OEMs prepare for hard landing
There’s never a good day of the week to reveal job losses. Bombardier Aviation chose Friday June 5th to announce staff cuts of 2,500 employees in response to the drop in orders caused by the global Covid-19 pandemic. Gulfstream said it was cutting people last month. Other manufacturers are likely to follow.
There are a lot of people talking about opportunities for business aviation. You can find many stories predicting a quick recovery. But OEMs disagree. It is worth noting that manufacturers have unique visibility. They can see how owners are flying their aircraft. They also get the data on orders and cancellations. Business jet deliveries, industry-wide, are forecast to be down by about 30% year-over-year due to the pandemic, according to Bombardier.
If you are looking for good news, business aviation is not getting hit as hard as commercial. Global air traffic is expected to decline by 45% this year, predicts investment bank Baird. Airlines are expected to lose $310bn in revenue during 2020. Therein lies an opportunity for business aviation. With many airliners moth-balled and airline staff furloughed, fewer passengers can choose scheduled airline travel even if they want to. Then, there are the well-rehearsed arguments about the safety of exclusive private jet cabins compared with airline cabins. Plus, corporations may wish to avoid the prospect of litigation arising from an employee who contracted Covid-19 on an airline flight.
Very recent WINGX data confirms that as global business recovers, paired business flights are beginning to outpace scheduled paired airline flights. In the first few days of June, business aviation flew almost three times as many unique pairs as commercial aviation.
But it is worth remembering that business aviation is still down. It may not be knocked out on the canvas. But it is bloodied – and OEMs know this.
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