Illegal charters, instability face private jet buyers in a shaky COVID-19 travel world

By Doug Gollan, April 30, 2020

Both existing and new private aviation users are expected to boost the recovery of business aviation. However, they are facing a myriad of new Coronavirus induced issues to deal with

There are signs that private jets will be on the leading edge of business recovery.

Speaking at Corporate Jet Investor’s weekly town hall meeting, Andrew Collins, CEO of Directional Aviation’s Sentient Jet said bookings to cancelations are now running about 10-to-1. It’s a sea change from earlier this month when daily cancelations were outstripping new reservations.

Collins, like many in business aviation, believes the segment will be a “net winner” from the carnage inflicted by the COVID-19 Coronavirus. He said, unlike past crises where private jets led the downturn and were slow to see a rebound, this time it could be “last in, first out.”

Like many, he also sees a shift in how private aviation is viewed by consumers. “I think private jets are going to move from lifestyle to utility,” he told the over 500 virtual attendees.

Ultimately, you really should think about what’s happening with (your) money. Are they escrowing it? Is it going into a broader pool?”

– Andrew Collins, CEO, Sentient Jet

His sentiments echoed speakers in past CJI town halls. In a yet another webinar, the editors of Aviation Week came to the same conclusions. They also predicted companies will embrace private flights to protect key employees who need to travel before there’s a cure or vaccine for Covid-19.

One flight department of a major national fast-food chain that contacted us this week said they are looking to supplement lift for their two owned aircraft.

Due diligence needed by jet card buyers

Still, the journey from needing supplemental lift or figuring out the right options for newcomers is fraught with obstacles.

Speaking a day after JetSuite filed for Chapter 11 bankruptcy protection in Delaware, Collins said, “The other thing we are seeing is a very challenging market for operators. There’s a lot of friction in the wholesale market right now, and ultimately I think there is going to be a lot of consolidation.”

Asked about the Phenom 300 operator’s insolvency and its impact on the jet card space, he said, “You should always do your due diligence on your provider. Think about who the ownership group is and how they are capitalized. Ultimately, you really should think about what’s happening with (your) money. Are they escrowing it? Is it going into a broader pool?”

While Collins described Sentient’s position as “strong,” he warned that more failures are likely to “splash mud” on the segment.

Collins also pointed to Tuvoli, a sister Directional/OneSky company that is developing secure payment processing for the on-demand private jet charter market.

In the 2017 Zetta Jet bankruptcy, on-demand charter clients lost six-figure amounts. In that case, the operator used long-range Bombardier Global private jets, specializing in flights to and from Asia. Roundtrip and multi-leg trips easily ran over $250,000. Tuvoli provides your broker an escrow of the operator’s payment, not remitting it until the flight is successfully completed.

Illegal private jet charters warned

Ryan Waguespack, vice president of the National Air Transportation Association, warned about illegal charters. He said the combination of distressed aircraft owners and furloughed pilots is creating a toxic mix.

In December, the Federal Aviation Administration warned pilots and consumers. At the time, the FAA wrote in a memo, “Illegal air charter operations pose a serious safety hazard to the traveling public, and the FAA works aggressively to identify and shut down rogue operators.”

Other factors that might impact flying in the coming year will be the retirement of aircraft that are long in the tooth. Over 70% of Part 135 private jet operators in the U.S. have fleets of five jets or less. JSSI CEO Neil Book told the group, “It doesn’t make sense to put $3 million (in maintenance) into (an aircraft valued at) $1.5 million.” Slimmed-down fleets may mean a once-reliable operator is no longer dependable.

Some reports had speculated private jet owners would use this down period to get ahead of various updates and repairs. Easier said than done. Book noted Covid-19 mitigation means if somebody on a maintenance team tests positive, everyone has to be quarantined for at least two weeks.

Bigger airports for private jets?

Another change could be airports that business aviation accesses. Smaller airports are suffering greatly from the travel restrictions. Some are reducing operations. Previously saturated major airports now have plenty of capacity, said Aoife O’Sullivan, partner of The Air Law Firm and chair of British General & Business Aviation Association. She pointed to London’s Heathrow Airport and Frankfurt Main as prime examples.

Andy Hudson, the founder of Down-route, told listeners he sees growth for jet sharing. “People are not going to get on large jets, but eight to 10 people, as long as operators and FBOs can demonstrate good hygiene, yes,”

Panelists debated whether or not executives will throttle back their volume of travel. Will you increase online meetings versus the ones you fly to? The consensus, in the end, was there will be a need to be there.

Industry analyst Rolland Vincent noted young, used private jets will benefit as OEMs struggle to keep delivery schedules due to supply chain disruptions. Just booking flights one-off will do well, too. “The charter market looks like a nice business,” he said.

NATA’s Waguespack said the winners will be those companies that focus on the door-to-door experience. That means more vetting not only of the private jet operators that brokers use. FBOs and car service partners need to be scrutinized for maximum hygiene too in a world increasingly trying to avoid germs.

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