Amid the global spread of the Coronavirus or COVID-19, the world’s airlines could lose more than $100 billion before the pandemic is under control, according to numerous airline officials. However, another sector of the aviation business has seen dramatic increases in demand over the past few weeks – private aircraft charter.
One of the largest private jet charter companies in the U.S. told Tarbell, “demand is way up” and there is “not enough supply” in the current charter aircraft fleet. Meanwhile, commercial airlines like United, American and JetBlue are canceling routes, while the British airline, FlyBe, has already declared bankruptcy due to lost revenue associated with fear of the Coronavirus.
Since 2001, private charter has become more available, economical, and reliable. While still exponentially more expensive than commercial air travel, the ability to save time due to less security measures at private terminals is the overriding factor for private charter’s success after 9/11. That trend has continued to move upward in the years since as charter fleets have expanded with numerous fractional, jet card and club membership alternatives that make private charter more affordable to commercial air customers paying high last-minute fares.
The private charter business also increased due to airlines cutting the number of seats on certain routes while raising prices. This decision by the three major US airlines has resulted in record profits for the industry in recent years. That success, however, is very fragile. It has taken the airline industry many years to recover from 9/11 and the Great Recession.
Billions of dollars were lost during those two events and now it appears a third is taking off. Private charter will once again thrive during this period, at least in the immediate term. However, it may be a short-lived bonanza for private charter companies. The tragedy of 9/11 and the Great Recession had a harsher effect on US industry than the global supply chain.
In today’s world, as a multi-billion-dollar manufacturing CEO told Tarbell earlier today, “all global supply chains for manufacturing seem to originate in China”. This same CEO said he canceled two trips to Asia in the past three weeks – both trips would have been flown on a private charter.
Another factor that may adversely affect domestic private charter is the exponential spread of the Coronavirus in the US. With recommendations of “limiting non-essential” travel coming from some federal and state officials, as well as mandates from the leadership at Fortune 500 companies, private air travel demand may be at risk, regardless of lesser security requirements or affordability.
There are millions of jobs at risk with the instability in the travel industry now. Ironically, with oil prices going down, so does jet fuel, which generally signals an increase in travel demand. The fallout from the Coronavirus will not be completely understood for many weeks or months, but the consequences of the situation will not be good for either airlines or private air charter.