Hunky Dory in 2023
Late lamented rock legend David Bowie had a refreshingly honest approach to each New Year. “I don’t know where I’m going from here, but I promise it won’t be boring.” So, after the turbulence of recent years, will 2023 be Hunky Dory or more of a Scary Monster?
Brian Foley, founder, Brian Foley Associates tells Corporate Jet Investor (CJI) that he is not promising that it will live up to the last two years. “2023 is likely to be uncharacteristically normal compared to the recent past.” But he does expect the rising tide of new entrants to private jet aviation to ebb.
Less than 10% of those new to general aviation “will remain in the fold”, he says. That compares with some charter providers reporting new clients accounting for up to 50% of their business last year.
“First-time users can be lured by making the initial process as painless as possible, but keeping them is really outside the industry’s control,” Foley tells us. “Private aviation is a discretionary spend, and there are external factors that always conspire to end the romance.” Queuing up to sour that romance are: improved airline schedules, fewer health issues, unfavourable 2022 stock portfolio statements and worry about a possible economic recession. “It still favourably raises the baseline obtainable market for the industry from this point forward.”
Other key challenges of last year – including manufacturing supply chain disruptions and labour shortages (other than the pilot shortage) – have already begun working themselves out going into 2023, he says.
Richard Aboulafia, MD, AeroDynamic Advisory acknowledges that retaining newcomers will be a key challenge – albeit a little overstated. “Purchasers and fractional share purchasers have made commitments that aren’t easy, in the short term, to get out of,” he tells CJI. That leaves charter market entrants. “Here again, I’m not sure what, if anything, can be done, since it’s really just a function of airline service being restored to smaller markets (and with reasonable frequencies) over the next 12-24 months.”
The big challenge for manufacturers will be to maintain production discipline, particularly as supply chain disruptions are resolved. But at present, production rates are steady, prices are increasing, and backlogs are large and healthy again. “Rising production rates would jeopardise that. Here again, not sure I see a way to stop any OEM who starts trying to out-build the others.”
Environmental and social governance (ESG) concerns will remain a challenge – but one that can be mitigated by concerted industry action. “Making bizav a test market for SAF [sustainable aviation fuel], a pump-primer market if you will, would be a great message to send and it would be genuinely good for all concerned,” says Aboulafia. “Since bizav is less cost-conscious than the scheduled air crowd, there’s greater potential for up-front SAF adaptation.”
Sustainability was also selected as the third of six top challenges facing business aviation by Heather Gordon, legal director aircraft ownership and leasing specialist Martyn Fiddler Aviation. The industry needs a plan to boost decarbonisation and to “own that narrative”, says Gordon. The other five challenges are: The (real) war for talent, Coping with the downturn, Activism on social media, Crime, sanctions and politics and Investing in innovation.
The industry is changing and much of that change is coming from external forces, Gordon tells CJI. “The challenges predicted to affect us in 2023 are very much concerned about how to safeguard the future of business aviation; and that relies increasingly on the younger generation and new talent entering the industry.” Talent that will require private jet aviation to share its industry knowledge, pay forward opportunities and increase its diversity and inclusion.
But what do you think? What do you think are the top three challenges facing business aviation in 2023? And – just as important – how can the industry meet those challenges in the year ahead? Please let us know.
As Bowie said: “Tomorrow belongs to those who hear it coming.”
David Bowie’s advice for business aviation: “Tomorrow belongs to those who hear it coming.”