As corporations recover and get back on the road, they have been forced to find new ways to build back air connectivity because of the wholesale elimination of business routes at the beginning of the pandemic and the failure of airlines to build back their networks. Instead business travel programs have since pivoted to private aviation not only to build their own networks but to counter airline disruptions, reduced schedules and shrunken networks.
However, with the changes comes the need for corporate travel managers to learn about private aviation to enable them to serve their clients appropriately. “Those who normally travel in business class and are handled by the travel manager and corporate travel program or policy are making the leap to private,” Private Jet Services senior vice president of sales Andrew VanderPloeg tells Business Travel Executive.
“The leap from commercial to private is massive,” VanderPloeg says. “COVID prompted a ton of education for new entrants who see the risk mitigation in terms of an executive’s itinerary as well as the ROI on the time savings or ability to be more productive when traveling for multiple site visits.”
More Than COVID
A year ago, businesses turned to private aviation to protect passengers by reducing airport and aircraft exposure. This wide-spread introduction to private aviation was a game changer, as businesses finally began to see the measurable benefits in increased employee productivity that comes from flying direct, allowing them to take advantage of the thousands of airports closer to their destinations either underserved or not served at all by commercial carriers.
Businesses also realized that efficiency brought reduced travel costs that, even if it didn’t entirely make up for the higher sticker price, certainly contributed to enhancing employee efficiency, gaining new business or keeping customers happy.
For that reason, it was not surprising to see so many business aviation companies exhibiting at November’s Global Business Travel Association conference in Orlando.
“Air Partner has seen private charter requirements for both small and large jet travel increase recently due to the large amount of flight cancellations and some concerns due to reliability of commercial services,” says Simon Moore, Air Partner’s senior vice president of commercial jets US. “For example, sports teams who cannot afford delays, last minute canceled flights, or missed connections have come to rely on charter flights as it is more reliable. Additionally, we have operated corporate shuttle charters as some scheduled services had been canceled during the COVID shutdowns.
Tailored, charter shuttle flight programs enabled some of our clients to keep their employees on the move and ensured they did not need to shut down domestic or overseas operations.”
Corporate travelers were not the only sectors harnessing the added value of private aviation, Moore explains. “Our Washington office has seen more business from political entities, particularly House and Senate clients, when expedient travel was needed to ensure meetings and votes and public engagements fit into busy schedules. These individuals and business clients would normally travel via Business or First Class. Bookings are being made by both the individuals through their own research or referrals from colleagues or friends, or via corporate travel managers and personal assistants.”
Managing the Shift
Companies will be turning to their travel buyers, who will need the right tools to respond. “There are certainly many new individuals using private aviation,” VanderPloeg says. “New corporate clients have turned to private aviation too, and some existing clients are re-tooling their portfolio to optimize for their needs and navigate the current market environment. As to more contracts or RFPs being written – there is always a steady flow, but new users are not there yet.”
The numbers demonstrate that the shift to flying private, for now, has staying power. In fact, there has been a dramatic shift in attitudes toward private flying since the economic downturn of 2008 when corporations were selling not only their aircraft but their fleets.
“Today, businesses are running toward private aviation,” according to Rollie Vincent, creator and director of JetNet iQ, a market research, strategy, and forecasting service for the business aviation industry. “During the Great Recession they were running away. On demand charter business jet usage is up 69 percent from 2019 to 2021 while fractional usage is up 63 percent. Sentiment is also up, with 76.9 percent of respondents seeing a continuing upward trajectory for the industry.”
The pivot to private aviation means increasing demand for charter and other options. As a result, the private aviation market continues to tighten. Indeed, charter and fractional operators (those selling fractions of aircraft to many owners in return for guaranteed minimum usage) are seeing fleet activity up sharply as passengers opt for private flying without owning.
Those who sell jet cards and fractional aircraft were forced to shut down sales in 2021 as demand exceeded supply, impacted in part by lengthy delivery schedules as these programs seek to increase fleets. Demand for aircraft ownership is rising, but so too are the lead times for taking delivery of a new aircraft. Meanwhile sales of pre-owned aircraft are at unprecedented levels, driving the tightest market on record.
Vincent forecasts an 11 percent increase in business aircraft deliveries over 2020 to 700 jets, with another 12 percent increase in 2022. Orders are well in excess of deliveries, he says, with backlogs stretching out years and demand driving production rate increases.
“There are more people who want to fly privately than there are aircraft,” says VanderPloeg. “Availability is more challenging. Planes are flying nearly non-stop. I think in terms of true supply it will take years for more aircraft to come into the charter market to address the demand if it stays at these levels or demand grows. Near term, aircraft are being utilized far more, and that has impact on maintenance schedules and intervals and the incident rate of mechanicals impacting service, which means businesses must account for that in their private aviation planning. No one is immune right now, including the big national brands.”
Good for the Bottom Line
Indeed, the growth of business aviation signals final acceptance by business leaders that it is no longer a luxury but a valuable business tool essential to the business strategy.
There are lots of ways to measure private aviation’s return on investment that cannot be illustrated by just looking at dollars and cents; something users understand.
The use of private aviation increases revenues, efficiency and productivity. Additionally, it is recognized as a significant competitive advantage in recruiting and employee retention when compared to nonusers.
Airline hassle factors such as smaller seats and seat pitch, packed aircraft and rising prices are no longer a matter of inconvenience associated with economy travel. For the business traveler flying business or first, it is a matter of time.
WingX notes the recovery in scheduled airline activity stumbled recently, with network capacity dropping 33 percent in sectors flown this January compared to two years ago and still only 27 percent of the schedules in January 2021.
The increasing cost of airline disruptions is now measured in how many days – often three to four, according to the government’s General Accountability Office – it takes to rebook a flight when things go wrong. GAO was only tracking weather delays when it drew those conclusions, but disruptions today go far beyond weather to crew availability, smaller fleets and airline schedules. Pandemic-induced isolation mandates have exacerbated the already critical pilot shortage and expanded the problems of short staffing throughout the airline industry.
“With commercial air experiencing issues, we are seeing more inquiries,” says VanderPloeg. “However, at the same time that all businesses are being disrupted by supply chain issues or labor issues, so too is private aviation and it is being reflected in some services levels at all providers. We have seen former owners who switched to charter reconsidering ownership because they want their own dedicated aircraft to maximize flexibility and so they won’t encounter any issues around availability.”
While historically most people have viewed private aviation as a playground for high net worth individuals, users know the truth is far more complex and compelling. If that myth were true, companies using private aviation would not outperform companies restricting themselves to airlines.
In fact, top executives only use the aircraft on 50 percent of the missions. The other 50 percent is middle-level customer service and sales personnel either troubleshooting customer problems or gaining new business.
Nor are these aircraft the globe straddling big jets. Efficient business aviation is all about matching the aircraft to the mission and that is why small jets and turboprops are leading this new migration toward business aviation activity and sales. Border restrictions also mean most of the increases are in domestic travel which also favor these aircraft.
“Many new clients have been moving to small private jets as a means of both personal and business travel,” says Moore. “They see private jets providing both a quick and seamless way of flying point to point while minimizing exposure to the virus.”
And, at a time when it is getting increasingly difficult to recruit much-needed employees, it is telling that private-aviation users outpace nonusers in recruiting.
Consequently, travel managers must understand offering private aviation options is not about abandoning airline programs, it is about helping clients be more successful when the mission warrants it. The majority of travel booked still is and always has defaulted to airlines first. Pandemic-related airline disruptions and the quest for corporate success now rely on travel manager adding private aviation to their tool kit to get the job done.
The message for travel managers is clear. Their clients are already using private aviation. To be part of the overall business travel strategy and be more responsive to new travel needs, buyers must learn about business aviation in preparation for the next airline disruption whether it be another variant or the ever-present computer meltdown.
The travel manager’s job has shifted, it seems, from simply getting employees from Point A to B to a stronger role that makes the travel program a partner in the overall corporate success strategy – especially at a time of dysfunctional airlines.
