This is a sensitive subject when the vast majority of the world's population is still only starting to get out of lockdown, but what have the pandemic and changes to working patterns done to the private jet industry? Is it still worth forking out millions to buy a plane?

The world’s airline sector has been hammered by the COVID-19 pandemic, forcing some carriers to bring out the begging bowl. The jump to remote working fixes such as Zoom or Microsoft Teams is bad news for business travel (although digital video can give one mental burn-out after a while). 

Wealth managers put in a lot of air miles. Even your humble correspondent frequently whizzed around the skies in recent years to attend conferences, awards gatherings and meetings, in Switzerland, Singapore, New York and Dubai, for example. Private bankers and UHNW clients can, as headhunters point out, be expected to jump on a plane at short notice. If you are looking after someone used to rapid answers and personal contact, going on video doesn’t quite cut it. 

So what options are there? Well, this news service has been contacted by a few organisations talking about private jets. This is a sector which we have written about before – for instance, in the context family offices running aviation assets, and also investing in them. This is a sensitive topic right now. It looks crass to wax lyrical about sleek private jets when everyone else is under house arrest. But certain facts of life don’t vanish. For those who are rich and connected enough, private jets have their place, even if it means coping with the same security grind as the rest of the population. Flying will remain a chore for a while, so one might as well make the experience as pleasant as possible. And if travellers can avoid crowds at airports, it also cuts virus risks. That is worth paying for. 

ZEDRA, the corporate services, funds and wealth services firm reckons that the future is bright for private jets. Andrew Wilson, ZEDRA’s head of marine and aviation services, is bullish overall. 

"March saw almost unprecedented private jet usage. Jet lessors saw some repatriations, but other flights were related to business, as we saw a flux in companies hiring jets in order to close important deals,” he said. “With caution now the watchword in so many sectors, we think private jet purchases for personal use might slow down, but at the same time, in order to maintain flexibility around travelling options, senior executives may well turn to leasing. That would suggest more demand for new jets for rental firms and structures to support these purchases.” 

Privacy and flexibility
“Private aviation’s two key unique propositions are i) privacy in the cabin and ii) the ability to travel point-to-point at your schedule. Both of these are now in sharp focus in individuals’ minds as people are trying to avoid large crowds and will likely continue to do so for the foreseeable future, and airlines have cancelled thousands of routes making point-to-point travel impossible. For those with the means to use it, private aviation will become an important method of travel,” Oliver Stone, the managing director and founder of the UK firm, Colibri Aircraft, told this news service. (The firm, founded in 2011 by Stone, also has an office in Bratislava, Slovakia.)

Colibri engages with and represents clients to help them sell and purchase private aircraft, and operates in all segments of the jet market. 

The pandemic created a bumpy ride, Stone said. “The initial reaction in mid-March was an overall freeze in activity. Everyone went on hold while they waited to see how the pandemic would play out. Starting late April, we saw interested buyers start to make enquiries again, particularly in the light jet space. Many of these are first time buyers who are looking at the prospect of significantly reduced airline service in the near future and a desire to avoid the large crowds that airline travel entails,” he said. “Overall, prices are declining, some greater than others such as in the large cabin segment. Sales have been decreasing across all segments since March, and in some segments, there have been no sales throughout this time.”

Pilot availability
One issue is that while there may be a flood of pilots entering the jobs market after being laid off by the big carriers, demand for private pilots could continue to create pressures, according to Howard Ricklow, partner, and Christian Davison, associate, at law firm Collyer Bristow.

The business aviation market (referring to business and privately-operated jets in contrast to “commercial aviation”) is experiencing a period where pilots and crew are much sought-after, to the point of over-demand, they said.

“The main issue appears to be an increasing number of business jets, creating a growing demand for pilots. Both existing and newly qualified pilots are attracted to working for commercial airlines rather than business aviation, since the pay is more attractive and typically more stable,” they said.

“Not only is the industry growing with a requisite demand for pilots, it also faces more senior pilots reaching retirement age. Boeing have said that the industry may need up to 800,000 new pilots in the next 20 years. One solution being proposed for mid-size and larger business jets is to have a lone pilot instead of the usual two but that, understandably, is a controversial issue.” 

“This shortage of pilots and crew has been further exacerbated by the recent spread of the COVID-19 coronavirus, following a similar pattern to the SARS coronavirus outbreak in 2003. While specific figures for chartered business aviation flights are not publicly available, it is reported that a number of operators have seen a steep increase in interest due to the outbreak,” Davison and Ricklow said.
 

Buyers and sellers
Colibri’s Stone said that the light jet segment has been affected least mainly because it has not seen distressed sellers thus far and there is a larger potential buyer pool with pricing being more feasible to a larger segment of people.

“The fairly steep declines in pricing on some of the large cabin aircraft is not solely due to the COVID-19 crisis. These prices were decreasing pretty dramatically in the recent history pre-COVID-19."

"Attributing to this is the ramp up in production and delivery of new models of aircraft, and owners are selling their current plane to make room for the new one, leading to a spike in inventory and resulting in price declines,” he said.   

People can use private jets in a variety of ways, such as fractional ownership, charter, direct ownership, membership, and so forth. Different models wax and wane depending on market conditions. 

“In general charter has been the most popular form of usage and one with the most widespread reach. Charter has a lot of benefits to it, in that it is committing to only one flight vs. committing to a series of future flights, and is the most cost effective way to use private aviation. The downsides are that you are always beholden to finding an available aircraft which may not be available, and you have no idea as to the service of the provider, condition of the plane or history of that aircraft,” Stone said.

“Each form of usage has their own pros and cons, both financially and operationally, which should be explored. Overall, we generally recommend clients charter first to make sure that they enjoy the experience, have need of the benefits of private aviation, and are comfortable with the costs. If they are happy with these, then exploring the other forms of usage becomes the next step,” Stone said. 

The US remains the largest market. “In absolute terms, the US has 70 per cent of the world’s aircraft, and currently some of the loosest travel restrictions, and this is where much of the overall demand comes from in terms of purchasing planes outright. However, our firm is more focused on representing clients in Europe, Middle East and Asia and so we are seeing first time buyers exploring their options right now from these parts of the world,” Stone said. 

“In terms of the service our clients, particularly first time buyers, are asking from us, we are seeing increased focus on the questions of ‘how much does ownership really cost’, and ‘what do I need to think of in terms of operating the plane’,” he said. “We enjoy these discussions as for us it means a client is really exploring the mechanics and logistics of owning a plane.”

“One thing that surprises many first time buyers is that owning a plane is always more expensive than chartering one. The fixed costs and depreciation are often unexpected and educating on this point is a priority for first time buyers. Ultimately, we want people to buy a plane knowing the realities of it. Too often, private aviation firms promise unrealistic expectations/fantasies and this always ends in tears. We prefer our clients to purchase a plane knowing that it is expensive, but that they will love the experience and gain non-financial benefits from it. This makes for long-term, happier owners,” Stone added. 

Unavoidable
For some people, private jet travel isn’t a luxury, said Davison and Ricklow. 

“Air travel can be unavoidable in certain businesses, so those that need to fly are looking for ways to minimise their exposure to the outbreak. Travelling by commercial airlines involves passing through a public airport with crowds and spending a prolonged period of time in close confines with a large number of potentially unwell people. This makes the appeal of travelling by a privately-operated jet for between four and 20 people, and boarding and disembarking without using a public terminal, all the more obvious,” they said. 

“Another factor contributing to the increase in interest in business aviation is the partial suspension of commercial airline flights in affected areas, including mainland China and Hong Kong. Where possible, some passengers have instead resorted to chartering business aviation jets to travel to and from those affected locations. However, the number of private charter flights available to these places is substantially reduced as there are concerns among operators that planes may be grounded indefinitely if a travel ban is imposed. Similarly, crews are concerned about being quarantined, or the possibility of a compulsory 14-day self-quarantine after visiting an affected area,” they added.

However, private jet passengers are still likely to have to wear a mask.