“We’re not in Kansas anymore Dorthy . . .”
It’s a challenge, incredibly hard to wrap your mind around the challenges the entire world is facing, not to mention those of us in the aviation industry!
Covid-19 has turned everything upside down in our wold. In general aviation we are blessed with an incredible demand for private aircraft/private jet movements, which is now become one of the safest ways to travel especially for those affluent and progressive thinking businesses.
To say that Covid-19 has upended the business aviation industry would be a tremendous understatement. Some of the sectors in the general aviation field, aircraft manufacturing, maintenance, and purchase and sale of jet aircraft have taken a severe hit. But these shocks have had relatively little consequence to private jet travelers – so far.
While governments have mandated closings and sheltering’s, effectively closing businesses during this pandemic, and airlines slashing service to 10% to 15% of pre pandemic levels, private aviation has remained open for business. Charter bookings have literally exploded, and if you were one of the lucky ones to own your own aircraft or your business owns its own aircraft, the National Airspace System remained and continues to remain open and uninterrupted.
In the meantime the general aviation industry quickly implemented protocols to ensure safety for those traveling. All major FBO chains and essentially all independent FBO’s have implemented best safety and health practices during this pandemic. That has given users the comfort and confidence that private aviation travel is the safest method we have today.
It’s now essentially mandatory but if you’re an owner, flight department, fractional provider, or jet card company that you follow the recommended standards for coronavirus protection. Now is the time to determine and confirm that your company’s aircraft or your own principal aircraft adheres to the latest health procedures. The Centers for Disease Control, the Food and Drug Administration, and the World Health Organization are all among the agencies which have published standards. In addition
business aviation groups including the NBAA provide owners policies that they can used to implement cleaning protocols and standards. These cover disinfection and cleaning procedures for aircraft and facilities and the use of personal protective equipment. And of course remember to consider the ground services at your FBO destination airport and contact them if you’re considering any kind of stop, fuel or technical along the way to ensure that they have Covid-19 protocols in place.
The National Air Transportation Association and the European Business Aviation Association have also all established standards which will help you navigate these challenging times as well.
All providers, from FBO’s to ground service organizations have developed and instituted Covid-19 protocols. Signature Aviation’s SignatureAssure is now a common branded safety program based on standards from the previously mentioned agencies. In addition Universal Weather and Aviation has implemented its own standards-based program at the Top 100 destinations frequented by its flight-services customers, covering FBO operations, ground transportation, in-flight catering, fueling and customer interaction.
It’s Become the New “Normal”:
For the foreseeable future, you’ll now see examples of these measures throughout your journey. You’ll be asked about your health and recent travel, likely had your temperature taken before departure, and you’ll fly with a mask wearing crew and ground support people. Aircraft will have been disinfected between uses to ensure that’s safe for you before you board. You will be offered a mask if you don’t have one, and catering options may be limited, together with onboard service items likely to be disposable for the time being.
If you have any questions you certainly should not be hesitant to ask. At a recent NBAA hosted webinar on disinfection practices, the experts recommended that customers demand peer-reviewed data on the procedures, systems, and efficacy of the products and protocols used to ensure your health and safety. You should too.
The Financial Impacts:
It’s been noted that charter will likely remain on sale along many routes during this period as operators scramble to generate cash flow and book enough business to satisfy the manufacturer-recommended minimum operational time for engines and aircraft. In addition one-way pricing is now less available on some routes as providers
have discovered it challenging to find customers to book return lags on charter flights.
The flip-side is that many fractional programs, jet card providers, and those with membership programs are reporting an uptick in customer renewals and inquiries from new prospects. The leading fractional-fleet providers such as NetJet’s and Flexjet’s are reporting record new customer sign ups during todays period.
But some fractional providers and jet membership programs have not fared as well, their pre-Covid-19 pandemic business operations were not financially viable. With the current state of affairs, living in a Covid-19 world, new customers are highly encouraged to focus on established and reputable fractional providers and jet membership programs to insure that your new provider is financially sound and capable of operating in this new environment.
You – the Aircraft Owner:
If you’re fortunate enough to own your own aircraft, you must ensure that you have an effective written Covid-19 protection plan which outlines the standards and practices that need to be followed throughout your flight operations and that such a plan is in place and followed. The peace of mind for you, your family, your business associates cannot be underestimated. All the tools we’ve mentioned herein and more are readily available!
At the beginning of the onset of this coronavirus era, uncertainty about aircraft valuations essentially brought sale transaction activity to nearly a standstill; with values unknown, lenders in the aircraft financing sector placed everything on pause and buyers in the marketplace walked away from deals. Add to that the challenge, the mechanics if you will, involved in the transactions themselves such as moving an aircraft to an inspection site and returning the crew became challenging with risks further challenging transactions.
Aircraft sales themselves began a slow down in the fourth quarter of 2019 following a year of market stabilization. 2020 was forecasted to have low global economic growth and therefore a likely lower demand for aircraft. In April and May have this year, preowned business jet transactions were down approximately 50% year-over-year. Despite this sellers have refused to buckle to market pressure to sell quick and cheap and so inventories are still prevalent. As of midsummer, inventory stood at approximately 10% with about 2,300 jets on the market. Industry experts comment that that is above the 10% threshold considered to separate the buyers and sellers market. Also by midyear average values of business jets fell 13% from the Covid-19 onset. It was reported that large-cabin models lost the most, 15% and light jets lost the least, 12%. And while the market remains tight and with uncertainty at present, those in the know advise buyers and sellers to wait for more clarity. In the meantime owners can use the current downtime for maintenance and upgrades that will make their aircraft more valuable.
Today and “Tomorrow”:
The economy will remain as business aviation’s underlying driver of activity and for now, as goes Covid-19, so will go the economy. The consensus however is that whatever the economic trend is that in the long term the pandemic will bring business aviation new
customers who will be concerned about the health risks of commercial aviation. It’s been publicly quoted that fully 90% of the approximate 1 million people who can afford to fly privately do not according to an international study. Add to that that 40% of billionaires are 70-plus years old, and the average age of high net worth Americans is 58 years old, puts this group at high risk for Covid-19 and other diseases. So private aircraft use should benefit should this group avail itself of the advantages.
During past economic downturns or recessions, business aviation has been the first to go and the last to come back. This current situation is just the opposite. Companies are not selling their airplanes, corporate flight departments are not putting aircraft on the market or furloughing pilots and other staff, nor are charter operators.
For the time being, considering all of these challenges and factors, our industry is in much better shape the nearly any other business industry today.
Be safe, fly safe!
FBO Advisors, LLC
Serving the FBO industry for more than 45 years!
Please feel free to direct comments to us on our views and opinions cited . . .