COVID-19 Hits 2020
There have been lots of news stories, in various publications, quoting business jet charter brokers on how they have seen a huge rise in calls from people looking to charter business jets in Asia. This is all as a result of the new coronavirus COVID-19. But, apart from some large evacuation flights, I am willing to bet a bottle of Corona beer that there have been more articles written about the sudden rise in demand than extra business jet flights sold. Very few (any?) operators are willing to fly into China and then self-isolate the crew for two weeks or risk aircraft being stuck at airports in regions that are closed.
There was a small uptick in business jet charter and sales following the September 11 terrorist attacks, but the wider economic impact meant that business aviation was soon in a deep downmarket. Unfortunately, the same is happening with COVID-19 now.
John Hopkins University says that the virus has claimed 2,788 lives worldwide, with 83,774 cases confirmed (78,824 cases are in China where the outbreak was first detected). You can argue that flu kills more people or that the odds of catching COVID-19 are still very low, but the economic damage is spreading much faster.
This week we have seen the biggest drop in global stock markets since 2008 and the Chicago Board Options Exchange (CBOE) Volatility Index – also known as the Fear Index, which is based on S&P options – has hit the highest level for 11 years. Central bankers around the world have said it will have an impact. Jen Weidmann, head of the German central bank, has just warned that it will hit his country’s economy. Goldman Sachs expects US companies to not grow profits this year.
When companies like Microsoft, Danone, Mastercard, Nestlé, Pernod Ricard, Adidas, Burberry, Diagio, Apple and Starbucks are announcing falls in sales, production disruption and travel bans, you know they are not focused on growing their corporate fleets. The same is true for smaller companies and individuals watching stock markets and most commodity prices fall. Distracted or worried people do not buy aircraft. “In a word: frightening,” says one former head of an OEM on the virus.
Historically, economies bounce back fast after pandemics, but until the virus dies down, it is going to be a tough year for many businesses. We are now very likely to move our Revolution.Aero Europe, Corporate Jet Investor Dubai and Corporate Jet Investor Singapore conferences to later in the year.
There is a lot of truth in the saying: “Every cloud has a silver lining.” Sadly, sometimes, it is actually plutonium dust.