Private jet broker, operator relationships strain ahead of a challenging summer

By Doug Gollan, May 27, 2022

Record demand and supply chain issues are setting up Summer 2022 to be a cruel one for some private jet flyers

Want a theme song for private jet travel this Summer? I’m thinking Bananarama’s 1983 hit Cruel Summer. It goes, “It’s a cruel, cruel summer…Leavin’ me here on my own.”

Not what you want to hear, I know. But let’s be honest. Supply chain and labor issues that created a new normal since last summer remain, and so do the problems. Pilot shortages are more acute. Yes, lots have been hired, but there are bottlenecks in training. New aircraft delivery dates are delayed. The upcoming months could be the worst yet.

Availability is a problem now. We’ve been contacted by large U.S. operators who are looking to block book multiple aircraft from us for May to September because they don’t have the lift available to their clients (in Europe). We’ve said no to them because we need to keep our aircraft for our clients.”

– Karl Mills, TAG Aviation speaking during EBACE in Geneva, Switzerland

It’s putting a strain on longtime industry relationships. There is a good deal of finger pointing, already. Brokers say with consolidation operators favor their membership and direct retail clients in a market where supply is as tight as a drum.

Private jet brokers vs. operators?

Operators say they simply have the upper hand. That’s after years of brokers playing them off against each other. Shave a few hundred dollars there and a couple of thousand dollars here.

Operators argue the money wasn’t passed along to customers. Brokers, they say, simply tacked on even larger mark-ups. Brokers say that’s not true. The market is too competitive.

They also counter that operators provide a singular solution – their own fleets. On the other hand, brokers can truly customize the experience to their well-heeled clientele.

During a panel moderated by the European Business Aviation Association’s Paul Walsh, Hunt & Palmer’s Julie Black, who is also Deputy Chair of The Air Charter Association, told EBACE attendees the industry is making a mistake trying to commoditize itself.

“Every single flight is a different experience,” she says. That goes from aircraft type to catering, ground transportation, and airports used. “It’s not like booking the airlines.”

Brokers add value by finding the right operator and aircraft for each mission. In some cases that means the configuration of the jet, particularly for large cabin missions.

In an industry where it is still not possible to digitize on-demand charter, brokers say apps only offer empty promises.

Start-up InstaJet has already retreated after saying it couldn’t source the aircraft at promised prices – or at all.

What happens when your airplane breaks?

Black says in a tight market; operators are treating brokers unfairly. If there is a mechanical for a direct client, the operator will pull an airplane chartered through a broker.

The broker then has to go out to the market and find a new airplane. If it costs more, brokers must decide whether to swallow the difference or pass along the costs to the client.

Brokers say finding replacement aircraft on short notice can mean making 50 to 100 calls to different operators.

Alex Durand, Chief Executive Officer of operator SaxonAir, said the current situation simply reverses a decade of oversupply. During that period brokers dominated the relationship.

Fadi El Samad of Elit Avia, another European operator, says allocating aircraft when there are not enough, isn’t that simple as favoring direct clients. “Just like brokers have their favorite operators, operators have their favorite brokers.”

Speaking separately, Eymir Segard of broker LunaJets said that supply and performance issues make brokers even more critical.

At least half of all aircraft it sources include phone calls in addition to the typical quote request and replies via emails. It’s often personal relationships between his team and operators, he says, make the difference, both in coming to a final price and ensuring clients don’t end up on the short end of what is a daily game of musical chairs.

All panelists said many issues plaguing the industry right now are beyond their control. They include air traffic control delays, spiking fuel prices, delays in getting aircraft back in service after mechanicals, and delays on the ground as understaffed FBOs cope with record demand.

How to expand private jet capacity?

In a separate session moderated by Corporate Jet Investor’s Al Whyte, JetNet IQ’s Rollie Vincent said a core challenge remains underutilization. “We don’t use our airplanes very much. They are very expensive to operate…We need to find ways to utilize airplanes 3x, 5x, 10x.”

Karl Mills, Sales Director from operator TAG Aviation, added Covid gave owners a chance to look more closely at charter opportunities. “Some of them want a lot of charter; some just need a bit of charter for tax reasons.”

Whyte asked if utilization could increase with a shortage of pilots?

WingX Managing Director Richard Koe says fractional and floating fleet operators are already flying their airplanes at maximum capacity. “For the large operators, taking utilization much beyond where it is now will be difficult.”

While fractional and charter operators clock between 1,000 and 1,500 hours per year per aircraft, managed airplanes often fly less than 300 hours.

There are between 30,000 and 35,000 private jet flights weekly operated by charter and fractional providers, according to WingX. That includes empty leg repositioning flights. That represents about half of all flights, with the other half being private flights for aircraft owners.

Summer 2022 private jet forecast

James Leach, Group Marketing Director for broker Air Charter Service, noted, “There were days last summer in the U.S. and Europe when we struggled to find any aircraft.”

He asked what Summer 2022 holds?

Koe predicts, “The demand side could be 20% above last summer, but I don’t think the supply side will be able to meet that. Given limits, I don’t see growth of more than 5-to-10%.”

TAG’s Mills says Americans headed to Europe this summer may get caught short. “Availability is a problem now. We’ve been contacted by large U.S. operators who are looking to block book multiple aircraft from us for May to September because they don’t have the lift available to their clients. We’ve said no to them because we need to keep our aircraft for our clients.”

VistaJet Chief Commercial Officer Ian Moore says in a recent month, 90% of days were “do not quote.” That’s when the operator limits fleet access to customers of its Program jet card membership which requires buying at least 50 hours per year.

In the past, these high-demand blackouts for brokers and on-demand flyers were typically only around big holidays.

Now, he says, any given Wednesday could set a new record.

One broker recommends always track your tail number – something he says good brokers do as customer service. He says often operators are behind the curve in finding out about delays. That means you might spot a possible issue before they do.

Indeed, a cruel summer may be in the offing for private jet flyers who wait to book, are not part of a guaranteed availability program, or find themselves without an airplane due to a mechanical.

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