Flexjet, Wheels Up, and Vista Global executives told the private jet conference there are no signs of demand waning
A line-up of CEOs and top executives with the major fractional private jet, jet card, and membership providers speaking last week at Jefferies Business Jet Summit continued their bullish outlook for private jet travel.
In her report summarizing the day, Jefferies Equity Analyst Sheila Kahyaoglu wrote, “Biz jet demand remains robust with stickiness in conversion of flyers from airline first-class to private aviation. Customers have so far not changed behavior.”
She added, “Industry sentiment remains strong despite looming risk of a U.S. recession given inflationary pressures. So far, Vista and Wheels Up customers have been accepting higher pricing, including surcharges. Flexjet is more concerned over the supply constraints in aircraft and pilot availability than demand elasticity.”
Mesinger Jet Sales
Jay Mesinger, President of Mesinger Jet Sales, told listeners, “Everything about the business jet sales process has changed in the last two years, and it is a very dynamic marketplace today. It is currently a seller’s market, but a swing back toward buyers to be more balanced would be welcome.”
With a record low inventory of pre-owned jets, Mesinger only has two private jets listed for sale. Typically, it would have about a dozen on the market.
Another factor crimping supply is the influx of first-time jet buyers. Since they don’t own aircraft, unlike the traditional returning buyer, they are taking from the market inventory without adding, Mesinger says.
There is no apparent let-up in demand for operators even as prices increase.
Vista Global Chief Investment Officer Charlotte Colhoun and Chief Commercial Officer Ian Moore said its brands have over 7,000 members. XO has around 5,000, while VistaJet has around 1,200 and Jet Edge around 1,000. So far, executives say there hasn’t been pushback on pricing, with most flyers understanding the inflationary pressures.
Flexjet CEO Mike Silvestro told listeners the fractional operator experienced a surge in pent-up demand from existing customers and a new tranche of first-time customers over the past year.
He said while the 2008 Great Recession drastically reduced private flight activity, the risks now lie primarily in supply. He doesn’t expect the supply side to catch up for the foreseeable future as OEM sales likely outpace production in both 2023 and 2024.
To deal with the aircraft shortage, Flexjet has limited access to new buyers and is not selling jet cards to new customers.
Flexjet will add 50 new aircraft this year. It plans to add 45 to 65 new private jets annually through at least 2025.
Kenny Dichter, Chairman, and CEO of Wheels Up said Q1 prepaid block sales were up 150% year-over-year. Q2 trends remain strong even after a second price increase in six months. He said customers who have purchased prepaid blocks continue to renew at a 90% clip. However, its newest members are spending even more than pre-Covid flyers.