A chief executive recently shared an email about a jet charter his company had arranged for important clients. Scheduled for on-time departure from Austin, the pilots noticed a blinking light in the cockpit and called in the mechanics. Several hours later, the issue was resolved but the crew had exceeded FAA-mandated hours for the day. Unable to secure a replacement aircraft, the clients completed the flight to Phoenix the next day. The CEO, an experienced private flier, was incensed: “One of the most incredible sh*t shows ever by a charter company.”
That sentiment is becoming all too common. “Nearly 20 percent of respondents say they’ve experienced service letdowns in the past several months,” says Doug Gollan, president of Private Jet Card Comparisons, pointing to a survey of his clients, many of them new to business aviation. Eighty-three percent paid average deposits of $240,000 for jet cards, so the financial investments are significant.
An industry that prides itself on white-glove, clockwork service is struggling in the Covid era with a sizable influx of newcomers from the commercial airlines. “We’re seeing 25 to 40 percent more volume than previous years,” said Michael Silvestro, CEO of Flexjet, a fractional and jet-card provider, on a recent webinar. “Our companies are all trying to get supply up to these levels of demand. We’re in the ultimate famine-to-feast moment—and are in for a new normal.”
NetJets, the largest fractional provider, suspended all jet-card sales to ensure it could keep its fractional owners flying on time. “NetJets’ flight demand is currently exceeding all other highs in our 57-year history,” wrote NetJets’ president Patrick Gallagher in June, noting that some fractional owners had experienced delays. “The vast number of flights is taxing the air-travel infrastructure in ways we haven’t seen in years.”
“We’re even seeing some companies change the terms of service in mid-contract by lengthening the amount of lead time clients must give them,” says Jay Mesinger, CEO of Mesinger Jet Sales, who has been in the business for 45 years. He has never seen a situation like this. “We haven’t come to grips with this yet. I think there will be a lot of disappointment.”
Delays and downgrades—swapping the client’s jet of choice for an older, smaller model—are the two main complaints. “We’re in a perfect storm,” notes Anthony Tivnan, president of Magellan Jets, whose company logged a 240-percent increase in jet-card sales from January through August.
A shortage of pre-owned aircraft and higher fleet-utilization rates mean fewer replacement jets are available, while maintenance delays take airplanes out of service longer. Air-traffic control delays and parts, fuel and labor shortages are also exacerbating the situation.
“Passengers are also scheduling flights in a much shorter window,” adds Tivnan, who doesn’t foresee much changing through the end of the year. “Every weekend last summer was comparable to peak periods like Christmas and July Fourth. We’re forecasting record traffic for November, December and January.”
Compared to tens of thousands of aircraft in the US commercial fleet, only 3,314 jets from 549 operators in the US are available for charter. The limited availability of pre-owned aircraft and fractured makeup of the charter world—only 66 operators have ten or more jets on their Part 135 certificates, and 149 operators have just a single jet—are creating a wild-west dynamic where demand continues to push up pricing, while service issues continue.
Magellan is spending “significantly more” on customer outreach, says Tivnan, by trying to educate clients on how to minimize delays—avoiding flying from Thursday to Sunday, booking earlier, and flying around peak periods.
Others are investing in fleet expansion. “We’ve recently taken delivery of six new aircraft,” says Nicholas Correnti, founder and CEO of Nicholas Air. “I think companies like ours who own and operate their own fleets are in a much better position than charter operators beholden to their suppliers. If they can’t deliver the flights, they’ll erode trust among their clients.”
Smaller, boutique firms, adds Peder Von Harten, Nicholas’ vice president of sales and marketing, will fare better in the new normal than firms aspiring to be the “800-pound gorilla” of business aviation. “Some companies keep selling cards when they know supply is limited,” he says.
Despite the growing pains, nobody sees a mass exodus to commercial airlines. “People are willing to deal with delays to a certain extent, and may bounce from company to company,” says Von Harten, “but they won’t all leave the market.”
Flexjet’s Silvestro thinks the 30-percent growth will slow down because of an economic correction or other factor, but believes business aviation has reached a new milestone. “I think we’re never returning to where we were before the pandemic,” he said. “Many of these newcomers are here to stay.”
Noting most members still report positives in their private flights, Gollan said a recent 300-member survey showed 100 percent would continue to fly privately. “Whatever delays and kinks are out there, these new flyers are not going back to the airlines,” he said.