Has Covid-19 changed the balance between airline travel and private aviation?

Olga Tcacenco
Olga Tcacenco
Director, Trust and Corporate Administration
Has Covid-19 changed the balance between airline travel and private aviation?

The Covid-19 crisis has deeply changed the airline industry and the way it is perceived by the passengers, especially the frequent travellers. At the end of 2020, most airlines are at risk, and the overall travel experience for the passengers is nowhere close to what it used to be. At the opposite, business / private aviation showed exceptional resilience during this crisis. It is now becoming an increasingly attractive alternative to airline travel.

Airline travel vs. business/private aviation

The Covid-19 crisis has deeply changed the airline industry and the way it is perceived by the passengers, especially the frequent travellers. At the end of 2020, most airlines are at risk, and the overall travel experience for the passengers is nowhere close to what it used to be.

On the opposite, business / private aviation showed exceptional resilience during this crisis. It is now becoming an increasingly attractive alternative to airline travel.

1. Can we still rely on airline travel?

According to the Official Airline Guide, from January to September 2020, the number of scheduled flights dropped approximately by -61% in Europe, compared to the same period in 2019. In spring 2020, the fall even reached -90% in Europe.

According to IATA, with passenger demand expected to reach one-third of the historical level in December 2020, many airlines will face bankruptcy as government support is reducing globally.

Financial distress, lower frequencies and lower capacity put the world airline network on hold – direct flights, short connections and day trips have become a difficult exercise especially between secondary cities.

The passenger experience also drastically changed. The sanitary procedures made the travel stressful, unpleasant and time-consuming. For instance, pre-Covid there were 2 direct flights from Geneva to New York (travel time 9 hours), now this trip requires one stop (travel time 11h15 or more). The loyalty programs and benefits also became suddenly irrelevant.

Passengers often face last minute cancellations or re-scheduling. They may be unable to know if they can make their upcoming trip or come back home. The level of complexity is such that many prefer not traveling at all. For many travellers, this situation has significantly impacted their business life and their vacation plans. 

2. Is business / private aviation the solution?

According to the European Business Aviation Association (EBAA), from January to September 2020, the number of business/private jet flights decreased by only -27%.  In September 2020, the activity was just -15% vs Sept 2019.

Although regulations and travel restrictions also apply to business / private aviation, this industry has proved to be significantly more resilient than airlines during the Covid crisis.

 

Why is this?

  • The industry is structured differently: most business / private aircraft are owned by private individuals or corporations that do not have the same financial constraints as the airlines.
  • Most operators do not own their aircraft and do not bear the financial risk of their operation, so they are less exposed to the economic crisis in case of grounding.
  • Flights are by definition organized “on demand” and not subject to a pre-defined regular schedule. They can be changed or cancelled at the last minute upon the lead passenger’s request. Flights are never performed “at a loss”.
  • Business / private aviation allows reaching remote destinations or flying between city pairs not served by airlines. It is often the only travel solution.
  • Whilst the travel restrictions due to Covid are the same for all travellers, many countries waive quarantine requirements for short trips (less than 24 or 48 hours), which are easy to organise with business / private jets but very complex with airlines.
  • The risk of Covid infections is also much lower: no long waiting time in queues at airports, no crowded cabins, very few cabin crew members and passengers.

Although it still faces limitations, business / private aviation has proven to be a trustful, convenient and safer alternative to airline travel in the past months.

3. How to travel in business / private aviation

Traveling in a business / private jet can be done in various ways, from the simplest to the most comprehensive:

  • Ad-hoc charter: typically for the clients flying less than 50 hours per annum. The client usually pays for occupied and positioning flights. There is no financial commitment, but the availability is not guaranteed and the flexibility (last-minute change) is limited.
  • Block charter: typically for the clients flying 50 to 150 hours per annum. The client usually pays for occupied and positioning flights. He or she usually needs to commit on a volume of hours. The availability may be guaranteed with a reasonable lead-time. The flexibility is limited. 
  • Shared ownership: typically for the clients flying 150 to 300 hours per annum. The client buys a share of aircraft which gives him access to a certain volume of flight hours per year. He pays the variable costs and a share of the fixed operating costs. The availability is guaranteed with a reasonable lead-time. The flexibility is limited.
  • Full ownership: typically for the clients flying more than 300 hours per annum or interested in having their own aircraft. The owner usually mandates a professional operator to run the operation. The owner pays all operating costs and bears the depreciation risk. The aircraft (with a dedicated crew) is fully available to the owner. When he or she does not use the aircraft, the operator may charter it to 3rd party clients to generate some profit on the operation and cover part of expenses.

We can assist you to evaluate how well-suited business / private aviation is to your needs. From ownership structure, charter supplier, operator or aircraft selection, we are here to find the optimum solution for your specific requirements. Thanks to the extensive experience of our aviation team, you will approach business or private aviation with true experts on your side, acting in full transparency and independence.

 

Should you be interested in business or private aviation, please do not hesitate to contact us. We are happy to advise you and navigate you through the complexity of this market.