Turbulence in the airline market: last year’s numbers will have to wait, but the number of new private jet clients is on the rise
After a strong summer, when some operators even reported year-on-year growth, the autumn slump has arrived. The majority of flights are currently shorter ones under three hours and smaller aircraft are also being used. Due to pandemic-related restrictions, the number of new private aircraft clients has increased. Flights in business aviation could return to last year’s normal levels as early as 2021, with deliveries of new aircraft as late as 2025.
The biggest increases at the end of the summer were in Russia, Turkey and the Czech Republic
While not reaching last year’s numbers in terms of flights, flight hours or passengers carried, operators saw a increase at the end of August, with Russia, Turkey and the Czech Republic seeing the most growth, according to Wing X. Some operators were unable to accommodate all interested passengers due to capacity. Both Prague operator Aeropartner and Time Air reported a strong summer, while Austria’s GlobeAir even saw a 13% year-on-year increase.However, the market slumped in the autumn due to the increased incidence of COVID 19. October trends showed a 13 percent drop in total regional flights and an 18 percent drop in terms of flight hours. Shorter flights of less than three hours make up the majority and smaller aircraft are also being used.
„Due to the tightened measures and the absence of scheduled flights, many clients globally who previously used business class have switched to business jets. These customers account for up to 60 per cent of new private jet users. The Pilatus PC 12 was the most used aircraft in August, with over 1,000 daily flights throughout the month. This was followed by the Bombardier Challenger 300 (15,000 flights). Noting that 75 percent of all these flights took place in the U.S. market,“ Antónia Lukačínová, executive director of MEDIA Tribune and author of the JetBook guide, commented on the new trend influenced by the pandemic.
Four of the six largest markets are in significant decline
Four of the six largest markets are experiencing rapidly worsening declines: Switzerland, France, Spain, with the UK down as much as a third in October compared to last year. Germany and Italy are the best performers, flying above 90 per cent of normal so far. Domestic flights dominate in Germany, Italy and also in Sweden, where they saw a significant increase in October. Flight activity in Turkey and Russia is on the rise, especially for domestic flights.
Long-haul flights are in decline, European coastal areas predominate
„The European charter market has improved in recent months. In October, it recorded only an 8% decline compared to last year. The six-month-long restriction on travel in Europe is a big factor in the increased flying. A significant number of European operators and brokers confirm that a larger proportion of flights are to coastal destinations, albeit mostly European. The usual long-haul flights for business (China, USA) or holidays (Maldives, Thailand, Caribbean, etc.) are significantly less in demand,“  describes the current state of affairs.
The UK, France and Spain are currently among the busiest charter markets in Europe. Germany, with the majority of domestic flights, confirms only a 5% drop from the previous year. The most popular flights in the European charter market were from the UK to France and similarly busy holiday flights between Germany, Italy, the UK, Turkey and Greece. Russian clients often chose between Riga, Bodrum, Nice and Larnaca.
Q3 development in the new private aircraft market
Gulfstream owned by General Dynamic, reported a profit of $283 million for the third quarter, down 28% from the same period last year.
Textron Aviation, maker of the popular Cessna business jet, on the other hand, remained in the red at a loss of $29 million, compared to a profit of $104 million for the same period last year.Both manufacturers agree that the effects of the crisis caused by the COVID 19 pandemic have hit them hard and it is currently very difficult to predict how the market will develop in the coming months.
The biggest impact on the current results has been the decline in aircraft deliveries. Textron delivered 25 jet aircraft this year compared to 45 last year, and King Air delivered 21 aircraft compared to 39 last year. The pandemic was also reflected in an overall decline in the number of flights and flight hours and associated service cycles, which caused weaker maintenance center utilization (down as much as $95 million at Textron).
Gulfstream has currently delivered 32 aircraft to clients, 25 units from the ‚large‘ segment (dominated by the Gulfstream G650) and 7 mid-size aircraft. Last year for the same period, 38 aircraft were delivered.
What was the outlook for the last quarter of 2020?
According to Honeywell International Inc, business aviation flights will return to normal in 2019 as early as next year, should a much deeper slump similar to the 2008 financial crisis be overcome. Total takeoffs and landings are expected to fall only slightly by 15% in the fourth quarter and fully recover around mid-2021, Honeywell estimates based on its regular annual survey of 1,050 private aircraft operators.
New aircraft deliveries will fall to 491 this year from 720 in 2019, the best year since the Great Recession more than 10 years ago. Deliveries won’t return to 2019 levels until 2025, according to Honeywell. The company forecasts deliveries of 7,300 aircraft for the next 10 years, down 3.9% from its 10-year forecast last year.