A recap of the private jet charter industry in 2019

A snapshot of the private jet industry in 2019

Three words sum up the private aviation industry in 2019: growth, challenge, and innovation.

Growth

Over the past 12 months the global private aviation market recorded growth of around 9% with 516 new business jet deliveries recorded between January and September, up from 447 in the same period last year. By mid-2019, business jet manufacturers had recorded a five-year-high billings increase of $1 billion year-on-year. It’s a trend that shows no signs of letting up with 7,600 brand new jets worth $248 billion expected to take to the skies in the next decade. The private aviation market forecasts a Compound Annual Growth Rate (CAGR) of 3.41% which will take the value of the private aviation industry from the $27.54 billion mark in 2018, to $36.21 billion in 2026.

IMAGE: Alt tag: Growth illustration with arrows point up and money growing

The main growth drivers for private aviation in 2019 were:

• More people traveling more often. In April 2019, the UN estimated that the world’s population had passed the 7.7 billion mark. The current average population increase is estimated at around 82 million new births each year. It’s no surprise that the number of people traveling by air is expected to more than double in the next 20 years.

• Business benefits of private jet travel cannot be matched by commercial airliners. According to the National Business Aviation Association (NBAA), companies that use private business jets outperform non-aviation users in annual earnings growth, stock and dividend growth, total share price, and market capitalization.

• Growth of the ultra-wealthy. Knight Frank’s The Wealth Report 2018 forecast that the number of demi-billionaires (individuals with a net value of more than $500 million) will increase by 39% between 2017 and 2022. Demand for private jet charter and luxury aircraft is expected to grow along with the number of ultra-wealthy.

• Upgrading of aging corporate and private fleets. 2019’s surge in new and pre-owned private jet sales was encouraged by private jet technologies that include new luxury interiors, improved aircraft performance, and next-generation avionics and onboard connectivity.

• Increased demand for airborne humanitarian missions. Aircraft operated by the private jet charter industry are often the only way to fly medical personnel and humanitarian aid into flash points hit by natural disasters or political unrest.

• A significant increase in ‘Wellness Tourism’. In 2019, an increasing number of people traveled to take part in activities that promote health and wellbeing, whether rock climbing or visiting organic farms. The Global Wellness Institute estimates this type of tourism has developed into a $639 billion market – a rising figure that shows no sign of slowing down. A private jet charter is often the quickest – or only – way to access remote locations. The private jet charter industry is getting onboard with an offering of travel products – from jet cards and empty leg specials, to fractional ownership – that bring private jet travel within the reach of individuals outside the usual customer target group.

Challenge and innovation

With so many natural disasters in the news in 2019 and renewed urgency around climate change, the stakes have never been higher for the aviation industry when it comes to dealing with the challenges of reducing carbon emissions. The history of flight is filled with men and women who were (and are) willing to push the boundaries, and it’s this same pioneering spirit that is seeing so many trailblazing innovations in the private aviation space – from partnerships between aircraft manufacturing giants and start-ups to get electric, hybrid and unmanned aircraft to market, to new ways to attract and train pilots to meet the increasing demand for cargo transport and passenger air travel.

1. Aircraft sales invigorated

As the industry saw a 9% increase in orders for new private aviation aircraft in 2019 – and forecasts put the number of new private jets expected to be purchased by corporations and the ultra-rich in the next decade at around 8,000 – Airbus announced in April that its Airbus ACJ319neo, the business jet version of the A319neo, had completed its first flight. In October, Gulfstream unveiled its $75 million G700 flagship with first deliveries planned for 2022. Other new private jet highlights in 2019 included Bombardier’s mockup of the Learjet 75 Liberty, Textron Aviation’s newly certified Citation Longitude, Pilatus introducing the NGX, and Tecnam’s P2012 Traveler making its first appearance.

Invigorated sales for new private aircraft was also good news for the pre-owned market. Typically, as buyers upgrade to the next model, high-quality airplanes move into the pre-owned market. In fact, 2019 saw demand for young pre-owned jets outstrip a limited supply. Industry experts have seen a symbiosis between new and pre-owned private aircraft sales as customers who have not been able to source a specific pre-owned aircraft will often choose to buy a new version rather than move away from the particular model of their choice.

2. Increasing private aviation traffic while reducing the footprint

IMAGE: Alt tag: Ecological Footprint concept with vertical grass footprints

Concerns around climate change, extreme weather events and other environmental concerns ramped up in 2019 with calls from some British politicians to severely restrict private aviation’s access to UK airports in years to come. It was also a year that saw the private jet industry leapfrog a number of innovations aimed at lowering the sector’s carbon emissions. 

IATA’s Carbon Offset and Reduction Scheme for International Aviation (CORSIA) has committed to carbon-neutral growth from 2020 and a 50% cut on 2005-level carbon emissions by 2050. In order to achieve this, it will have to be a case of technology to the rescue, using new composite materials and sustainable fuels.

One of the top private jet industry news stories in 2019 involved Harbour Air's Electric Beaver that pulled off the world’s first flight by an all-electric aircraft on December 10. The re-engined DHC-2 de Havilland Beavers powered by a single 750-hp Magnix magni500 electric motor left Richmond, near Vancouver in British Columbia, piloted by company CEO Greg McDougall. The goal is to run scheduled passenger flights in all-electric aircraft as soon as 2021.

Meanwhile, Magnix is developing electric propulsion systems for a range of aircraft applications – including the all-electric Alice fixed-wing design under construction by its sister company, Eviation Aircraft, and an electric vertical takeoff and landing (eVTOL) aircraft.

Another surprising private jet industry news story was the revival of airships. Better known as advertising blimps, the classic airship has a large balloon powered by lighter-than-air gases and is steered with engine-driven propellers. Tickets have gone on sale for a trip in the Hybrid Air Vehicles’ Airlander in 2023, and even the legendary Zeppelin is once again in the business of manufacturing airships.

Start-up Flying Whales has teamed up with several corporates and the China Aviation Industry General Aircraft Co Ltd (CAIGA) to build a fleet of 50 airships (each twice the length of a Boeing 747), while Lockheed Martin announced that they were on track to deliver the first 12 hybrid-electric LMH-1 airships in 2020 or 2021. In August 2019, the International Institute for Applied Systems Analysis released a report which concluded that “reintroducing airships into the world's transportation-mix could contribute to lowering the transport sector's carbon emissions and could ultimately increase the feasibility of a 100% sustainable world”.

3. Private aviation industry resources and infrastructure

The pilot shortage in the private jet industry was explored in the media in 2019. The reality is that private aviation is not able to fill the increasing demand for experienced pilots and this is having a significant industry-wide impact.

IMAGE: Alt tag: Pilot smiling in front of an aeroplane exhaust 

More than 67% of business jet operators worldwide experienced difficulty recruiting or retaining aviation-related staff, according to a JETNET iQ survey. The shortage includes pilots, mechanics, and technicians. Around 96,000 new pilots will be needed in the growing private jet charter and private aviation industry by 2037.

An innovation spurred on by this industry challenge is the creation of unmanned aircraft, and 2019 has been a watershed with the CityAirbus electric vertical take-off and landing (eVTOL) prototype, a joint venture between Airbus and Siemens, making its first flight unmanned in Germany on May 3.

Other solutions to attract pilots to the industry include: career pathway and cadet academy programs, and making a career in aviation more attractive to women, who currently make up just 5% of pilots worldwide.  

Airport infrastructure was again a concern for the private jet charter industry. According to IATA (the International Air Transport Authority), more than 190 airports across the globe are “slot constrained”. These are airports that do not have the capacity to meet demand at all hours of the day. Part of the problem is airport construction that can’t keep up with aircraft activity. In 2019, it was again emphasized that a crisis was looming if the industry failed to find ways to collaborate with infrastructure partners to maximize customer service and boost air connectivity.

4. Impact of international trade wars on the private aviation industry

One of the biggest news stories of 2019 was the US government’s threatened trade war on China, Brazil, and Europe. IATA warned that trade protectionism and travel restrictions were a significant risk to the growth of global aviation. The international body forecast that without trade liberalization and visa facilitation, the growth of air travel could drop to 2.7%, which translates to 1.1 billion fewer passenger journeys a year by 2036.

The California-based manufacturers of the ICON A5 – a next-generation light sport aircraft that performs as both a seaplane and an airplane – experienced the full impact of the trade wars in August 2019. Chinese investment needed by the company to further develop the award-winning leisure aircraft was cut as the trade war broke out between the US and China. ICON was forced to lay off 40% of its workforce and scale back aircraft production to fewer than five airplanes a month – down from their original target of 20 aircraft a month.

Brexit was another news story in 2019 that never went away. Global aviation and the private aviation industry has issued repeated warnings to both UK and EU authorities of the possibility of cancelled flights and chaos for the industry and passengers if the UK exits the European Union without a deal in place. The result of vigorous aviation industry advocacy has been an agreement from both the EU and UK to keep most of the current air services agreements intact for up to a year in the event of a ‘no-deal’ Brexit.

5. Jet fuel costs eat into private aviation market profits

IMAGE: Alt tag: Fuel pump in a jet needing to refill fuel tank 

According to IATA, the global airline industry’s 2019 fuel bill stands at about $188 billion. This represents an increase of 4.7% over 2018 and is a whopping 50% more than the $127 billion fuel bill for 2006. The forecast for 2020 points to around $182 billion. Since jet fuel costs make up about a quarter of aviation operators’ total expenses, a spike in the price of crude oil and inability to accurately budget for fuel costs, has had a devastating effect on some of the smaller private jet charter companies in 2019.

A lack of competition in fuel supply and unpredictable duties, fees, and taxes on jet fuel in certain parts of the world is a major concern for the private jet industry. IATA continues to campaign on behalf of the aviation industry for a reliable supply of jet fuel priced transparently and competitively. One possible solution is the digitization of the fuel management process with systems ready for implementation across the aviation sector. The result of the India regulating authority’s reduction in the fuel throughput charge at Chennai Airport, represented a savings for airlines of around $30 million in 2018/19. A stabilized fuel supply and transparent pricing have a significant impact for the private jet charter industry’s growth margins in 2020.

Fast, agile, and personalized travel

IMAGE: Alt tag: Someone on a tablet personalising their flight

If you would like to find out more about private jet charter, please speak to our team about the benefits of fast, agile, and personalized air travel. We’d also be happy to speak to you about your other options for flexible, cost-effective jet charter, like our short-haul air taxi service or our jet card that offers you a range of benefits unsurpassed by any other product on the private aviation market.