CJI Asia: ‘Big operators realise it’s a storm and storms pass’

The global Covid-19 pandemic will force consolidation among smaller operators in the region and test the resilience of big operators, according to Sarah Kalmeta, founder of aviation consultancy Pivot Point.

“I think we will see some consolidation, after 10 years which saw an explosion of growth and new operators,” Kalmeta told forum Looking Past 2020 – The Future for Asian Business Aviation. “The smaller operators – the couple-of-person teams – probably will not be able to withstand the storm. The big players realise it’s a storm and that storms pass.” 

Paul Jebely, Pillsbury, the managing partner of Pillsbury’s Hong Kong office, predicted the recovery of business aviation would be protracted. “If we are looking at a few years ago as the high water mark [for business aviation], it will take at least five years until the good times return.”

‘Second half of 2022’

Simon Bambridge, TAG Aviation Asia’s commercial director, was a little more optimistic. “Business aviation will get back faster than commercial aviation but 2021 will be a tough economic environment. It’s going to be a long slow recovery until [things pick up] in the second half of 2022.” A key deterrent was the prospect of travellers facing a 14-day quarantine period on either side of a trip.

He believed Covid-19 health concerns for family and board members and “savaged airline schedules” would persuade many wealthy individuals to invest in corporate aviation. New entrants to private aviation would be “spit between charter and full ownership”, he predicted.

‘You haven’t seen anything yet’

Joe Reckling, Jet Aviation, Vice President President Regional Operations Asia Pacific, hoped the airlines do make a speedy recovery. That was because of the positive impact the recovery would have on related industries such as tourism and catering. Jebely warned the full impact of Covid-19 on the airlines had yet to become clear. “In terms of airline defaults and stress, you haven’t seen anything yet,” he said.

“Most people are flying privately through charter and jet cards,” said Jebely. “That will make our lives easier in the next upcycle, as new entrants jump in and become owners. But we are some time off that.”

Meanwhile, owners were retaining their aircraft, unlike during the Great Recession, according to Bambridge. “Our business has held up fairly strongly. Unlike in 2008, owners are not jettisoning aircraft because they see the value in them. We do not have one client who wants to get rid of their aircraft.”

Corporate Jet Investor Asia 2020 took place on Tuesday October 13th and Wednesday October 14th. More information about Corporate Jet Investor Asia is available here.

Speakers predicted an extended recovery from Covid-19. Image courtesy of Jet Aviation.