November 1, 2024
Major airlines warn that a full recovery may now take into 2024. Business aviation executives say that’s not the case for private jet travel.
A poll of more than 500 attendees at Corporate Jet Investor’s weekly Town Hall meeting showed a confident outlook about the future.
However, speakers also discussed industry challenges, including illegal charters, discounted pricing, and novice brokers that are confronting new-to-the-market consumers.
The surveys – conducted online during the seminar – both showed optimism near and long-term.
Asked how their companies will finish out the year, 45% said stronger, compared to 16% who said there will be a decline. Thirty-nine percent (39%) said business is expected to be the same.
With an eye to 2021, 11% said they are very optimistic and 81% said they are fairly optimistic. Just 7% said they are fairly pessimistic, and just 1% who are very pessimistic.
Despite the overall cheer, there were notes of caution and concern.
Harry Clarke of Avinode pointed to a trebling of requests for empty legs. He pointed to first-time private aviation users whose buying decisions are being driven in large part by price.
In the U.S., data shows median private jet charter costs are 5-to-10% below where they should be. Still, it’s an improvement from the 20% decline in May.
In Europe, charter pricing for very light and light jets has recovered to pre-COVID-19 levels. However, quotes on large-cabin private jets are still 10% lower than they should be.
Flight requests for the fourth quarter of 2020 still lag where they should be, he said. Unless there are major disruptions due to the pandemic or a stock market crash, he expects “surging” requests closer to departure dates.
David Norton, a Dallas-based aviation attorney, said illegal charters continue to be a big concern. He said newbies looking for cheap prices, aircraft owners who don’t understand the rules, and unscrupulous brokers and management companies are to blame.
One example was from a broker who approached his client offering to dry lease her aircraft, which is under Part 91. He suspected the broker intended to use the airplane to sell on-demand charter flights which requires a Part 135 certificate.
Part 135 operators and aircraft have higher standards for pilot experience, training, duty time, maintenance, insurance, and operations.
Management companies, he said, entice unknowing private jet owners. They promise to sub-lease their aircraft, generating revenue for the owner, but often also skirting FAA rules.
Last week, the FAA proposed a $576,400 civil penalty against Bluefin Aviation Services of Opa-Locka, Florida. The FAA alleges Bluefin conducted at least 26 illegal charter flights last September and October between Florida and the Bahamas.
In a press release, the FAA said, “The flights were illegal because Bluefin did not hold an Air Carrier or Operating Certificate, or Operations Specifications issued by the FAA, the agency alleges. The FAA further alleges the flight crew that conducted the operations had not passed required written or oral tests, competency checks and flight checks. The FAA alleges the flights were careless or reckless so as to endanger lives or property.”
Phil Brockwell is the founder of Quorem, a start-up developing a lead management tool for charter operators. He said an “oversupply” of “under-skilled” charter brokers is adding to the challenges for operators.
He noted one operator gets over 1,600 inquiries per day. Overall, only 2.6% of inquiries to operators are followed up, he said, and not necessarily based on profit probability.
We do overnight what it takes airlines six months to do in terms of setting up new routes. He said challenges with fully automating the backend of flight and operations logistics is still holding up progress.
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