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What’s Next in 2021?

3.2.21

With 2020 behind us, what can we expect in 2021 for corporate aviation?


The Industry:

2020 was a difficult year for the world and especially the aviation industry. It’s been universally accepted that 2020 was abysmal for aviation led by the slow down on the Airlines. Airline terminals were/are eerily empty, and corporate FBO’s weren’t far behind. For the airlines, a slow and steady recovery has begun and most experts believe it will continue well into 2022. Corporate aviation’s recovery is also well on its way and has out-paced the airlines however, the recovery is more complex.

For corporate aviation, many providers are now as busy, and even busier than they were pre-COVID. This is almost exclusively a result of new clients entering the market and flying privately for personal travel. Within our industry, the single greatest outcome of this very challenging time is that more people than ever recognize the value corporate aviation provides; safe, CLEAN, controlled, private transportation. A shocking statistic highlights when traveling on the airlines, a traveler has an average of 700 unique human interactions compared to 20 when traveling privately. This is a primary factor driving thousands of new clients to the corporate aviation industry, and we at Priester have clearly been benefactors.

An accompanying factor counter to the previous paragraphs positive spin is, the overwhelming majority of new entrants are flying in light and mid-cabin aircraft. These aircraft and these clients are clearly valuable and important from a business standpoint, but the revenue produced per flight hour, and in totality, is significantly lower than that experienced pre-COVID. In short, volume has recovered much faster than revenue, and this adds more stress to a traditionally low margin business.

This additional stress will test the system. Inevitably, this stress could lead to lower margins, reduced quality, and eroded client service. Good operators with solid platforms will likely weather the storm and ultimately thrive long term. Smaller operators with fewer standards and less infrastructure may find themselves stuck in a challenging environment with few knobs to turn to help navigate through turbulent times.

Despite these short-term challenges, the industry has never been better poised for success. As alluded to earlier, since the beginning of COVID the industry has been buoyed by personal travelers while corporate travelers have stayed on the sidelines. It is the belief of many, including myself, that these new personal travelers will continue to fly and by mid-year there will be a flood of corporate travel that returns to the market. Not only will corporate travel return, we have heard anecdotally that corporate travel on private aircraft will be extended past the C-Suite to protect company’s leadership teams.

Warm regards,

Andy

 

 

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