The State of the Global Private Jet Industry

2022 was the strongest ever year for private aircraft sales, but this headline masks a narrative of mixed fortunes. With a rapid resurgence of interest post-pandemic, supply has been struggling to keep up. Growing manufacturer backlogs born of increased demand from new and returning users and low pre-owned inventory has led to headaches for some in the global aviation sector, as they wrestle with understaffing and availability challenges. However, it has also served to bring about enhanced industry resilience. Meanwhile, inflationary, interest rate and recessionary challenges have combined to see business aviation falling in Europe, although this has been offset by a rise in other markets. At the same time, the conflict in Ukraine has acted to eliminate Russia from the equation, meaning a business hole to be filled for some actors to ensure continued viability. All told, very interesting times!

COVID-19 dynamics brought in a rush of virgin users and buyers into the market across 2021 and 2022 that would formerly have flown commercial first class but wished to limit exposure to the virus. While maintaining such a pipeline of new business is inevitably unsustainable, the expectation is that high levels of demand for and expenditure on new aircraft will prevail for several years yet, especially since the newbies have now been irreversibly bitten by the private flying bug – attracted by its time saving, convenience, reliability and efficiency credentials.

However, demand is likely to have peaked in the traditional markets, while the introduction of new aircraft is beginning to increase supply; a rebalancing that is set to see costs come down. With new business no longer constituting such low hanging fruit, the smart ones are positioning themselves to develop and nurture relationships with those recent arrivals at the private jet top table.

The Future of Aviation
On the tech front, the sector is aware of its reputation for being the wrong side of the net zero debate, but those that think it is sticking its head in the sand would be wrong.

As new generations come to the marketplace, so they bring with them new expectations. Those stakeholders in the private jet space that recognise the need to be greener to continue to appeal to a rapidly evolving client base and to comply with regulations that are sure to be ever more exacting are well placed to prosper. Informed by this, there is a hive of activity directed towards decarbonising aviation with the advent of hybrid electric ultra short take-off and landing aircraft. In parallel, there will also be an increase in biofuel options for conventional aircraft.

Moving forward, the market for business jets is likely to become more global in nature, bringing with it new reach for fractional programs. Meanwhile, the post-COVID rollback on what seemed to be an ever-expanding list of commercial destinations means private is now often the only option for swift access to a host of regions across the globe.

“Moving forward, the market for business jets is likely to become more global in nature, bringing with it new reach for fractional programs.”

China, meanwhile, represents a market of huge untapped potential with a glut of HNWIs representing private jet stakeholders-in-waiting. And although there are challenges around air congestion and access to airspace that need to be resolved, there are encouraging signs of infrastructural developments to remedy these issues, such that business aviation in China is set to soar in popularity. Currently, new aircraft is what owners overwhelmingly want, but in time, the demand for pre-owned alternatives will steadily grow as fleets age and it’s time to replace.

Ultra long-range intercontinental private jet options will become increasingly sought after meaning there will be increased focus on the on-board experience in terms of stand-up cabins, enhanced connectivity, as well as other elements such as private chefs and shower facilities. Meanwhile an increase in the prevalence of composite fuselages will serve to increase efficiency and performance, given they are lighter and less noisy.

With a squeezed global economy set to prevail for some time yet, economies of scale will come to count. In this way, major fractionals will be able to appeal to those drawn to the benefits of shared use investments over their more niche counterparts that may struggle in a challenging inflationary environment. In addition, a more risk-averse climate could see the likes of jet cards, flexible plans and hybrid membership programs as key drivers of growth in the sector as folk increasingly shy away from long-term commitments and asset exposure.

A systematic and proactive approach to managing safety risks by way of a Safety Management System (SMS) will also increasingly sort the wheat from the chaff. Because those invested long-term in safety enhancements, optimal maintenance support and best in class training will be afforded an edge in what is set to be a fiercely competitive market. At the same time, those in the highest echelons of the sector will need to step up to the plate to advocate and lobby to ensure the regulatory, administrative and fiscal burdens do not become so prohibitive as to stifle growth in the industry. Broadly speaking, however, a higher bar is to be welcomed, since enhanced regulation will see the ‘fly by nights’ consigned to history.