4 min read.Updated: 28 Nov 2021, 07:18 PM ISTDOUG CAMERON, The Wall Street Journal
Some well-heeled, would-be private-jet fliers are being turned away as industry booms
A boom in private flying is helping revive business-jet sales, but it is also challenging charter operators who are scrambling to meet the holiday-travel rush.
After a multiyear slump, flying by private jet is soaring again. The number of flights in the U.S. over the Thanksgiving travel period is forecast to be up as much as 10% from 2019, according to WingX. Private-jet flights were up 60% in the first half of November compared with a year earlier, the data tracker said.
The boom comes after a long, fallow period since the global financial crisis. The more than 495,000 private-jet flights in the first 10 months of the year is up 9% from the same period in 2019, and just ahead of the previous high in 2007, according to the Federal Aviation Administration.
Demand has risen during the Covid-19 pandemic thanks in part to fliers’ desire to avoid crowded commercial planes and airports, as well as cuts in airline service to smaller communities. The increased availability of on-demand private-jet services also has helped.
Private-jet operators and charter brokers, who secure aircraft and then rent them out to private customers, said they are stocking up on spare parts and trying to secure pilots.
“They know the surge is coming," said Ryan Waguespack, senior vice president at the National Air Transportation Association, a trade group.
Amid the surge, sales of new jets are booming. Orders in the third quarter rose more than 50% over the past year, according to the industry’s four largest manufacturers—General Dynamics Corp.’s Gulfstream, the Cessna unit of Textron Inc., Bombardier Inc. and Embraer SA. New private jets sell for between $5 million and $70 million.
Sales are being propelled by wealthy individuals—many of them first-time buyers—and companies that sell shares in jets or charter planes, according to aircraft manufacturers. Plane makers are responding by boosting production after a decadelong slump stretching back to the 2008 financial crisis.
Gulfstream, the world’s largest business jet maker by revenue, has its biggest backlog of orders in six years. Brazil’s Embraer is sold out of private jets until the first quarter of 2023.
Jet makers, especially those making smaller planes carrying six to 10 passengers, said buyers who have never owned a private jet account for as much as a quarter of sales, far higher than historical levels. Some customers include fliers who previously traveled commercially but have shifted toward business jets for health and safety reasons during the pandemic, according to Eric Martel, chief executive of Bombardier.
Industry executives said as many as a quarter of buyers of new planes this year haven’t previously owned a jet. Michael Amalfitano, CEO of the executive jet arm of Embraer, said at a recent industry conference that users were also getting younger, including millennials and those from Generations X and Z.
A shortage of used aircraft has some buyers snapping up multimillion-dollar planes on the spot, rather than after the more typical extended due diligence, said aircraft brokers. The average asking price for a used jet increased to $10.7 million in October, about $1 million higher than its pre-pandemic level two years ago, according to JPMorgan.
Executives say all the demand has led to the tightest market for used aircraft in a decade. The number of previously owned business jets for sale in November fell by half from a year earlier, according to investment bank Jefferies Group LLC.
“You’ve got used aircraft available for sale at record low numbers, particularly if you look at something that’s [newer than] a 10-year-old aircraft," said Scott Donnelly, chief executive of Cessna owner Textron Inc.
Fliers are mainly heading to U.S. beaches, mountains and other leisure destinations rather than to slowly reopening offices and factories, said charter operators and flight-tracking services.
A pilot shortage has led some jet ride-share operators to say they are introducing blackout periods for flights.
Private-plane operators such as NetJets, a unit of Berkshire Hathaway Inc., offer prepaid blocks of private flights to customers. For instance, a traveler can buy a certain number of flights to and from Chicago and Palm Beach, Fla., during a certain time period. The company also offers common ownership of jets, providing them rights to the jet much like a condo share.
NetJets suspended new sales and memberships to maintain service for existing customers. The company expects demand over the Thanksgiving period to be up 42% over 2019. Wheels Up Experience Inc. in October told most new members they can’t fly for 90 days after joining. Other operators have frozen new business completely.
Kenny Dichter, chief executive of Wheels Up, said on an investor call last month that the industry had missed out on hundreds of millions of dollars in potential revenue by limiting or suspending new membership and charter sales to protect services for existing customers.
“We have done thorough analysis of flight patterns and behaviors and we are confident we can deliver in a responsible manner for those members," said a Wheels Up spokesperson.
This story has been published from a wire agency feed without modifications to the text
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