One reason I enjoy going to the National Business Aviation Association's annual Business Aviation Convention & Exhibition (NBAA-BACE), which was held last week in Orlando, is its diversity. Attendees range from maintenance technicians to managers of ...
One reason I enjoy going to the National Business Aviation Association’s annual Business Aviation Convention & Exhibition (NBAA-BACE), which was held last week in Orlando, is its diversity. Attendees range from maintenance technicians to managers of corporate flight departments, pilots and even UHNW consumers there to see the latest from manufacturers of new business jets, sellers of avionics, companies that modify interiors, providers of in-flight connectivity, fuelers, private jet terminals and I suppose anything and everything one might need to operate a private aircraft. It also makes for an interesting press room where a fair section of journalists are also pilots and where there are often as many discussions about engine technology and government regulations as new aircraft orders, which brings me to my report.
Embraer launched its Praetor 500 and 600 midsize and super-midsize private jets during the annual convention of the National Business Aviation Association held in Orlando, Florida last week.Doug Gollan
One of the week’s highlights is a Wednesday cocktail reception to raise money for the Corporate Angel Network (CAN) whose sole mission is to transport cancer patients to the hospital at which they need to be in order to receive a specialized form of treatment. At no cost to the patient, the group pairs empty seats on private jets with those who need the rides. Its corporate supporters include Abbott, America Express, Caterpillar, Flexjet, Hertz, Nestle, Purina, Honeywell, Intel, Lilly, Meredith, NetJets, The Home Depot, P&G, Valero, Verizon, Target and more than 500 others.
While Business Aviation is responsible for over one million jobs and over $200 billion annually in economic activity in the U.S. alone, it’s CAN and the industry’s role as first responders after natural disasters, that often doesn’t get the spotlight it deserves hence why I have it near the top of my story. In the weekend immediately after Hurricane Michael, Operation Airdrop activated 31 airplanes that made 44 flights delivering over 20,000 pounds of supplies to four different airports, according to Aviation International News (video below). It was essentially a replay of how the industry responded last year to Harvey, Irma and Maria or the 2010 Haiti earthquake when the industry ran 4,500 relief flights in the first 30 days after the earthquake and transported over one million pounds of supplies.
That said, Business Aviation remains an industry in flux, weighed down by a slow and sometimes seemingly hard to notice recovery that’s now stretched nearly a decade since the Great Recession. That was highlighted at the JetNet iQ State of the Market Briefing showing that at the industry’s current rate of about 800 new private jets delivered per year is still a far cry from the 1,317 new jets that were delivered in 2008 or the 1,137 in 2007.
Reasons for the snail-like bounce back are multifold and range from the still depressed pricing of used aircraft meaning that you get less value from selling your current jet to worries about how well new jets will hold their value after having been stung by plummeting residual values in 2008. At the same time, impending regulations that will require older aircraft to go through upgrades could ground at least 1,000 jets, perhaps boosting used market pricing and helping jump-start new aircraft sales, at least in theory.
NetJets chairman Adam Johnson (right) signs off on as many as 320 Citation Longitude and Hemisphere private jets during the NBAA convention held last week in Orlando, Florida. He said the fractional share, lease and jet card provider has taken delivery of 230 private jets in the past four years.Doug Gollan
The silver lining - the fact that overall flight hours, according to ARGUS TraqPak, are now back to those pre-recession levels, indicates that many users are flying more via short-term solutions such as on-demand charter, leases or jet cards, with the number of providers for card membership programs more than doubling in the past decade.
The idea of having your own flight department fully stocked with a multitude of your own private jets took a body blow on the eve of last year’s conference in Las Vegas when GE’s then-new CEO John Flannery announced he was going to dramatically scale back the conglomerate's in-house flying. Needless to say, there were a few snickers that he was unceremoniously dumped earlier this month, a micro-short tenure rarely seen without a scandal. That said, current operators are as likely to use fractional shares, leases or jet cards to increase capacity than buy shiny new metal. Some 45% in the JetNet survey, which includes corporate flight departments, said a combination of not needing new aircraft, the cost of trading up and uncertainty about the economy are key inhibitors.
While VistaJet used the conference to show-off its over-the-top Chairman's Menu it turns out most of its well-heeled customers want healthy vegan menus, salads and high-quality hand-made pasta dishes.Alex Cretey for VistaJet
VistaJet took the opportunity of the increasing spotlight on asset-light solutions to unveil for attending journalists its Chairman’s Menu, a Michelin-style feast that needs 15 days notice to prepare and requires its Head of Private Dining to fly to wherever the trip is starting to work with local chefs on sourcing and preparation. While the company admits healthy salads, vegan menus, and juice presses are far more popular that caviar, the idea was to underscore you don’t have to pay $50 million to own your own jet to have a similar pampering experience.
Manufacturers such as Gulfstream (above) display their various aircraft types during an outdoor exhibition at the National Business Aviation Association's annual convention held last week between the Orange County Convention Center and Orlando Executive Airport in Orlando, Florida. (AP Photo/Andy Wong)
Of course, some folks will always want what's new and improved. A day earlier, at a hangar at Orlando Executive Airport, just 10 miles north of the main airport that handles 45 million adventure park enthusiasts and conventioneers annually, Embraer Executive Jets unveiled the Praetor 500 and 600, souped-up versions of its Legacy 450 and 500 jets with longer range, lower cabin altitude, meaning less jet lag, improved avionics and very sexy cabin interiors. As I was walking out after the presentation and was waiting for my Uber at the makeshift valet stand, up vroomed a Ferrari and out popped a 50-something gentleman dressed in all black and his high-heeled companion who had to navigate the gravel parking. Clearly, if you have the wallet to buy a $25 million new jet, you’re never late.
And that’s also the interesting part of this conference. It was held in part at the Orange County Convention Center with stands and displays typical of many trade shows, and also via a static display at the general aviation airport where each manufacturer had on display the aircraft types they are trying to sell, billions of dollars of private jets baking under the hot Florida sun.
Registered delegates can come aboard, get a feel for the cabin height and width, get a first-hand look at the luggage space, see some of the new interior designs, check out the lavatory size, and if you are a pilot take a look at the avionics in the cockpit. If you don’t happen to run a corporate flight department or have a net worth exceeding $100 million, visiting the static is hit and miss. You can be ready to board an aircraft and all of sudden a velvet rope comes up. “Can you please wait 10 minutes” can turn into two hours if there is a real buyer aboard, perhaps discussing actually making a purchase, or at least getting a bit further down the sales funnel.
Executive AirShare announced its rebranding to Airshare and plans to add Chicago, Nashville and New York to its bases for fractional share and jet card sales.Airshare
Then again, what’s a real order is also a good question to ask. If you follow the industry from an arm's length you may feel like you hear the same news multiple times, and that is probably true. There may be an announcement of an intention to buy a particular aircraft, a firm order with options and then in subsequent years more announcements about converting more options to firm orders and taking delivery of aircraft ordered five or more years ago.
Kenny Dichter, founder and chief executive officer of Wheels Up, says the pay-as-you-go jet card membership provider will launch a program targeting fliers who need less than 10 hours of flight time annually in 2019. Photographer: Chris Goodney/Bloomberg
On Monday during media day, Textron Aviation shared the stage with NetJets where its chairman Adam Johnson announced that it intends to purchase as many as 325 Citation Longitude and Hemisphere private jets from the maker over a span that could last more than a decade. Chances are much of the order will happen. Johnson noted NetJets has taken aboard 230 new private jets in the past four years.
At the beginning of the week, Honeywell announced in its annual forecast it expects 7,700 new business jet deliveries valued at $251 billion through 2028. Last year’s forecast predicted 8,300 aircraft at a $249 billion - still way below the 14,000 aircraft in its 2007 projection. However, the trend is tilted towards larger aircraft. Just between this year and last year, the value of the projected new jets jumped to $32.5 million from $30 million.
Dumont Group will have a fleet of 27 ex-NetJets Dassault Falcons by the end of 2019. After a C-check and full interior renovation (pictured above) and new exterior paint, the company offers the aircraft on a sale-leaseback basis and uses the fleet for on-demand charter and jet card sales.Dumont Group
While the show is dominated by manufacturers and the B2B side of the industry, Wheels Up held its annual press conference and let it out that it will be looking to launch a membership program targeting fliers who need less than 10 hours of flight time per year. At the same time, Kansas-based fractional share, lease and jet card provider Executive AirShare unveiled a new name – Airshare – and ambitions to add Chicago, Nashville and eventually New York to its regional hubs. Priester Aviation, a Chicago-based management company, also announced its first jet card, a regionalized fixed-rate, guaranteed availability product. And while the depressed price of old jets may be a thorn to some, for others it’s a rose. Dumont Group is taking delivery of 17 ex-NetJets Dassault Falcon 2000s in addition to the 10 it already has in its fleet with big plans to gussy up interiors and provide value-oriented ownership, lease, charter and jet card solutions to consumers. Priced new at $25 million, older versions can be found on the used market for under $5 million.
One thing, at least to me, is still clear. While private jets are an efficiency tool, they aren’t used very efficiently. JetNet iQ stats show in the past 15 years, the number of annual flights for the average business jet actually declined from about 420 per year to about 340, perhaps another reason there isn't a surge for existing operators to add to their fleets. For most of the last decade, the show has been peppered with entrepreneurs and funding for start-ups whose concepts were going to increase usage and efficiency through various sharing economy models, something I didn't notice this time.
Another issue is the pilot shortage – perhaps sewn by years of commercial airlines doing their best to make it a less than attractive career and the desire for technology to replace the profession altogether. JetNet's research revealed 72% of non-fractional fleet operators agreed it’s a problem compared to 22% who disagreed and 6% were not sure.
Whether or not the industry is now at its new and rationalized normal, and less likely to see a dive as it did after 2008 the next time a recession hits is open to enthusiastic debate. A reader poll by Flight Global accompanying an op-ed titled, "Are Business Jets Ready To Soar Again?" found that today a mere 49% of respondents believe the recovery is starting versus 19% who say the industry is stuck in a rut and 32% who see more trouble ahead. While changes to the U.S. tax laws are helping make ownership attractive again, it's probably best to remain seated as much as possible and keep your seatbelt buckled.
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