Transportation

Coronavirus And Service Cuts By Big Airlines Are Inflating Demand For Private Jet Charters After Year Of Strong Sales


Despite years of environmentally-driven criticism bordering at times on out-right mockery, the world’s makers of private jets delivered more new planes last year than in any year since 2009, and 15% more than in 2018.

And now growing concerns around the world about the spread of coronavirus and the resulting dramatic reduction of international airline service in some big markets like China are combining to drive up demand to charter corporate jets. Indeed, demand currently is especially strong for mid-size, large, very large and ridiculously large corporate jets with really long legs, i.e. those capable of flying at least 7,000 miles unrefueled.

Recent reports say that demand for private flights between Hong Kong and both Australia and the United States have more than tripled in January as word spread about the flu-like virus officially named COVID-19. Meanwhile, though air travel to and from Hong Kong has not be shut down, as it has been in certain regions of mainland China, there are only about half as many flights a day to and from Hong Kong now than there were before COVID-19’s appearance. The number of flights in January between Hong Kong and both Australia and the United States were up 214%. And private flights between Hong Kong and all other destinations were up 34% from January 2018. 

The International Air Transport Association last week said it expects the coronavirus outbreak will cost airlines around the world a combined $30 billion this year as they chop huge chunks of capacity from their international schedules. And the total negative impact on global airline revenues could grow worse if the COVID-19 outbreak proves to be even more long-lived, infectious, deadly and/or rapidly spreading than currently expected. IATA said most of the revenue hit will be felt by airlines with principal operations in the Asia-Pacific region, where it currently expects a 13% percent drop in demand for all of 2020. That would be the first drop in commercial air travel demand in that region since 2008, when the global economic decline had its biggest impact.

Hong Kong, a former independent British protectorate, is not subject to all the strict local/domestic/international travel, work and public gathering restrictions imposed by the Chinese government on much of mainland China. Still, commercial air service to the dynamically capitalist island has been cut nearly 50% since this time a year ago, thanks to the one-two punch of the coronavirus outbreak began and the political protest movement against efforts by China’s communist government to tighten up on the freedoms uniquely enjoyed by Hong Kong citizens.

As a result, many Hong Kong residents have hired corporate jets to get out of the area, at least temporarily. And many foreign corporations also have moved to evacuate some or all of their employees and their families for the time being.

Though, in all likelihood the COVID-19 threat will be gone long before any new private jets ordered today could ever be delivered, the recent events still show how useful private planes can be when commercial aviation options are reduced or eliminated in response to geopolitical – or, as in this case, health – emergencies. Thus, the global threat of the coronavirus’ spread is being viewed as catalyst for additional private jet sales.

Last year ranked as the fourth-best year ever for the private jet sector, at least in terms of aircraft delivered. The top sales year was 2008, when 1,317 private jets were delivered, followed by 2007 (1,137) and 2009 (874). Total sales value data has not yet been compiled but 2019 almost certainly was a record-setter in that regard, given the roughly 50% rise in private jet prices since those peak sales volume years more than a decade ago and the 106-plane increase in sales volume over 2018.

Collectively they build everything from the tiny, 3,600-pound Cirrus SF-50 Vision Jet, that sells for around $1.9 million, to the giant, 1 million-plus pound Boeing 747-9 Business Jet that costs $367 million per copy before the purchaser drops another $25 million to $50 million for a personalized interior.

The corporate jets delivered in 2019 represent between 15% and 18% of all corporate jets currently use around the world. Definitive numbers are not available but it’s generally believed that there were more than 4,600 private jets in service going into 2019. It is not known how many older corporate jets were retired in 2019 but it is clear that the global fleet has seen net increases over the past five years.

In 2017 Jetcraft, a broker of new and used jets for sale, forecast that more than 8,300 new jets would be delivered to the private aviation market through 2027. More recently aircraft parts and avionics maker Honeywell forecast 7,700 planes will be delivered to the private market between 2019 and 2028. Cessna, a unit of Textron that makes what is arguably the most popular line of small and mid-size private jets sold under the Citation name, is expected to remain the sales volume leader over the next decade.

Bombardier, the Canadian company that earlier this month sold its last remaining interest in its commercial airliner division to Europe’s Airbus SE and its rail car and engine maker division to France’s Alstom, is expected to retain second-place in the private jet sales volume race via its large to extra large cabin Global Express line of corporate jets.

Gulfstream, a unit of General Dynamics, is projected to remain at the top of the sales value competition over the next decade because of the popularity and the passenger capacity and range capabilities of its large cabin and top-priced G series of jets. And France’s Dassault, maker of the Falcon jet line of larger, longer-range private jets, is likely to continue in hot competition with Gulfstream and Bombardier in the fast-growing upper end of the private jet market.

Other, mostly newer competitors meanwhile are slugging it out with Textron’s Cessna Citation family of jets lead the mid-size marke. While makers of smaller business jets include Switzerland’s Pilatus, Japan’s Honda Jet, and Minnesota-based Cirrus. Though it is best known for making a small, turbocharged piston engine plane, the SR22, that was the first to include a parachute that can bring the entire plane safely to the ground should it lose power, Cirrus several years ago entered the low end of the private jet market with a four-seat, single engine jet called the Vision Jet. It too is equipped with an all-plane parachute system plus the ability to land itself in an emergency that does not require the use of its parachute system.

At the other end of the private jet world are Boeing and Airbus, the two biggest airplane makers in the world and the principle providers of airliners. Airbus currently markets corporate or VIP versions of its A320neo family of single-aisle jets popular with airlines around the world. Boeing, this nation’s largest exporter, now markets eight different private market versions of its airliners through its Boing Business Jet or BBJ unit. They include the huge 747-8, two different versions of the 777, two different versions of the 787 and three versions of the 737 MAX. All three versions of the BBJ 737 MAX, however, have been grounded for nearly a year along with all the commercial 737 MAX versions. That grounding, the result of flight control system and pilot training issues that played roles in the deadly crashes of two 737 MAX airliners, is expected to continue at least into this summer.



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