The private jet market is struggling with the increasing demand for get-me-away

Even people who can usually afford to charter a private jet on short notice need to be patient and often pay more.

All because of the pandemic.

In the beginning only a few people flew – or really had to go somewhere. Since then, the demand for high-end travel in particular has grown exponentially as more and more affluent people choose to avoid airport lines and overcrowded commercial flights. But so many flock to private jets, there aren’t enough planes and pilots to operate them.

This has been linked to the same supply chain problems that plagued many other parts of the economy. Would you like a spare tire for a jet and someone to replace it? What used to be done in a few hours can now take a week or more, said one jet company.

As a result, providers who used to be able to quickly send a jet to members have changed their terms. XO, for example, now requires 72 hours notice, instead of 24. Ascent has increased from 10 to 24 hours.

And NetJets, the world’s second largest airline by number of planes, has stopped selling new jet cards – the equivalent of prepaid Starbucks cards loaded with jet hours to take the rich wherever they want to go.

“The recording of private trips is beyond the capacity of the system,” said Doug Gollan, founder of Private Jet Card Comparisons, which oversees the industry. “Some of these are beyond the control of the operators, such as a shortage of parts or delays in refueling – not because they forgot to order fuel, but because there is a lack of truck drivers.”

And that, Gollan said, at a time of record demand for private jet travel across the country and, in some cases, the world.

“When you’re in New York, going to Palm Beach isn’t a problem,” he said. “But these are national programs. If you live in Idaho and want to go to Oklahoma, you have to get a plane there, and these jet companies can no longer get the planes profitably in 12 or 24 hours. “

He pointed out that most Jet card programs, which are tied to dozens of page contracts, require people to prepay $ 200,000 or more, so few flyers enjoy the delays.

To be clear, flying privately is still an incredible luxury that only some people can enjoy. But they flood the system.

Prior to COVID-19, there were about 100,000 regular private jet aviators in the United States out of about 1.5 million people who could afford to charter a plane, according to a 2020 report by consulting firm McKinsey & Co., the Report found a lot more people who could afford to fly privately.

“A significant portion of that group has been released,” said Pat Gallagher, president of sales, marketing and service for NetJets. “But the demographics are no different from that of our existing customers. Nobody reaches out to fly privately. They are people who previously didn’t think they had to fly privately. “

The motivations for wealthy people to switch from world-class commercial flights are not surprising. Convenience is one. Getting to your plane is easier, safer, and less stressful than dealing with airport lines. And there are no arguments about wearing a mask on a private jet.

“We have 85 jets, and if I had twice or three times as many jets I wouldn’t have enough because of the demand,” says Jim Segrave, owner and chairman of flyExclusive.

“Everyone’s worried about how we’re going to deliver over the holidays,” Segrave said. “Come on Thanksgiving, there will be no more planes available. You may not be able to find a plane unless you’ve already booked one or it gets ridiculously expensive. “

The industry was not prepared for this increase in demand. Aside from buying your own jet, which can cost $ 60 million or more for a new top-of-the-line model, there are several common options: charter a plane if necessary, buy a jet card with prepaid hours, or buy a fraction of a jet. Everyone is under pressure right now.

The charter market works like a beach house rental: you go through a broker who procures the aircraft for you. Prices depend on where you are going and when.

What causes problems are jet cancellations. “Most of these jet cards guarantee you a free replacement aircraft if the operator cancels them because of a mechanical problem,” said Gollan. But when the jet operator cancels because they don’t have a jet, they said, “Your broker might say, ‘Sorry we lost this plane, but we have three new offers.’ Instead of paying $ 18,000 to travel to New York, you could pay $ 28,000. “

Your choice at this point? Get a refund and fly commercial, or pay the extra charge and go.

“Jet operators have been inundated with inquiries,” said Gregg Brunson-Pitts, founder and president of Advanced Aviation, a boutique jet broker. “We had to be creative”

Since the lockdown was eased last year, charter prices have increased 15%, but customers aren’t hesitating, Brunson-Pitts said. But in the rush to fly privately, would-be flyers would need to make sure their broker is working with reputable jet owners who properly maintain the planes and train the pilots.

Jet cards are more likely to offer a guarantee. Airmen have already paid hundreds of thousands of dollars for the hours and want the plane when they want it, usually at relatively short notice.

But these were also in high demand. Even higher prices did not cool the interest.

“After a few price hikes that didn’t slow sales to a pace that was comfortable for us, we stopped selling Jet cards entirely and put them on a waiting list,” said NetJets’ Gallagher. “We could have tested this price elasticity further, but I didn’t want the perception of a money robbery in a hot market. We saw how demand built up in the summer. “

Kenny Dichter, chairman and CEO of Wheels Up, another vendor, said he didn’t see any slowdown in the jet card market. “People are putting money aside for travel until 2022,” he said. “The demand we are seeing now is the result of the stubbornness of this COVID crisis.”

Even those who own fractions of an aircraft are under pressure from delays in producing new jets and training pilots and crew. NetJets has now ordered 100 aircraft.

And given the demand for jet cards, some of those partially owned jets will be used to service jet cardholders, said Peder von Harten, vice president of sales and marketing at Nicholas Air, which operates 35 jets.

“It stinks to the consumer,” he said. “The $ 1.4 million you spent upfront on that fraction now has a residual value of $ 800,000. Or the company really used it more than you wanted and that value is $ 500,000. “

Throwing another wrench into traveling with private jets are the different COVID rules of the countries. “There are a number of government restrictions you need to consider when flying from Hong Kong to Dubai,” said Ian Moore, chief commercial officer of VistaJet, which operates an international fleet. “That is very complex in normal times. COVID made it three times difficult. “

Aircraft maintenance is also affected. As the planes are flown more frequently, they will be serviced more often. But there aren’t always enough parts or people to get the job done as COVID has disrupted the global supply chain.

“If you had to bring a spare wheel to Cairo, you could get it in a couple of hours sooner,” said Moore. “Now it takes seven to ten days. So the service for this customer has become much more difficult. “

Even small delays can be an issue, said flyExclusive’s Segrave. “It’s not that we can’t get the service,” he said. “They say, ‘We can reach you, but it will take three to four days.’ Three to four days in a plane that flies 100 hours a month is an eternity. “

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