The former CEO of the Air Charter Association says rosy talk about a private jet boom doesn’t match reality
If you work in private aviation, you might want to leave that bottle of champagne on ice. Former Air Charter Association boss David Edwards says it’s too early to pop the cork despite the tsunami of positive media reports and press releases.
Challenged that his views are from a glass-half-full perspective, Edwards told attendees Corporate Jet Investor’s weekly Town Hall, “I’m a realist. I just try and tell you what I think is going to happen…I’m usually not that far off what actually comes to fruition at the end.”
The U.K. private jet market
Edwards says, “Every statistic related to the U.K. is a Brexit and COVID statistic. I can’t split down the middle where they begin and where they end. But the U.K. market for charter flying is 52% down in February from where it was last year. We can be all upbeat as many people are about how great the potential is, but in reality, that’s a pretty dire number to be dealing with.”
He continues, “I don’t think 2021 is going to be a great deal different. We still have the challenges of vaccine rollouts…until we get past that, and vaccine passports, it’s going to be a bit difficult for the market to come back.
In terms of U.K. private jet charter operators, he says, “If you break it down granularly…it’s really horrific numbers in how little flying they’re doing compared to how much flying.
“Everyone is being hit by COVID. Maybe the summer will be a bit of relief. EU operators aren’t seeing those kinds of 89, 84, 62, 76% reductions in movements compared to this time last year. It’s a good position for EU operators to be in terms of the Brexit negotiations.”
Winning customers from the airlines
Edwards says, “The charter sector has an opportunity ahead of the scheduled airlines to get in and do a bit of marketing.”
However, that window is closing. Major European airlines, he says, are already announcing plans to restore service on key routes.
For the charter market, he says, there’s still “a little bit of time to get people in and keep them.”
The trend in leisure private jet flyers
Edwards worries focusing on leisure travelers puts private aviation at risk of once again being a lightning rod. “We’re meant to be a business industry, and we don’t want to lose the public’s support for what we do,” he says.
How COVID is changing the private jet industry
“We’ve had years that totally changed the industry in the past, and yet we are still pretty much doing what I did 25 years ago,” Edwards says.
He points to industry-changing “new products that haven’t gotten anywhere except great fanfare at the beginning.”
On Zoom replacing business travel
Edwards says, “The first six months, we were talking about how we will never travel for business meetings again. I’ve rarely picked up any business from (video conferences). It comes down to bumping into people in the right place at the right time, having a coffee.
The rise in legal actions
Gone are the days when charter brokers and the private jet operators worked out disputes over a beer. He says there has been a spike in “more legal stuff.” Points of contention focus on payments, cancelation fees and reasons behind cancelations.
Most on-demand charter contracts allow the operator to cancel for nearly any reason at any point up to departure. The customer gets a refund, but then has to get their trip re-quoted.
He blames, “The continued drive to the bottom on pricing keeps impacting operators in the pockets, and at some point, operators can’t keep just sucking it up. They can’t just keep taking these costs onboard.”
A shortage of private jets?
While recently there have been comments that there could be a shortage of private jets by the summer, Edwards disagrees. “There’s still a lot of spare capacity in the market before we worry about demand outstripping supply.”
SPACs and new investment in private aviation
Edwards says, “It’s great that it’s raising the profile of the industry. In my 25 years, there have been quite a few people who came to the market with billions and walked away with nothing, having not really changed anything at the end of the day.
H continues, “The world of finance and the world of how you value companies is nothing like I learned at university. I looked to businesses that made a profit. There’s going to be a lot of people that perhaps don’t get what they want at the end of the day. But there will be successful ones, and that’s the joys of investing in things like this.
Does media coverage meet reality?
“I don’t think it’s in the amazing place that some people are saying it is today, he says, adding, “Fact check…It’s really easy to get access to statistics. There are people who are doing exactly say, and there are other people who have a different way of presenting it compared to what the numbers say.”