A Gulfstream G-IV private jet flies through the clouds at sunset on June 12, 2024, arriving at Washington’s Reagan National Airport in Arlington, Virginia.
J. David Acker | Getty Images
A version of this article first appeared in CNBC’s Inside Wealth newsletter with Robert Frank, a weekly guide for high-net-worth investors and consumers. Sign up To receive future editions delivered directly to your inbox.
The number of private jet flights fell 15% in the first half of the year compared with a peak in 2022, as the industry grapples with falling demand and a new competitive landscape for high-end travel.
Despite a brief boost from the Summer Olympics, which saw a record 713 private jet flights to Paris in the last week of July, the private jet industry continues to decline this travel season. The number of private jet charter flights fell to 610,000 in the first half of this year, down from 645,000 last year and 716,000 in 2022, according to data from Argus International.
The two-year decline highlights an ongoing correction in the private aviation sector, as fewer new Jetcard members and charter passengers take their first private trips during the coronavirus pandemic. Even ultra-wealthy travelers are showing signs of spending fatigue.
“At its peak, everyone was saying, ‘First-time private jet flyers will never go back to commercial flights,'” CEO Rob Wiesenthal said. Blade air maneuvers, Air charter and helicopter companies. “Guess what? A lot of people went back. And they’re still going back.”
The industry is still ahead of 2019 levels, and experts say business has been growing along its usual growth path, excluding unusual spikes in 2021 and 2022. However, the post-COVID boom has unleashed a euphoric wave on the industry, ushering in an explosion of IPOs and startups and a frantic scramble for jets and pilots. Many say all the expansion now sets the stage for a shakeout.
wheel up, The company went public via a SPAC in 2021 after its stock price plummeted more than 90% Delta Air Lines Help save the company through investment and partnership. Wheels Up has never posted a quarterly profit and last week reported a second-quarter net loss of $97 million, with membership down 29% from the same period last year.
The company’s chief executive, George Mattson, said Wheels Up is making solid progress. seamless integration of private and business travel ecosystems.
Jet It, a large US private jet operator, shut down last year due to the grounding of its Phenom 300, Gulfstream G150 and HondaJet fleets. Although VistaJet founder and chairman Thomas Flohr told CNBC in May that “all documents and data are always available to our equity and debt holders,” VistaJet The airline has faced concerns and media coverage about its debt load.
Some smaller charter operators may soon face tough decisions as fleets idle and demand drops, industry experts say.
“Smaller operators with three, four or five jets are hurting,” Doug Gollan said. Private jet cards comparison.
Private aviation’s recent challenges and brief successes can be traced to the coronavirus pandemic. With airports and airlines closed in 2020, private jets provided an escape and safer way to fly. Wealthy travelers, who rarely, if ever, fly on private jets due to cost and energy consumption, can now justify quarantine at 40,000 feet.
“This is a group of people who can afford to fly privately, but they’ve always been reluctant because they don’t like the optics,” said Jay Duckson, founder and president of consultancy Central Business Jets. “Because of COVID-19, they have a reason to fly privately. .Demand has increased significantly.
Floods of liquidity from government spending, stimulus, low interest rates and a booming stock market have also created record wealth to pay for the soaring cost of private flying. Companies scrambled to buy planes, hire pilots and recruit new members. Before 2019, there were only a few months when the number of private jet charter flights exceeded 100,000. In 2021, the number of flights will exceed 100,000 almost every month, with the number of flights in July 2021 exceeding 300,000.
Demand is overwhelming the industry. Private jet passengers who pay six-figure flights are starting to face delays and cancellations as operators can’t buy or lease planes quickly enough. Shortages of pilots and parts have also grounded the fleet.
In 2023, demand began to decline even as more aircraft and pilots began to come online. Some wealthy passengers believe they can no longer use the coronavirus pandemic as an excuse to fly themselves or others on private jets. For others, the soaring price of private flights is simply out of control.
“Prices are up about 20% from 2019,” said Private Jet Card Comparisons’ Gollan. “A lot of people are saying, ‘I spent $300,000 or $350,000 on flights last year, and this year I’m not going to spend $400,000 or $45,000. Million dollars. ‘” Even if they have the money, they have a dollar figure in their head that they don’t want to go beyond.
In addition to flying fewer flights, some passengers are simply starting to take commercial flights to facilitate travel between cities, mixing commercial and private flights throughout the year. In his latest survey of private jet passengers, Golan found that 87% “switch between airlines and private jets depending on where they fly.”
As demand falls, unsold aircraft pile up again and prices soften. A report from Jefferies showed that the number of used business jets for sale increased by 17% year-on-year in July. Prices fell by 7%, according to the report. While orders for new planes remain strong, wait times for many models have shortened from three or four years to about two years, according to aircraft brokers.
Many industry executives welcomed the drop in demand, saying the industry was returning to a more balanced balance, with profitable routes, available aircraft and happier customers.
“The industry is on a more sustainable long-term path,” said Travis Kuhn, senior vice president at Argus Software. “It’s not a bad thing to cool down a little bit.”
Golan said that while some occasional flyers may have stopped flying, “heavy users” are still flying. His survey showed that 95% of respondents who started flying privately during the COVID-19 pandemic are still flying privately, with 77% using loyalty cards, jet cards or points plans.
Industry giant NetJets, owned by Berkshire Hathaway, is also benefiting as more people switch from chartering to fractional ownership due to better reliability and quality. The number of regional flights actually increased by 12% in the first half of 2024, to 308,000, Argus data shows.
“Some of these new passengers looked around and assessed the market, and they liked the fractional model,” Kuhn said. “It’s a set number of hours and a larger fleet.”
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