. Private flights are expected to be off 27 per cent this month from a year earlier, and may recover to pre-virus levels within a year, said Travis Kuhn, vice-president of market intelligence at Argus International. That's after flights plunged as much as 72 per cent in April and 49 per cent in May.
Meanwhile, the number of commercial airline passengers plunged 90 per cent in May, according to the Transportation Safety Administration. Carriers already are warning investors that demand may not return to pre-virus levels for years. The airlines are shrinking to survive, which means fewer flights and options for travelers.
Private planes are seen as the aviation equivalent of driving a personal car instead of taking the train. That provides a safety factor that could become a key selling point, according to Eric Martel, CEO of small-jet maker Bombardier Inc.
"That's a reflection we're having, whether COVID-19 will clearly bring new needs," Martel said in May. "Business planes become probably a safer solution than commercial planes."
A slow flight to recovery
Private air travel, which hit bottom during the last recession in 2009, never regained the boom levels of 2007. It was worse for aircraft manufacturers. Annual deliveries of new private planes dropped for five years from a peak of more than 1,300 in 2008.
Last year, the industry delivered 809 jets, according to the General Aviation Manufacturers Association, one of the best years since the financial crisis.
Outlook
In 2020, deliveries of new aircraft are estimated to plunge 30 per cent or more from last year. Planemakers, including General Dynamics Corp.'s Gulfstream and Textron Inc.'s Cessna, have throttled back production.
NetJets, a business-jet operator owned by Berkshire Hathaway Inc., has canceled orders, and Flexjet has postponed taking new aircraft.
The brutal contraction in the last recession left a loyal customer core that will anchor a rebound, market experts say. That foundation will be bolstered by first-time charter flyers who convert to repeat customers and, eventually, jet owners.
"You're going to see an entire new wave of business jet flyers who make the jump from commercial to private aviation, and you're going to see first-time jet buyers," said Neil Book, CEO of Jet Support Services Inc., which has maintenance contracts for about 2,000 private planes.
