April 23, 2024
The latest research from JetNetIQ reveals the places respondents believe will provide the best ROI for business aviation investing.
According to new research released today during the National Business Aviation Association’s annual conference in Las Vegas, private aircraft owners and their representatives, including corporate flight departments, have a message for anyone who wants funding for a private jet charter or fractional ownership program: Don’t ask us!
Respondents to the quarterly JetNetIQ survey were asked, “If you had $500 million to invest in the business aviation industry, where would you invest for the best return?”
Only 8.3% said they would put their money into a charter aircraft business, and just 4.6% would invest in a fractional ownership program.
By contrast, 23.3% would invest in an MRO Network.
MRO stands for maintenance, repair, and overhaul.
In other words, the people who fix the airplanes the charter and fractional operators fly.
A similar 22.7% of business owners also said they would invest in an MRO Network, although 10.3% would invest in a charter operator.
Fractional operators were not in their top five investment choices.
Industry executives say the lack of capacity and skilled technicians at MROs continues to stymie operations for flight providers and aircraft owners.
Nineteen percent of chief pilots surveyed by JetNetIQ also favored investing in MROs, although their top choice would be to invest in hybrid turbine engines (27.6%).
Respondents over the age of 40 also favored MROs to charter operators by a 23.4% to 5.9% margin. Fractional operators were not among their top five choices.
However, charter operators seeking funding may want to look for younger folks to invest.
For respondents under the age of 40, a charter aircraft business was the top choice of where to invest, with 25.6% of the vote, although 20.5% said they favored MROs.
Fractional operators didn’t make their top five either.
On a regional basis, 28.3% of North American JetNetIQ respondents picked MROs, making it their top choice, with 6.4% saying they would invest in a charter, the fifth choice.
European respondents said their top investing choice would be in sustainable aviation fuel production facilities (32.6%), although 13% gave their nod to charter operators.
Overall, respondents were also bearish when it came to investing in a supersonic business jet at 5.2%.
Oh, and so much for eVTOLs.
Just 3.7% of respondents in the JetNetQI research said they would invest in all-electric aircraft, although a hybrid turbine engine (23%), SAF production (15%), and an FBO Network were popular choices (12.3%).
Oddly, fractional operators, which aren’t part of the group surveyed, may agree with the findings.
Both NetJets and Flexjet have eschewed buying other operators.
They are investing heavily to build out their MRO support with acquisitions, expanded facilities, staffing, and parts inventories.
Last November, NetJets President Pat Gallagher told us the world’s largest private jet operator and biggest player in the fractional market wasn’t interested in buying other operators.
He said instead, the unit of Berkshire Hathaway was focusing on building out its infrastructure and supply chain, which includes an inventory of 750,000 parts.
The goal is so that when planes break, they can be fixed quickly.
He said NetJets is also investing in ramp and hangar space to accommodate its growing fleet.
In October 2020, it announced a significant expansion of facilities in Denver and San Jose, California.
It currently has 14 similar locations around its system. There are 60 more infrastructure projects being evaluated.
Meanwhile, Directional Aviation folded its Constant Aviation MRO into Flexjet, Inc., owner of Flexjet, the second-largest fractional provider.
It bought MRO Flying Colours earlier this year.
At the time of the purchase, Flexjet, Inc. Chairman Kenn Ricci said, “Bringing the capabilities of Constant Aviation, which Flexjet bought earlier this year, and now Flying Colours in-house enables us to ensure both the highest possible service quality and the maximum availability of aircraft for our owners.”
He added, “Unlike other companies in our space that rely on third-party providers for their MRO needs, Flexjet now fully controls its maintenance and product support needs, and this aligns with our strategic vision of differentiating ourselves from the competition at every level and in every way.”
