The demand for private jets is skyrocketing – to the point where companies cannot produce them fast enough and buyers face long waiting times for deliveries.
Even used business jets are disappearing from the market.
“If you look at today versus 2019, the market has almost exploded,” John Schmidt, head of global aerospace and defense industry consultancy Accenture, told CNBC at the Dubai Air Show.
Due to the pandemic, many travelers are using private jets, many for the first time. But analysts say the trend is primarily related to the wealth boom over the past year and a half, especially in the upper echelons of society, as more companies go public, the stock market reaches record highs, and sponsors enjoy prolonged periods of low interest rates.
Business jet takeoffs and landings in the United States are up 40% year-over-year, according to Morgan Stanley – the highest since the 2008 financial crisis.
Public listings of companies in the United States have already reached a record high in 2021. Jefferies Equity Research data shows that as IPO activity increased, business jet shipments increased with it.
The market also attracts individual shoppers looking for safer and more exclusive travel that guarantees more reliability than commercial flights, which is hindered by Covid-19 travel regulations.
Amid rising demand in the luxury goods industry and rising inflation, prices for both new and used aircraft are hitting their highest levels in years.
Used aircraft stocks – the proportion of aircraft sold over the world’s listed aircraft – are at an all-time low, around 3% or lower for most of the major aircraft manufacturers, including Cessna, Dassault, Gulfstream, Bombardier and Embraer, Jeffery said.
Private flights have grown not only in the United States, but also 20% in Europe, Schmidt said. “Used business jets are really bad, stocks are the lowest in recent years, but prices are still 20-30% higher,” he added. “So this is a really hot market right now.”
Newcomers to the private jet market now account for over 30% of buyers, according to a recent report from Goldman Sachs. For Embraer Chief Commercial Officer Stephen Friedrich, the growth in the customer base stands out.
“The targeted business jet market has now expanded. The pie has gotten bigger, ”said Friedrich. “And the result is over 12% continuous wealth creation when you look at the world’s billionaires, as well as what has traditionally been the Fortune 100, and large private companies.”
“People are looking for ways to be more productive, more confident in the tasks they have to do,” he added, describing business aviation as “a productivity tool.”
“Can you fly a direct commercial flight from New York to Muscle Shoals, Alabama? No, ”said Friedrich. For companies or individuals that may own a business jet, travel that takes an entire day is reduced to a few hours.
The airtightness of the cabin of business jets is also significantly lower than that of commercial airliners – for some, less than half. This difference means passengers feel significantly less fatigued upon boarding, making multiple city stops and meetings much easier. The flagship Embraer Praetor 600 has a cockpit height of 5800 feet, while the Dassault Falcon 6X has 3900 feet. Compare that to the average commercial aircraft cabin height of up to 8,000 feet.
VistaJet, a private jet charter company, reported a 29% increase in new members over the past year, with 71% of new requests coming from passengers who had not previously used private aviation on a regular basis.
It was also found that more than half of new private jet users – 53% – will continue regular private flights following the pandemic.
Since March 2020, the post-pandemic welfare level has been extremely uneven, according to the American think tank at the US Institute for Policy Research, with US billionaires becoming about 62% richer, receiving more than $ 1.8 trillion.
Private jets were fairly common at the COP26 climate summit in November, drawing strong criticism from environmental activists who say 1% of air passengers is responsible for 50% of the industry’s carbon dioxide emissions.
A recent report from the European Transport and Environment Group found that private jets are 5 to 14 times more polluting per passenger than commercial jets, and that one private jet can emit two tons of CO2 in one hour. The group also found that in Europe alone, CO2 emissions from private jets increased by 31% between 2005 and 2019, outpacing growth in commercial aircraft emissions.
Industry leaders say sustainability is becoming a key priority for their business. Embraer is committed to achieving zero carbon emissions by 2040, and business jet charter provider VistaJet is committed to the same by 2050.
To this end, some carriers are starting to use cleaner aviation fuel, or SAF, which generates 80% less CO2 emissions over its entire life cycle than fossil fuels. But for now, the pickup is slow.
Accenture’s Schmidt says that clean jet fuel is expensive and hard to come by, although there are currently more than 20 locations around the world where clean jet fuel can be found. NetJets, a private jet charter service, celebrated SAF’s year of operation in November, flying 2.5 million nautical miles on cleaner fuel.
“I see (SAF) as the next step in making business aviation sustainable, followed by new programs, new engines and continued technologies for sustainability,” Schmidt said.
Forward purchase agreements contain 3.7 billion SAF gallons, according to the International Air Transport Association. 26 million gallons of SAF will be produced in 2021, and about 45 airlines have experience with this fuel. Since 2016, more than 370,000 flights have been operated using SAF.
“We concluded that we knew it would be beneficial for the business to make sure we had an environmentally friendly product,” said Friedrich Embraer’s. “It’s not only something to do, it’s also good for business. This is the right thing to do for the company. ”
The coming years will show whether the promises of companies will lead to lasting change. But with the surge in private air travel that industry analysts expect to continue, any significant reduction in the damage they do is still a long way off.