Xclusive Jets stops flying
The website for Xclusive Jets, a UK charter operator with an owned and financed fleet of a few Cessna and Dassault Falcons – has been down for over a week. Last week, one part of the company – XJC filed for administration – although other companies linked to it (including the one that owns the fleet) have not. Just Develop It, Xclusive’s largest shareholder and a successful investment company, invested £4.5m (then $5.8m) into the operator in 2016.
Xclusive Jets is unlikely to be the only European business aviation company to stop flying this winter. Although there are a few exceptions, most operators we spoke to this week are resigned to another tough winter. Europe always sees a bigger drop in charter traffic in the winter compared with the US, but it was not a great summer either.
Data company WINGX is forecasting that traffic will be down this year compared with 2018 by a few percentage points. This may not sound like that much but 2018 was the first year that European business jet traffic beat 2008.
“It has been tough year and has been tough for the past 10 years, coming down on the crazy boom market up to 2008, but it is important to point out there is a lot of dead wood in these figures,” says Richard Koe, managing director of WINGX. “There are operators who have grown faster but overall it is pretty grim.”
It is easy to pick out why the market is not booming. There is a lot of political risk in Europe. The UK, which is now going through a messy election and still needs to work out Brexit, is an obvious example but not the only one. France is seeing national strikes this week and, on Monday President Trump threatened to impose 100% tariffs on up to $2.4bn of French products – including champagne and luxury goods – in retaliation against a digital-services tax.
Things are not looking much better economically. In September German industrial production levels fell back to 2017 levels. Brexit is still overhanging both the UK and the Eurozone – particularly Ireland.
But perhaps the biggest threat is sociological. Attitudes towards all flying have hardened in the past few months. A few years ago, companies were promising that technology would reshape the market – but these have not yet stimulated any significant amount of demand.
The next 12 months will see some consolidation and we may see more firms going into administration, but several holders of Aircraft Operator Certificates we have spoken to this week are seriously considering handing them back. “Charter rates are uneconomical,” says one operator. “I do sometimes wonder why we all bother with the increasing regulation when I could just hand it back and sell charter or aircraft to our existing customers.”