2021 Trends: What Lies Ahead For Private Aviation

Dmitriy Korshunov, CEO of Delta World Charter, glances back at 2020 before exploring what the year ahead may bring for the private aviation sector.

The UAE’s aviation sector has been a key contributor to the country’s non-oil economy. It has cemented the country’s status as a major international aviation hub, and it has been a vital catalyst in the UAE’s tourism economy, facilitating visitor arrivals from all over the world.

Before the coronavirus pandemic broke, IATA had projected a 170 per cent growth for the UAE’s aviation sector, supporting 1.4 million jobs and contributing $128 billion to the nation’s economy by 2037. However, the unprecedented events of 2020 crippled the sector, especially commercial airlines. With national borders closed and flights cancelled, nearly all of the world’s passenger aircraft fleet were grounded. Normally they transport almost half of total air cargo shipments.

Business performance in 2020

At the start of 2020, private aviation registered a steady growth in business. According to statistics from a report recently issued by Delta World Charter, chartered flights to and from the GCC saw a 4.9% increase in January year on year (YoY) and 7.9% increase in February YoY.

However, with the onset of the pandemic the GCC’s chartered flights sharply dipped by 41% in March YoY. April saw a sharp decline of 75% YoY, a trend that continued through summer. July witnessed a decline of 77% YoY – figures that mirror the plight of the entire airline industry with commercial aviation still battling headwinds.

The total number of business aviation flights departing and arriving in the Middle East region since January was 22,628; a 15% decline year on year. As the COVID-19 pandemic worsened in Q2, travel quarantines were responsible for a dip in activity. Business aviation flight activity slowly recovered by the end of Q2, with flights in the Middle East increasing each month from 3658 flights in Q2 to 7593 flight in Q3.

From January to November 2020, flights utilizing ultra-long-range jets and business jets saw a significant decline during this period, falling more than 55%. However, there was no significant change in the utilization of large cabin and super mid-size jets. In the light jet and mid-size category, the number of flights was up 45%. Cessna-Citation Bravo and Learjet 45XR models were leading the light jet category, while Hawker 800XP and Hawker 900XP contributed to the mid-size category. This may have attributed to the role of medical, repatriation, evacuation, and Government flights in the time of COVID-19.

While some business jet travelers are returning for business travel, the majority of movements in the latter half of 2020 have been stranded individuals trying to reunite with their families either back in their countries or in the Middle East.

2020 also saw the emergence of private flights as a viable solution to bridge the gap between cargo demand and available lift. Private chartered flights eased the choked global supply chain, transporting personal protective equipment (PPE) kits, surgical masks, gloves and medical supplies.

The way ahead

Once air connectivity is restored globally, an increase in charter requests is anticipated. Pent-up demand for holiday travel to destinations such as Mauritius and Malta that have only seen sporadic cases so far, for instance, will stimulate the demand for flying private.

Fears and anxiety over flying commercial is expected to further stimulate demand for private aviation. New customers, particularly older passengers and those with existing health conditions, are opting for private travel as it dramatically reduces risk of exposure to about 30 times lower, owing to much fewer touchpoints. Using FBOs (Fixed Based Operators) or private aviation terminals also reduces the risk of infection as the number of people that passengers may come into contact with is far fewer.

Record lows in the price of jet fuel and an overstock of airplane manufacturer inventory has decreased the cost of flying private, contributing to increased demand for private aviation.

Trends for 2021

Corporate travel traffic remains relatively weak compared to pre-pandemic times. This is due to global conferences being cancelled, business meetings being held virtually, offices staying closed or partially reopening and companies slashing their budgets.

In 2020, we saw increased adoption of collaborative and communicative tools for operators to stay connected with customers and employees. These platforms shorten distances – bringing providers and their clients together to ensure they remain open and prepared to transact.

In 2021, it is anticipated that private aviation operators will broaden their scope of services and customer base, going beyond high net worth individuals and celebrities.  We are confident that the overall market for domestic private aviation will grow significantly, as what was once seen as a luxury is now often considered a necessity. We expect to see a demand for business flights and an increased number of first-time private fliers as they look for safer and more reliable flight solutions.

The pandemic propelled remote business jet viewings as a buyer’s only option. Developments in VR technology could bring full-scale walkthroughs to a potential buyer’s living room in the future – or the chance to ‘touch’ an aircraft through tactile VR gloves. Today, while some travel restrictions remain in place, buyers can still remotely view multiple aircraft through high-quality photos, videos and on-the-ground virtual viewings.

Private jet operators and brokers need to diversify the use of private jets. Air medical services have emerged as a solid business line out of increasing demand from hospitals and insurance companies. Freight transport and business continuity operations are also possibilities to broaden the scope of services from private jet providers.

Partnering with commercial airlines will help secure a steady demand for flights to remote terminals. Furthermore, private jet operators can generate tailored deals for clients interested in these remote routes. A simple market research will provide the routes and the estimated number of passengers that might be willing to pay more for a direct private flight instead of boarding two connecting planes to save time.

Elastic costs of fuel and insurance, increased number of operators with fewer overhead costs and thus cheaper prices, are some of the variables driving cost-cutting. Private aviation will begin to place greater emphasis on being more efficient in spare parts sourcing and maintenance, pursuing fleet commonality and thoroughly selecting cost-efficient suppliers, like FBO’s and catering companies.

Demand is also expected to spike in the wake of mass immunization programs against coronavirus that are now being rolled out. The aviation sector will be tasked with the mammoth challenge of transporting and distributing approximately 10 billion doses of vaccines over the next two years. We expect business aviation to also contribute to this humanitarian mission.

At the time of writing, countries are once again suspending international flights and closing borders, throwing travel plans in disarray during peak holiday season. With commercial airlines cutting down on routes, private jet travel is again proving to be one of the fastest and safest ways to reach international destinations. As the travel industry rebounds, leisure demand will recover before corporate travel – with more people travelling for pleasure rather than business. Looking to the future, it is expected the global economy will take more time to rebound to pre-pandemic levels and 2021 will be a challenging year.

You can also read the feature article here