The elephant in the casino

opinion

by Alasdair Whyte

October 23, 2024

As NBAA-BACE takes place in Las Vegas, how is the US Election impacting the market?

NBAA-BACE is taking place in Las Vegas this week, but we need to talk about the elephant in the room. And the donkey.

You do not need reminding, but business aviation’s biggest gathering starts exactly two weeks before the US presidential election. The election is definitely casting its shadow over business aviation and especially the charter market.

“Charter is a confidence meter for those who choose to fly privately. Charter in particular is a decision made on a case-by-case basis. It is rarely the only way this segment of the market flies,” says Greg Johnson, president and CEO, Tuvoli. “Most of the time the customers in this segment are making a judgement call as to whether to go at all and/or whether to fly commercial. That decision is emotional – they have the money.

“It is based on that flyer’s personal level of confidence in the future. The more bullish they are about the future, the higher the likelihood that they will choose to fly privately. I mention this because uncertainty is driving the market right now.”

Tuvoli’s data shows the charter market for the first two weeks of October was 16.89% below the same fortnight in October 2023. That is almost 11,000 hours lower than the first half of October 2023.

Johnson is strict on what he considers to be a charter flight. He removes air ambulances, medical tests and carriers running essential air routes, and he strips out aircraft like Cessna Caravans that are not associated with mainstream passenger charter and piston aircraft.

“By all traditional accounts, we should have had a fall this year that was only slightly below 2023. It should have been just under 2023 numbers, or in a best-case scenario just above last year,” says Johnson. “Business travel is stronger right now than personal travel. Companies are putting up very good numbers. The stock market – which is often touted as a barometer of charter demand – is proving to be exceptionally resilient. The big X-factor this fall is the US election.”

There is lots of data showing that US elections do not typically hit aircraft sales. During the past eight presidential elections, the total number of transactions (for both pre-owned and new deliveries) have only declined twice. Once in 2008 – which was mostly due to the global financial crisis – and in 2016. Other than these two outliers, the total number of business jet transactions have increased by an average of 5% year-on-year.

Jefferies says that there are 1,290 business jets for sale now according to its analysis of the AMSTAT database. This is up 13% in the past 12 months but still only accounts for 5.2% of the fleet. For jets under seven years old, just 4.1% of the fleet is for sale.

It is still early for aircraft sales data, but escrow companies feel it is a little quieter than last year. But there is still time to close a few more deals before the end of the year.

US charter operators, many of whom say they had a quieter summer, have lost another important month. “This election cycle is surfacing a significant level of uncertainty in the future state of things, and that is impacting demand. Because the race is essentially a toss-up, people on both sides are equally concerned about losing,” says Johnson.

Las Vegas is the spiritual home of toss-ups. You can even bet on key coin-tosses at the MGM Sportsbook (tails has won 53% in the history of the Super Bowl). But you are not allowed to bet on the US election. Foreign betting markets have Trump slightly ahead but it is very close. The business jet market would benefit from a quick result.

Johnson adds: “This uncertainty is depressing charter demand and will continue to do so until we have a clear winner of the 2024 presidential race.”