The pandemic created promising new contours for the corporate-aviation market that should continue well into 2021. But the post-virus recovery will test whether industry dynamics have changed for good—or are just one-year wrinkles.
“People still have travel needs they want to meet, and they’re not comfortable with airlines,” says Elis Olsson, director of operations for Martinair, an aircraft-management outfit in Richmond, Virginia. “But the days of having hundreds of private jets lining up at Teterboro Airport [for general aviation, in New Jersey] and no ramps to park them—will that come back?”
Business-jet usage rebounded to as much as 85 percent of 2019 levels by late 2020 and should fully rebound by mid-2021, Honeywell Aerospace forecasted in October. In Honeywell’s annual survey of business-jet operators, their five-year purchase plans were down less than one percentage point compared with the 2019 survey.
Here are looks at several of the major dynamics for private aviation in 2021:
• Expanding customer base. Virus effects on airlines have brought new corporate customers to the private-aviation fold. “Use of business jets is being pushed lower down into organizations,” says Sheryl Barden, head of Aviation Personnel International. “We’re seeing more engineers going from one plant to another to help with retooling, for example.”
Post-Covid, companies may want to avoid any new Transportation Safety Administration protocols at airports that could slow things down. “Flying commercial, even in first class, is viewed with trepidation as an increasingly brutal and hazardous affair,” says Paul Jebely, aviation partner at Pillsbury Law.
What’s more, says Mark Dombroff, partner at the Fox Rothschild law firm, “It now is somewhat easier [for CEOs] to justify adding corporate flight departments to the board and shareholders.”
Yet, such first-time buyers are why some believe used jets will experience more growth than new-plane sales in 2021. “The market that’s going to flourish now is pre-owned turboprops up to low-cost, pre-owned jet aircraft,” says Ken Qualls, president and CEO of Flight Management Solutions in West Palm Beach, Florida.
• Flourishing of time shares. Choices including charters, fractional ownership, leasing and “jet cards” should fare well as demand for private flights grows—yet many customers hesitate to purchase their own plane. “A lot of options are going to flourish,” Qualls says. “That’s going to be where the growth is.”
One indication: In November, Zanite Acquisition, a holding company for major fractional-share brands such as Flexjet and Sentient Jet, launched a $200-million IPO.
Even some airlines are pushing into the private-aviation market. Delta struck a pre- Covid agreement to provide its 200-plus private jets to the 8,000-plus members of hourly charter giant Wheels Up. And some carriers are pitching a socially distanced onboard experience in small regional jets as a reasonable alternative to flying privately.
• Reckoning for business travel. The true nature of company communications will be tested in a post-pandemic environment. “That generational need to go out and shake hands, or now bump elbows, has gone by the wayside,” Qualls believes. But Tim Lynes, managing partner for the law firm Katten Muchin Rosenman, insists, “People will want to go back to the office and travel. That’s going to drive the market. We’re not going to stay in a phase where everyone wants to do a Zoom call.”
International travel likely will lag more than domestic, with Qualls predicting about a one-third drop in the long-term business need for foreign trips and the stabling of most long-range airplanes for at least two to three years. Yet “for many people,” Lynes says, “it’ll be more compelling to travel on a private jet to London for an in-person meeting than to take a Zoom call at 2 a.m.”
• Conflicting financial considerations. “Phenomenally inexpensive money” to finance deals will continue to drive the plane market, Lynes says. And if President Biden raises corporate tax rates to 28 percent from President Trump’s cut to 21 percent, the deduction a company can get for buying its own jet also will rise. Yet the Biden administration is expected to deep-six immediate 100 percent depreciation of corporate-aircraft purchases that bolstered sales under Trump’s tax cuts.
In any event, Covid overhang could continue to drag on sales. More than 95 percent of business-jet operators in the Honeywell survey expected no change in their fleet size due to cuts in commercial travel. And, says Greg Cirillo, founding member of HCH Legal, “Buying and selling is slower and more difficult because inspection and repair facilities are imposing operational limits and reduced staffing.”
• Missing pilots. The furlough of thousands of airline pilots should be good news for a private-aviation industry that has faced an acute shortage of pilots for years. But that’s not the case.
For one thing, amid contraction, airlines have prioritized keeping junior pilots who can help them rebuild. So, most pilots shed were senior operators of larger airline jets who “were on the edge of retirement anyway,” says Craig Picken, managing director of NorthStar Group, an industry search firm in Wilmington, North Carolina. “They aren’t coming into corporate aviation.”
Another thing: Training and obtaining “type ratings” for flying a particular business jet can cost an operator as much as $100,000, even for an experienced pilot. “It’s not like switching from a Chevy Suburban to a Ford Excursion,” Lynes says.
• Rising table stakes. Jet makers are adding Covid-era sanitation protocols to lush digital connectivity as key appeals. Leveraging internet bandwidth in the plane has become crucial, as illustrated by communications giant Viasat’s recent promise to provide “home-like performance in the sky” for large Gulfstream G650 and G650ER business jets.
Already, cabin ionization has become de rigueur. And Safran, a leading provider of business-jet interiors, just signed a deal with 3M for hygiene enhancements that include permanently embedding anti-microbials into interior surfaces during the manufacturing process.