Private Jet CEOs Navigate New Challenges As Demand Stays Strong
For operators of private jet fleets, maintenance technicians are the new pilots. In other words, companies can’t hire enough of them fast enough. Training slots for all the pilots hired and parts to fix airplanes are often in short supply. Air traffic control delays and ground services are still hampering reliability. However, a mix of new and old pandemic-related issues haven’t slowed the sales pipeline; private jet flight providers told attendees at the annual Corporate Jet Investor conference held earlier this month in Miami.
NetJets, the world’s largest operator of private jets, expects to add 100 aircraft in 2023, but if you want one, it’s too late. All shares are already spoken for with non-refundable deposits. It is again selling jet cards to current and former customers and a limited number of 25-hour leases – fractional ownership starts at 50 hours per year.
On a panel titled, “Can the charter boom last,” Jim Segrave, Chairman and CEO of fast-growing flyExclusive, said, “If we had twice as many airplanes, we would fly twice as many hours.”
Directional Aviation’s Sentient Jet expects revenues to hit a record $460 million for the year, an 11.3% boost over last year’s record, including $40 million in October, according to President & CEO Andrew Collins. That’s despite having put new jet card sales on hold for several months and then imposing flight restrictions on new joiners once it restarted selling.
VistaJet U.S. President Leona Qi said that the operator, long known for its red-stripe and silver jets with plush interiors and white glove service, is using aircraft acquired from Jet Edge and Air Hamburg in its Program jet card, even as they are being upgraded. She said clients told the company that availability trumps consistency, at least for now. Sales in Q3 were “best in history,” she told the group.
In an interview during CJI, NetJets President Patrick Gallagher noted despite the backlog, “We still take a record number of inbound leads every month, which are more qualified than we’ve seen historically. We haven’t seen the quantity or quality of the leads entering the pipeline soften at all, which is one reason we are so bullish on the future. When they call us, people know there is a wait, but they want to be with NetJets.”
However, flight providers said they are still navigating issues that impact operations.
Segrave called “maintenance reliability” the “biggest challenge to delivering for our business,” while another executive said operations are being hampered by staffing shortages that cause ground delays at FBOs and air traffic control delays. Getting training slots for all those pilots that have been hired is another “blockage.”
FlyExclusive is amid hiring hundreds of maintenance technicians, and after recently opening a new hangar at its Kinston, North Carolina base, plans to bring 85% of maintenance in-house. It is also planning to buy simulators so it can bring pilot training in-house as well.
NetJets, which has eschewed the industry’s merger mania, is instead focusing on expanding infrastructure. It currently inventories over 750,000 parts and is adding a major facility in Scottsdale, Arizona. It previously announced expansions of support facilities in Denver, Colorado, and San Jose, California.
Despite the euphoria about sales and consternation about operations, customers and providers may well want to stay seated with their seat belts fastened.
Directional’s Chairman Kenn Ricci predicted “a tug of war between operators and service providers” as investors on both sides demand return-on-investment.
There have been 92 private equity investments in private jet operating companies since 2017, not including acquisitions of FBO groups Signature Flight Support and Atlantic Aviation, Ricci said.
At the same time, tracking data from both Argus and WingX show while charter and fractional flying remains double digits above pre-Covid 2019 levels, it is now trailing last year’s records.
WingX’s Managing Director Richard Koe noted, “We have seen almost six consecutive months of falling bizjet flight activity in 2022 compared to 2021, taking demand well off the peaks of the Covid rebound, although the market still has a substantial gain versus pre-covid 2019.”
“October’s flight activity landscape is indicative of transition. On one side of the coin, we’re up double digits from October 2019, and on the other side, we’re down from last year’s all-time high,” said Argus Senior Vice President Travis Kuhn.
While 96% of flyers who started using private aviation plan to continue, according to a survey of 571 Private Jet Card Comparisons subscribers conducted in August and September, just 40% plan to continue on a regular basis, down from 57% last year.
Also changing is the number of flyers that said they had experienced delays, cancelations and other service issues. That number increased to 44% from 21%, and 51% of respondents say they are now considering changing providers. What’s more, hourly private jet prices are up 33% since the end of 2020.
Executives at CJI said despite the new set of challenges, by adding aircraft, pilots, technicians, inventory of parts, slowing the flow of new customers and introducing new rule sets (longer callouts to book flights, more peak days and even blackouts, and discouraging short hops by increasing daily minimums) they expect to provide a better level of service.
NetJets’ on-time performance, controllable on-time performance (which excludes weather and air traffic control), average recovery time, and percentage of perfect flights (any negative issues down to the wrong salad dressing in a catering order) are now at or better than pre-2020, according to Gallagher.