BAN's World GazetteerSwitzerland
As the private aviation charter market continues to enjoy a new golden age, Geneva-based brokerage LunaJets warns of a hard landing as it sees more signs of market bubbles.
"This year to date, our growth is over 90 per cent, considering a $110 million revenue in 2021 for our private jet charter division," says sales director Guillaume Launay. "Our web platform model and industry position puts us at the front line of any market changes, and I can tell you that the shift has been dramatic."
LunaJets' website and mobile app receives thousands of visitors every day, a large portion of whom are newcomers who aim to avoid post-Covid commercial airport and airline experience at any cost. Last year, LunaJets acquired north of 1,000 new clients.
CEO Eymeric Segard warns: "I am delighted with our performance so far. We continue to deliver on our strategy based on the best technology and expand with new offices into new markets. Nonetheless, I maintain a cautiously optimistic and opportunistic approach as I don't believe in the current euphoria and see more risks ahead for our industry. Either the current trend lasts and the market faces a major supply issue or it reverses dramatically and faces a new wave of bankruptcies. 2021 was like a wild pendulum, from one side to the other in three months, and I don't see any indication of a soft landing. Having said that I will not be surprised if we experience another more than 50 per cent growth in our revenue this year if the current situation remains.
"Most of our competitors have either been acquired, gone into administration or are currently for sale. With our long-term track record and cash rich balance sheet we are ready to seize any opportunity as we expect more consolidation ahead when the market reverses."
The risks to the industry, he says, are that the post-Covid recovery turns out to be mostly based on new clients and short flights, rather than existing and long haul, and business clients do not returned to pre-Covid levels as video and remote working are still favoured. Financial market volatility may send new clients back to commercial airlines and the crypto wealth effect may disappear as fast as it stormed the industry. Then there is the war in Ukraine; supply chain disruption will delay aircraft delivery and maintenance, and a pilot and crew shortage. The impact of inflation on charter rates must be considered, and the rising cost of debt and financing will impact the velocity of sales and acquisition market. IPOs, SPACs and M&A activity at nonsense prices will fade. Will we see new Covid variants? And what about sustainability regulations?
LunaSolutions, the sales and acquisition division of the group, is also experiencing a strong year and hits a new record of transactions.
"We see aircraft that we sold within the last 18 months coming back on the market at a premium of 50 per cent," says managing director Alain Leboursier. "The market has shifted from struggling to find buyers to struggling to find enough good aircraft in a few months. The situation is very similar to the charter market, and maybe worse than the 2008 bubble peak.
"We will continue to diversify our revenue stream into other aviation services markets. During Covid we opened a new cargo division, LunaLogisitisk, and a group charter division, run by Rémi Aubin in Paris, who has already organised flights for more than 18,000 passengers this year."
Founded 15 years ago by Eymeric Segard, an ex-Ogilvy executive, LunaJets revolutionised the private jet charter market, then mostly controlled by a group of jet operators, limited to their own fleet and business interests. The company was the first to offer a web platform to access an unlimited category of business aircraft, with no minimum notice, peak days or fleet restrictions. Based on its website and mobile app technology the company offers an independent marketplace to book all types of aircraft. LunaJets is fully controlled by its founders and managers.
With offices in Geneva, London, Paris, Monaco, Riga and Dubai, the group partakes in private jet, passenger group, cargo charter segments as well as sales, acquisitions and financing of aircraft. The company is currently hiring new employees into all its divisions to meet surging demand and raise its service standards.