NetJets, Wheels Up, and Sentient Jet execs tell attendees at Corporate Jet Investor Americas 2020 they expect the private jet recovery to continue through next year
Wheels Up, with the second-largest for-hire fleet behind NetJets, says flying is already at pre-COVID levels. Jet card leader Sentient Jet recently restored pre-pandemic budget levels
Airline CEOs continue to say it could take until 2024 or beyond to recover from the COVID-19 downturn. In a parallel universe, the heads of private aviation’s biggest players painted a far different picture. Bosses at NetJets, Wheels Up, and Sentient Jet each offered bullish 2021 forecasts. They were all speaking at Corporate Jet Investor Americas 2020.
In fact, Andrew Collins, CEO of Sentient Jet, PrivateFly and FXAIR, units of Directional Aviation’s OneSky Flight, including Flexjet, recently reinstated his pre-pandemic budgets for the year and is “hitting most of those numbers.”
Of new customers, he added, “Acquisition and retention pace is stronger than I’ve ever seen it.”
In 2019, Sentient registered around $300 million in jet card sales.
Meanwhile, Patrick Gallagher, president of NetJets, the world’s largest private aviation company, said the unit of Berkshire Hathaway expects to be back to 2019 flight levels by the second half of 2021.
Many of the people who’ve joined us in the past few months…have said, ‘I wished I had done this sooner.’–Patrick Gallagher, President of NetJets
“Our forecast is to finish this year where we are now, at about 15% off our pre-pandemic levels and hold there for the first half of next year…and then once we get through the summer, we are forecasting to finish 2021 back at 2019 levels,” he said.
Gallagher continued, “We think there will continue to be an influx of new customers driven by commercial airline schedule reductions and post-vaccine health concerns, so we think we have a nice long runway of new business.”
He told the virtual attendees at CJI Americas 2020, “The people who are joining us, they’re flying a lot. They didn’t just buy a Marquis Jet card to have it in their back pocket for a what-if scenario. They’re out flying, and the booking patterns are a bit higher than what we’ve seen historically, meaning people are flying more frequently than we would have expected.”
He called it “a really good sign for our business long-term. They probably won’t be one-and-done people who had a near term need because of the pandemic…We’ve already seen some (new customers) graduate into shares.”
While much has been made of first-time customers, Gallagher put a slightly different twist on their profile. “It’s not the first time they’ve flown privately. It might be the first time they ever paid for it. They might have had access to a company plane or flown with a friend,” he said.
31 new private jets in 2020 for NetJets
NetJets will add 10 private jets in the last six weeks of 2020 and will take delivery of 31 new aircraft this year.
“Our forecast for next year is (adding) 40 plus airplanes, and we see that continuing throughout the next 10 years, with far fewer disposals than we’ve seen historically…The net growth will be pretty significant…We will be a much larger business,” he said.
Gallagher said COVID-19 has unleashed pent-up demand stalled since the Great Recession. “If you look at how wealth has increased…and private aviation hadn’t kept pace with the creation of wealth, this is a way to play catch-up on that. Many of the people who’ve joined us in the past few months…have said, ‘I wished I had done this sooner.'”
Kenny Dichter, CEO and founder of Wheels Up, which has the second-largest for-hire fleet of private aircraft, called his group “incredibly well-positioned.”
He told attendees, “The way that the crisis broke, it has been a real tailwind. Membership has been two to two-and-a-half times what we projected for 2020.
“And, if you look at the flight action, we’re at pre-Covid levels, and you have only one leg of the demand stool pushing that, and that would be the high net worth travel. We’re really bullish that the traditional vacation flyer and business flyer, which are the other two legs of the stool, are going to come back strong. I think we are going to see unprecedented levels of flying in the domestic profiles.”
He predicted, “When all three legs are kicking, I think you will see unprecedented flight hours flown…Covid 19 was an accelerant. We’re well-positioned at the entry-level. It’s a repositioning of priorities.”
Dichter pointed to McKinsey statistics. They estimate that as many as 1.6 million affluent households have the means to fly privately. As few as 100,000 who were doing so before the pandemic.
Optimism at the conference wasn’t limited to operators and brokers. Rob Scholl, senior vice president of sales for Textron Aviation said turboprops and small private jets from its Beechcraft and Cessna divisions are proving popular with first-time buyers. “(The buyers) are private companies. They are the owners of the businesses and don’t have to go to a board of directors for approval. It’s mostly for their use, and there’s an immediate need.”
Private Aviation M&A
Both Dichter and Collins said they continue to look at growth through acquisitions. In the past 18 months, Wheels Up has acquired operators TMC Jets, Delta Private Jets, Gama Aviation, and tech platform Avianis. Directional bought PrivateFly in September 2018 and then launched FXAIR in July. Its principal Kenn Ricci is co-CEO of Zanite Acquisition Corp. The $200 million SPAC went public yesterday on the NASDAQ.
“We’re a net buyer…aggressively pursuing companies and partners to take us to the next level,” Dichter said. Collins said he expects more deals as smaller companies come under pressure as they run out of CARES Act support.