Private aviation is one of the fastest growing sectors in aviation. What is driving growth?
At the peak of the pandemic, though total flight numbers were down 80% on 2019 volumes, business flights (defined in this instance as all non-commercial, non-cargo flights) at 64% down, seemed less badly hit. By the end of 2020, while total flight numbers were still 50% down year-on-year, private travel had recovered to pre-pandemic levels.
Going forward, the market for business jets is expected to grow at CAGR 2.5% over the next five years (2021-2026), from US$15. 25b to US$17. 9B. There are two apparent reasons for this.
On the demand side, though COVID-19 caused a short-term dip in orders and deliveries during 2020, it delivered a boost to long-term demand. High net worth (HNW) and ultra-high net worth (UHNW) individuals as well as VVIP and corporate travellers all want to travel privately for reasons of safety and of convenience (read, avoid the queues and the crowds).
4 Reasons more people are choosing private travel
More specifically, there are four important benefits of private flying: privacy, safety, customization and accessibility. It is often a legal requirement for high profile politicians, business leaders or even celebrities to travel privately for their own safety and security. Others might need to do so to control their surroundings for health reasons, customise to personal or work preferences or simply for their own comfort. Private jets are a particularly good option for people needing to travel to remote places or those inaccessible to commercial airlines.
Lightweight, fuel-efficient business jets with customised, state-of-the-art cabin interiors are western corporate favorites especially in the largest business jet markets across North America, particularly the US. There is increasing demand from both Latin America and Southeast Asia, and particularly, Africa where pre-owned Bombardier and Dassault’s Falcon series are especially popular.
Africa. The new frontier in private aviation
As the number of routes and airlines claimed by the pandemic has risen, so has the demand for private aviation with businesses and private individuals looking for the ‘flexibility, control, and security’ that comes with it. According to Danie Joubert of Jetcraft, there were twice as many first-time buyers looking for preowned aircraft across the African continent during 2020 than there had ever been before. Customers in South Africa, north and west Africa tend to invest in mid and super mid-size jets. In the eastern part of sub-Saharan Africa, it is helicopters and turboprops that are far more popular. This is partly due to lack of infrastructure needed to support larger planes.
From a geostrategic perspective, the African continent is extremely attractive to China which is investing billions in regional infrastructure as part of its One Belt, One Road initiative. The combined potential of the Red Sea corridor and a rapidly growing middle class is continuing to attract increasing global interest in the region from countries such as Turkey, France, Netherlands and Great Britain which in turn is driving a significant uptick in the demand for business jets and charter aviation.
The uberization of private aviation
On the supply-side, industry reports show that over 30% of business jets currently in operation are over 10 years old. OEMs are already investing in innovative, hi-tech, next-generation business jets, helicopters and electric planes to in anticipation of rising demand as operators and owners ramp up extensive fleet modernisation programs. There is already pressure from customers as well as from aircraft leasing companies to do so. There is also a shift from business aviation as a product to a service, including innovative options such as fractional ownership and the uberization of business travel.
These are all trends that were already apparent pre-pandemic. Covid19 has simply crystallised the challenges of commercial aviation while catalysing those of business aviation. These developments are expected to underpin growth in the business jets sector over the next five years.
