The rich opt to travel in private jets on fear of coronavirus
In April, John Matthews’ private jet business, AirX, went into a terrifying nosedive. After coronavirus lockdowns, monthly charter requests fell from almost €100 million to just €200,000.
“There was pretty much nothing. Terrifying may be an understatement,” said Matthews, chairman of the Malta-based private jet operator. His company faced a grave threat to its survival from the spread of travel restrictions across the world.
But since then, a rebound in demand has given hope to Matthews and his competitors. Although their sector styles itself as “business aviation”, little of the new demand has come from corporate travel, which is still largely frozen after conferences were canceled and meetings migrated online.
Instead, it is an influx of leisure customers — unable to travel commercially or unwilling to risk mixing with crowds — that has helped pick up the slack and allowed the private jet market to avoid the worst of the crisis afflicting large airlines.
June figures for the commercial sector are yet to be published but airline trade body Iata expects them to be grim. In May, commercial passenger demand was down 91.3 percent compared with a year ago.
In the first three weeks of July, global private aviation was down just 19 percent from its pre-Covid levels © Captain Ferenc Merker
By contrast, private flights dropped 70 percent year on year in April but were down only 28 percent in June, said aviation business monitoring group WingX.
The recovery has continued into the first three weeks of July, with global private aviation down just 19 percent from its pre-Covid levels as more European countries lifted travel restrictions.
NetJets, one of the biggest private jet companies and a subsidiary of Berkshire Hathaway, said demand was back to 85 percent of normal flying levels by late June after dropping to 20 percent in late April.
“Business travel has not returned in any material way,” said Patrick Gallagher, president of sales and marketing at NetJets. “But the personal travel, to have brought us back to 85 percent of demand, really shows a shift.”
The trend has brought a change in private jet routes. While arrivals to New York were still down 32 percent in the first three weeks of July compared with the same period a year earlier, according to WingX, the Spanish island of Majorca saw a 20 percent increase, representing an additional six flights a day.
AirX has partnered with hotels in the Maldives to shuttle wealthy tourists to the islands using its largest jet, an Airbus A340 with 100 lie-flat business class seats. “I always said, if we can get one charter a month on this plane we’re doing really well, but I never thought this was possible,” said Matthews.
Shuhan Ahmed, general manager of Milaidhoo Island hotel in the Maldives, said his company realised booking a long-haul trip this summer could be “daunting” for many travelers. “Flying on a private jet should give them the confidence to know their personal space will be respected at all times,” he said. However, the AirX flights are on hold as the UK’s Foreign and Commonwealth Office has yet to clear the islands for quarantine-free travel to the UK.
Crucially, flying on a private jet avoids hundreds of so-called touch points that could be contaminated by coronavirus, such as busy airport terminals and baggage check-ins.
“If you want to reduce your number of touch points with people and you are having to fly in and out of a hub, then private aviation gives you that ability to reduce that contact,” said Justin Bowman, chief executive of Air Charter Service, a broker for chartered jets.
“It’s changed commercial travel,” said Sentient Jet chief executive Andrew Collins, referring to coronavirus. “People are very much going to be looking to avoid crowds.”
US-based Sentient, which sells cards from $137,000 that give customers access to private jet flights, experienced a 90 percent fall in volume in April compared with a year earlier. In June, it was down less than 30 percent compared with the previous year.
Collins added that people who had never flown privately before were contacting the business. He cited a couple who routinely shuttled between Detroit and Scottsdale in Arizona, where the husband no longer wanted to take his wife, a cancer survivor with a weakened immune system, on commercial flights.
NetJets’ Gallagher said the truncated schedules of commercial airlines would provide a sustained boost to private jets. “The issue today is there is not a nonstop flight between Miami, Florida and Columbus, Ohio, and there used to be several,” he said. “Flight schedules are operating 65 percent down from pre-pandemic. It makes it much harder to get between cities nonstop and on the schedule you want to fly.”
The additional hope for private jet operators is that business travel will start to return but with executives reluctant to travel on commercial flights.
Despite growing optimism in some parts of the business, much of the industry remains cautious because of fears of another coronavirus wave and continuing quarantine measures.
For some companies, it is already too late. Texas-based JetSuite, which had revenues of $50m in 2019 and backers including JetBlue Airways and Qatar Airways, filed for Chapter 11 bankruptcy on April 28, citing debts of $68m.
“Let’s be really clear, there’s still a long way to go and there’s still so much uncertainty,” said Mark Briffa, chief executive of UK-based Air Partner, a private jet broker. “The aviation industry is going to shrink. There’s absolutely no doubt about it, the consumer is going to change its habits.”
– Culled from Financial Times