NetJets' Gallagher: 'No signs of slowdown' with room for growth

In a wide-ranging interview with CNBC this morning, NetJets Aviation President Patrick Gallagher gave a bullish forecast for both the world’s largest private jet operator and the industry as a whole.

NetJets, he told CNBC’s Robert Frank, expects to take delivery of around 90 new private jets this year, “virtually all of which are already fully sold to customers.”

Asked if anything is clouding his outlook, Gallagher said, “In terms of what we see in future demand, there have really been no signs of slowdown even in this period of market volatility, uncertainty, and tariff concerns.”

Gallagher continued:

‘We watch all the leading indicators very closely. How much are our existing customers flying? Are they giving us less notice? Are they still booking with normal travel patterns? Are they going to different places? Is travel to Europe down compared to last year? So far, we have not seen any indicators of our business at NetJets slowing down.’

However, Gallagher did add, “The sales cycle has got a little longer. It’s taking people a little longer to make a decision, but our sales volumes haven’t suffered at all.”

Room To Grow

Gallagher also discussed the opportunity to grow the addressable market.

He pointed to a McKinsey survey that estimated that before the pandemic, only about 10% of the population that had the financial means to fly privately were doing so.

Gallagher told CNBC, “The pandemic unlocked a portion, but if the private aviation market expanded by 40%, you still have only 14% of the addressable market (flying privately).”

During the March-May 90-day period, NetJets flight hours were 56% higher than the same period in 2019, per Aviation Week.

Approximately $80 trillion of wealth is expected to be inherited over the next two decades, presenting a substantial opportunity for private aviation.

Gallagher said that while the industry is often labeled as a luxury, there are very different reasons customers fly privately.

They range from being able to return from work trips more quickly, creating more family time, visiting grandkids, avoiding airports, enjoying privacy and anonymity, as well as traveling with pets.

Last year, NetJets flew over 25,000 pets, including parrots and pot-bellied pigs.

NetJets addresses sustainability concerns by enabling flyers to offset carbon emissions.

It is also the largest private aviation buyer of sustainable aviation fuel.

Additionally, the unit of Berkshire Hathaway offsets all maintenance and administrative flights.

It also looks across its business on ways to increase sustainability, down to the packaging for inflight catering.

Top Private Jet Destinations

In terms of other trends, Gallagher said, “We’ve seen a migration to the sunbelt not just at NetJets but with high net worths overall, and with that we’ve seen less seasonality in places like Palm Beach and Naples, Florida, or Scottsdale, which are becoming very busy year-round. “

He added, “You see less of that up-and-down demand.”

Growth hotspots include Austin, Texas, Nashville, Tennessee, and Columbus, Ohio, where NetJets is headquartered.

Gallagher said there has been a dip in San Diego and Los Angeles,

However, the San Francisco/San Jose Bay area remains robust, and NetJets has its highest market share there.

“The tech money is investing in the shared economy,” he said.

Praise For Pilots

Gallagher also praised the company’s pilots, calling them “the best ambassadors we have for our brand, along with our flight attendants.”

Gallagher noted that pilots are the largest group of NetJets’ employees.

As is typical with most operators, most aircraft don’t have flight attendants, making pilots a key point of customer contact.

Last year, the company and the union representing its cockpit crews reached a new contract agreement.

It provides a 52.5% increase in compensation through 2029.

Watch the full 18-minute interview here.