As normal service gradually resumes, BAN takes a look at what the analysts are saying about business aviation demand in a post pandemic world. Given the enforced lock down and restrictions to movement, it is perhaps unsurprising that leisure demand over the Christmas and New Year fortnight was particularly strong, but overall, where once there was a slump, there is now recovery. Business jets flew 3.3 million flights in 2021; light jets were the busiest segment and heavy jets the slowest, but the largest sector growth came in the super midsize segment, particularly for the Challenger 300. North American business aircraft flights jumped 45 per cent year over year, 21 per cent compared to pre-pandemic November 2019. And even in Europe, where economic recovery has been slower, flights have jumped 40 per cent since November 2019 and a full 97 per cent since last year at this time. It is interesting to note that this rush to private flying has caused the supply of pre-owned aircraft to diminish to around three per cent of the fleet for sale compared to 10-12 per cent in normal times.
“Ever since pandemic lockdown restrictions were lifted and well-heeled travellers emerged from their bunkers, the private aircraft industry has been on a tear,” says founder of investor research and guidance company Brian Foley Associates (BFA) Brian Foley. “Conditioned for months to social distance, droves of newcomers flocked to personal aircraft to avoid the hoi polloi at public airports and on airliners. Those who were already private jet savvy doubled down.”
Business jets flew more sectors worldwide in 2021 than in any previous year on record according to WingX research; 3.3 million flights, seven per cent higher than in 2019. During the two week Christmas period 127,000 sectors were flown, 41 per cent more than two years previously. Dedicated cargo sectors were up eight per cent compared to 2019.
The rebound in demand in the US came from fractional (+51 per cent) and branded charter operations (+48 per cent), while private and corporate flight departments saw a more modest recovery. Generally US flights were up in holiday periods, and were geographically concentrated around leisure destinations.
WingX tags light jets as the busiest jet segment in 2021, up 15 per cent with 662,000 sectors flown and almost one million flying hours operated. The largest sector growth was in the super midsize segment (+18 per cent), headed by the Challenger 300. Ultra-long range sectors flown eventually nosed ahead of 2019, even if hours operated were still seven per cent down. Heavy jets have not yet seen a robust recovery.
Despite the hesitant recovery of European economies from lockdown, business jet activity surpassed 2019 levels with five per cent more sectors flown, although France, Germany and the UK ended 2021 still some way short. In contrast, leisure demand in Italy and Spain prompted the strongest rebound in the EU, and Russia and Turkey, with large domestic markets and looser travel restrictions, were up by a quarter. Across the European region, the standout growth came in very light jet sectors; up 22 per cent in 2021 versus 2019.
Business jet activity outside North American and European regions constituted a small minority of the global total, with around 200,000 sectors representing six per cent of worldwide activity, and flights up 28 per cent on 2019. WingX data reveals diverse regional trends, with Asia getting modest growth, buoyed up in India and Australia but stunted in China. The Middle East saw some of the strongest growth, notably in the UAE where sectors were up by 73 per cent on 2019, contrasting with very modest growth in Saudi Arabia. Elsewhere, Brazil, Nigeria and Egypt saw much more activity.
"Business aviation flourished in 2021, with a very strong rebound in demand from Q2 onwards, characterised by leisure demand, unleashed as travel restrictions loosened," explains WingX managing director Richard Koe. "The prolonged slump in scheduled airline capacity and the persistent hygiene concerns around new virus variants appear to have migrated business aviation services to many new customers. The resilience of the rebound in 2021 will be tested in early 2022 by the travel behaviour of business executives."
Foley notes that the rush to private flying has caused the supply of preowned aircraft to dry up. Buyers are left with having to place new aircraft orders as their only ownership alternative, so that for every jet an OEM delivers, it receives two more orders. "Fattening their order backlogs across the board,” he says.
"Private aviation is hot," he continues, "but not all investors were winners.” While the upturn would normally benefit shareholders, the universe of public stocks representing the private aviation segment is rather limited. “Many suppliers who have a footprint in the industry also have much larger ones in the commercial airline and military world, making for a muted upside in the business aviation sector,” he continues.
General Dynamics, which includes the Gulfstream business jet unit, is up 40 per cent. Textron’s Aviation division, which includes the Cessna Citation line, is up 60 per cent. And outside the US, Brazil’s Embraer rose 160 per cent while Canada’s Bombardier managed a 250 per cent increase.
The burgeoning UAM industry, by contrast, is off to a rough start. Shares in newly privatised Archer, Lilium and Joby have all fallen by around 40 per cent. “Stocks rising with the private aviation tide have thus far been established industry participants,” says Foley. “The stock market has not been as kind to younger, often SPAC-linked companies.”