Brian Foley: Flight Shaming Hits Business Aviation and Other Predictions for 2020


Oftentimes industry outlooks tend to be nothing more than an extrapolation of what’s already happening at the end of the year rolled into next. For private aviation however, there are developments that would suggest that 2020 will shape up much differently than 2019. Here are some thoughts, trends and predictions for the year.

The Big Trend

Barely in the industry’s vernacular as 2019 rolled in, the term “flight-shaming” from the Swedish word Flygskam was developed by environmentalists to create the perception that one should be ashamed for flying and leaving a carbon footprint. Whereas criticism of corporate executives flying off into the sunset in their private jets had always been a crowd favorite to stick it to “the man” adding the environmental card now brings a nuclear option to activists’ arsenal.

Aircraft owners risk being publicly called out à la Prince Harry for his now infamous Gulfstream jet trip to pal Elton John’s. In 2020, private flyers will gravitate towards ways to evade this kind of judgement and public humiliation, either by voluntarily paying into third-party carbon offset programs to have a good alibi if confronted, or by ditching aircraft ownership altogether by using charter, fractional or other non-ownership models that better protect identities. The latter is not at all helpful to new business jet sales which have been stubbornly anemic for the past decade.

To create favorable corporate identities of being deeply concerned, committed stewards of the environment, companies in the business aviation industry will tweak their ad copy and concoct PR stunts to demonstrate commitment, such as one-time flights using Sustainable Aviation Fuel (SAF), by now an overdone skit. Others will offer voluntary access to pay-as-you-go carbon taxes to accommodate those who really care and others who want what is essentially an insurance policy to avoid public shaming.

The only way out of this quagmire would be through the gradual introduction of hybrid-electric propulsion systems which eventually lead to all-electric engines. While the former could take 10 years and the latter 20 to come to limited fruition, it would eventually squelch the criticism even if smoke-belching, coal-fired electric plants are being used to charge the batteries.

What To Watch

Follow the money. With the US. stock market up around a whopping 30% in 2019 and a repeat performance unlikely, investors are looking to overseas financial markets for better returns in 2020. This will have the effect of stimulating non-North American and emerging markets which have been on hiatus for much of the decade. Back in 2010, emerging markets accounted for 35% of worldwide business jet deliveries. In 2018 that figure had been reduced by half due to a variety of geopolitical and economic reasons.

An inflow of investment due to attractive stock valuations coupled with an improved outlook for global growth and the probability of a successful Brexit will create a decent uptick in offshore business jet sales. This comes at a good time as the economic cycle of largest purveyor of jets, the US, matures and buyers remain skittish.

The Unconventional Wisdom

A lot has been said of late of the sharing economy’s effect on the industry. It’s been popularized that a younger generation of fliers want nothing to do with aircraft ownership, only wanting access and the experience of private flying. The theory was this would further dent new aircraft sales while benefiting non-ownership models such as charter, fractional and jet cards – essentially a prepaid charter debit card.

If that’s the case, it’s certainly not showing up in FAA flight statistics or even notionally. Charter continues to be an oversupplied market with what seems like a race to the bottom on pricing. The number of flight operations, or takeoffs and landings of chartered business jets in the US, barely budges each month, while fractional aircraft providers such as Berkshire Hathaway’s Netjets division is still a shadow of its former self since the worldwide financial crisis.

Feedback from leaders in the charter business suggests that millennials representing the sharing economy are barely moving the needle. While the topic makes for good cocktail conversation, it cannot be verified either objectively or subjectively. The unpopular and contrarian truth is that the new aircraft sales lull cannot be attributed to the instant gratification crowd, nor are they swarming to any non-ownership means of private air travel.

The Misplaced Assumption

A great economy is no longer a proxy for new business jet sales. US stock markets and corporate profitability have been consistently breaking records. In previous times this would have signaled a booming jet sales environment. Instead, sales have been flat for a decade and much of the stock market run-up can be attributed to artificial government interest rate stimulus rather than fundamentals.

Instead of shelling out money for a jet, companies are deploying capital to areas of higher return instead of a depreciating asset. Profits have been going towards company stock buybacks while jets, which at one point held close to 80% of their value after 5 years, can be worth less than 50% of the new price as supply equals demand and a business jet finally depreciates like any other capital good should.

It could even be argued that sales have remained stable and not fallen any further only because of a good economy. This kind of reasoning would then portend a decrease in sales should economic growth falter in any way.

The Bold Prediction

There are too many business jet models chasing too few buyers and something will likely give. Forty-one models of new business jets from seven manufacturers vie for just 700 total worldwide industry sales per year. In response to tepid demand, leading makers such as Textron Aviation’s Cessna division and General Dynamics’ Gulfstream unit announced layoffs in late 2019.

With such a relatively small market and workforce cutbacks, it wouldn’t be surprising for a least one of the participants to call it quits. The last culling of the herd hasn’t occurred since Hawker Beechcraft went bankrupt a few years ago. Cessna ended up buying its ruins and four Hawker Beechcraft jet models were permanently removed from the market — hardly enough to make a dent in the cornucopia of business jet models to choose from.

If there were a weak link in the industry it could be the Learjet division of Bombardier, the parent who has been relentlessly shedding business units to remain viable. It surely has been evaluating its Learjet division which only delivered 9 units through the third quarter of 2019 and is the smallest contributor to the company’s overall business jet sale revenues which include the Challenger and Global Express divisions. Learjet’s recent move to offer a stripped-down, no frills, discounted model called the Liberty could be interpreted as a move to get rid of the last of the inventory rather than a tactical market strategy. With an aging product line, the company cancelled its all-new Learjet 85 a few years ago which further questions its long-term commitment.


2020 will hardly be a repeat of 2019 in the business aviation industry. The green movement will rise logarithmically creating a widespread move for companies to rebrand themselves as environmentally responsible while their clients seek carbon offset programs or explore non-ownership private flying models to also protect their image.

With barely a detectable pulse the last several years, emerging markets will slowly be resuscitated to become more meaningful purveyors of new business jets. This would be timely as the next generation of millennial flyers aren’t pulling their weight, and the US economy can’t sustain the industry forever as talk of a recession in the next year or two permeates financial conversations.

Lastly, a measly 700 worldwide business jet sales per year will test the resolve of some plane manufacturers, with the possibility of a storied brand being sold or quieted.

In short, 2020 will not be just another cookie-cutter 2019.

About Brian Foley Associates (BRiFO)

Since 2006 Brian Foley Associates (BRiFO) has helped aerospace firms and investors with strategic research and guidance.  Its sister company AvStrategies helps match aviation investors with great companies