Gil Wolin draws upon almost 40 years’ aviation management experience as an industry consultant.... Read More
Two of a private jet’s “unique selling propositions” are 24/7 connectivity- and privacy. Add to that security- comfort and efficient use of time- and it becomes evident as to why anyone who can- travels aboard one of the world’s 33-000 business turbines as an owner- charterer- fractional owner or guest. So- with all those advantages- are we seeing growth in private jet sales and flight activity this year ?
According to GAMA- first quarter deliveries were up 4%- but that is an increase of only five units. ARGUS TRAQPak numbers for June show a 3.8% decline from May flying – even large cabin jets- whose flying has held up remarkably during the downturn- were off 8.1%. Year-to-date- business turbine flying is down 1.7% compared with 2012 – and that is despite recent double-digit increases in Part 135 charter flying.
Now- the US real gross domestic product increased in 1Q 2013 for the 15th consecutive quarter according to the Bureau of Economic Analysis. Business aircraft sales and flight activity historically have been trailing indicators… but for 15 quarters? IATA’s July forecast for Commercial Airlines projects a 4.3% increase in revenue passenger flying- with a 78.1% load factor. That makes for pretty crowded aircraft – but they have to be crowded- because the average per-passenger profit margin is 1.8%- or $4 per passenger – including full-fare- first class tickets.
The problem is that the Airlines don’t sell enough full-fare anything- let alone first class tickets. All bets have been off on ticket prices since 1979- when deregulation opened the skies to price competition. That began an Airline profitability race to the bottom- expedited during the last two decades by the Internet. In order to achieve even minimal profitability- Commercial Airlines have been cutting service with a vengeance – a fact bemoaned by James Atlas in his July 6 Opinionator column in the NY Times- ‘Class Struggle in the Sky’.
“The choice of ‘snacks’ on my New York to Miami flight includes blue potato chips- a Luna bar- a packet of trail mix and — a selection I haven’t been offered before — popcorn. But it makes sense: the cabin already feels like a movie theater at the end of a showing- even though we still have an hour to go. The floor is strewn with candy-bar wrappers and broken headsets- crumpled napkins and cracked plastic glasses… Welcome to economy.”
But such service cuts are not enough. The Airlines have lost too many senior executives and High-Net-Worth-Individuals to the advantages of business jet travel – travelers they desperately need to subsidize their discount economy air fares. They are fighting back- though. “In May-” Atlas reports- “in an effort to compete with Netjets and private jets- American unveiled a new premier service- an elite category for those who can afford to pay approximately $18-000 for a round-trip ticket to London … Emirates Airlines now offers- as part of its ‘first-class private suite’- a private room with minibar- wide-screen TV and ‘lie-flat bed.’”
Will the Airlines be successful in wooing back the full-fare- First Class passenger? I doubt it. But with more than 13% of business jet owners today giving their aircraft “the pink slip” according to JETNET- as an industry we’d best keep focused on doing what we do best – providing safe- efficient travel to thousands of airports Commercial Airlines don’t – and won’t – serve.