Death, taxes and (private jet) maintenance
Nothing is certain except death and taxes. That was the view of Benjamin Franklin back in 1789, and while a lot has changed since then, his truth lives on. When Covid-19 hit, another certainty emerged: that the phrase ‘unprecedented times’ would be thrown around at least once a day, echoing across news channels and elsewhere.
The market has indeed been marred with uncertainty since, be it due to restrictions, supply chain problems, increased demand with limited supply, or labour shortages. Over the past two years, the industry has had to adjust to a boom in demand, but there are signs it is beginning to falter.
“We’re forecasting in July, for the first month since the pandemic, that we’re going to really see a year-over-year decline in flight activity,” Joe Moeggenberg, CEO and president, Argus International told our Town Hall online meeting. “The July 4th holiday was off 20% from our forecast, so as an indicator that’s something we really have to take a very close look at.”
Moeggenberg’s uncertainty followed Argus’ TRAQPak report, which showed flight activity slowing to just a 1.9% increase year-on-year from last June. Between May and June this year, the number of flights per day in North America remained flat, at around 10,100. All Part 135 flights fell compared with 2021, with big yearly reductions across most fractional flights too.
Jay Mesinger, CEO and president, Mesinger Jet Sales, believes the industry may not be prepared for market turns due to the time it takes for economic problems to trickle down into the aviation world. “We tend, as an industry, to lag, not lead, market conditions,” he said. “I don’t know that’s a blessing. I think sometimes we get fooled by lagging and not really understanding what change is right there in front of us.”
Steve Varsano, CEO, The Jet Business agreed. “We’re always lagging,” he said. “We’ve always been saying we want more business, more deals, we want the activity to increase, and boy did we get it. It really came with an avalanche and it was much more than the industry could handle.” He likens market conditions to playing Whack-a-mole; constantly faced with problem after problem and trying to keep up. “You keep on taking care of one issue and another one pops up. You’re sticking your fingers in the holes in the dyke and eventually you run out of fingers, and all of a sudden, you get hit.”
So how do we see past this lag time to more stable conditions ahead? Jeff Lake, president, Duncan Aviation, reckons that to prepare for the future, we need to look to the past. “I remember at the end of 2008, our business was completely strong, and we even told our board:‘ Maybe we’re going to bypass this thing, it’s not going to be that bad’. Then, a month or two later, things completely changed,” he said. “It’s a good reminder that things can change quickly and we do tend to lag.” Flying hours are a good indicator of the health of the market, he added.
But, there are reasons for renewed optimism. Commercial airline troubles continue to drive new clients to private jet aviation and demand for maintenance remains strong. Duncan Aviation’s Lake says their hangars are full due to soaring demand.
“We’re working aircraft out on the ramp, which we normally don’t like to do, but we’re having to do it right now,” he said. “Our customers are scheduling much more in advance than they had to two years ago. We’re working in 2023 right now, and our hangars are pretty much full through the rest of the year.”