Private Aviation

2020 and COVID-Safe travel 

Following the rapid reduction in domestic and international commercial airline capacity from March 2020 when the World Health Organisation declared COVID-19 an official pandemic, the private jet sector was similarly affected by border closures and reduced business and leisure travel demand. Business jet operations through the first quarter declined 9.7 per cent compared with the previous year. Similarly, new aircraft deliveries dropped, and new and pre-owned transactions were down by unit and dollar volume. 

But, relatively speaking, private jet travel has not been hit as hard as commercial. By April, the passenger count on airlines had fallen 95 per cent year-on-year, while private jet charters were down 67 per cent. Between March and August, while global commercial aviation flatlined between 80 to 90 per cent reductions from the previous year, business jet activity saw a steady recovery across most regions, up to almost 90 per cent in some areas. Where private jet activity and individual traveller demand has really surged has been in its “COVID-Safe” appeal. Private aviation is attractive to the hygiene-conscious traveller through its inherent efficiency and seamlessness. Minimal touchpoints in terms of checkin, security, lounges (700 for commercial v 20 for private aviation, according to McKinsey & Co); less dense passenger groups; and generally less interaction and proximity results in greater perception and reality of hygiene and COVID protection. 

New business models

Independent of COVID-19 has been the groundswell of new private aviation business models that have been developing over the past 20 years. Originally developed for the military, private jet manufacturers, brokers, operators, and users have come a long way since the 1950s and 1960s. Over the 60-odd years since the first Learjet 23, business jets have progressed from corporate executive vehicles; to VIP and luxury transport modes; and from the traditional ownership model to fractional ownership models, pay-asyou-fly, all-you-can-fly, and membership-based models. 

VistaJet, founded by Swiss entrepreneur Thomas Flohr, was one of the first to progress the market from traditional business models in providing clients access to a private “floating” fleet, while enabling them to only pay for the hours they need to fly. While VistaJet is a leader in innovation and service among the fractional jet model, and they pioneered and continue to lead the industry in providing private jet solutions, their business model is still premised on their owning and operating an expensive asset base. 

Enter Surf Air. In 2012, this California-based commuter airline was founded, offering unlimited flight service for a fixed monthly fee. Surf Air ushered in a revival of innovative private jet business models enabled by changing flight regulations, and technology (i.e. apps), which saw the start of the democratisation of private jets. Surf Air quickly recognised that owning aircraft was not conducive to its business model, and shifted to an ‘asset-lite’, leased operating model. The model has proven successful in that a plethora of similar businesses have emerged, with varying levels of success: Wheels Up, Gama Aviation, Beacon, and even Airly in Australia, to name a few. 

What each new business model iteration progresses, whether successful or not, is the increased accessibility of private aviation to a broader market. 

Australia and Oceania 

Air travel in Australia has been impacted at a domestic and international level. State and territory border closures have severely reduced domestic capacity and travel demand by about 80 to 85 per cent year-on-year, while a federally mandated international border closure has reduced arrivals into Australia by a staggering 99.6 per cent compared with a year ago. However, domestic charter movements are significantly higher than 2019 levels. Australia’s infrastructure, population, history, regulations, and attitudes towards private aviation limit comparisons to strong private aviation markets like the US and Europe, the sheer passenger volumes of domestic commercial air traffic between capital city airports, and the surprising strength of the charter market indicate an untapped opportunity. 

A fad or the future? 

The big question that COVID-19 raises is whether passenger travel patterns will change during and following the pandemic, favouring private jet business models. AMDA Foundation’s October COVID-19 aviation summit, featuring expert aviation panellists Sir Rod Eddington (former CEO British Airways) and Lyall Strambi (CEO and MD Australian Pacific Airports Corporation), noted that the longer the pandemic goes on and impacts air travel, the more business and leisure air travel demand and sentiment is likely to change in the long term. Prepandemic, private jet travel was an efficient luxury. With hygiene, minimal points of contact, and an accelerating swell of innovative new aviation business models that reduce the price, and increase the accessibility of private aviation, a new niche is forming. 

The COVID-19 pandemic, while bringing the industry to a standstill, may have served to accelerate the inevitable decline of traditional airline business models, and increased the need for aviation business models to be flexible and technology enabled in order to succeed beyond 2020. IATA’s 2018 whitepaper, The Future of the Airline Industry 2035, highlighted the probable disruptive nature of new technologies, intermodal transport connections, and sustainability mandate. At opposite ends of the aviation spectrum, both Thomas Flohr and Emirates’ Sir Tim Clark echoed this sentiment through their independent statements made during the year that flexibility, technology, and innovation are enablers for success in the future of the aviation industry. 

The premise that the future of aviation lies with nimble, smaller businesses that can provide flexible services is based on the belief that the underlying market conditions that saw the aviation industry doubling every 15-20 years are sound. In Australia, a country with a mature and dense urban air traveller market but limited options besides the tired duopoly, there is a prime opportunity for constructive disruption and trendsetting.