Impact of COVID-19 on Private Jet Charter Industry

"In God we trust, everyone else must bring data"  - Current State of Private Jet Charter Industry and 6 to 12-month outlook.

As one of the founders of the largest data-driven private jet charter marketplace, I wanted to share with my network what story the data tells us for the upcoming 3/6/12 months. Information here is for private jet travel within the US. The information we discuss here is not just TapJets clients; it is for all of the 849 operators that we actively track in our SkyWizard Ai platform.

Current State of the Industry

There is a 43% reduction in requests for light jets, a 39% reduction for mid-size, and a 52% reduction in requests for heavy long-range models.   The bookings within the US are off by 72% for lights, 64% for mid-size, and 56% for heavy aircraft.

These are significant reductions in travel, and while the countrywide emergency orders are in place, this is unlikely to change.

The operators with large fleets engaged in all-out price wars against smaller operators. With companies like XO offering their Citation X aircraft at half the rate of WheelsUp.  If you listen to the posts from smaller operators, they are urging for sanity in pricing as they are starting to lose trips to folks who are subsidizing the flights.

6 Months Outlook

We are going to be witnessing the most massive consolidation of aircraft/operators in the history of this industry.  Some operators will not make it for financial reasons. Others will see owners shopping their charter management agreements with larger operators now willing to take on more management business.   The FAA will experience an unprecedented number of aircraft conformity requests for the aircraft that are going to change operators.   All of this activity, while chaotic, ultimately will be beneficial for the end consumer.  We will see the total aircraft charter fleet of the US (Aircraft on D085) reduced by 20-25%. The older model's inventory will exit the market due to competition on price point with newer models.

Looking at the request and booking data,  we are a bit optimistic that after enduring long periods of stay at home orders, folks are optimistic about their vacation plans.  Trip requests for June, July are spiking, but they are not turning into bookings.  We believe that there will be a surge of vacation travel, but it will just bring the number of flights to healthy levels for a brief period in late June and late August.

12 Months Outlook

Currently, Flight Safety and CAE training facilities are having to adjust and cancel classes and simulator training to comply with the current executive orders.  While the FAA is accommodating by allowing for recurrent training in operator aircraft, the long term problem is that with pilots changing operators and training requirements of certificate holders, the training infrastructure will be overwhelmed at about this point.  This will result in a severe shortage of pilots ready to fly due to delayed training.   The NBAA and other organizations need to urge the FAA to get ahead of this issue, and so far, there is a scarce effort in that regard.

Currently, flight requests and bookings data for the 9-12 month from now is similar to the above 6-month outlook. What is very notable is the larger operators (top 10) who are actively damping the prices are closing contracts on these flights.  Such dynamic leaves smaller fleet operators at risk of extinction, and that is what larger operators are counting on to recover the expenses of offering their aircraft below operating costs now.

Most, if not all, sporting events have been canceled for the remainder of 2020. That alone will put a 12% dip in the total number of flights for the year. If you add this reduction to current projected data, we will end the year about 340,000 private jet charter flights short of about 1.2 million number that we were gravitating around in the last two years.

For those of you who know me personally, I am the optimist of the private charter industry, and I believe that the industry is going to come out ahead out of this crisis. The trials and tribulations will lead to the survival of the fittest both in the broker and operator market.

If you are a charter operator, please comment below or email me to let me know if your day to day operation reflects what we see in the data.  If you need additional information specific to your aircraft type my team and I can assist you with pricing and other operational data to help out in this situation.

In the next week or so, we will have a similar outlook for air charter brokers and how their volumes and customer migration (shopping around) is impacting their business.

As always stay safe and happy flying.

by Eugene Kesselman, Co-Founder
April 16, 2020