One minute 2021

A Learjet flying at dawn

A Learjet flying over Lake Michigan at dawn (Photo: Jim Koepnick).

Last year showed the futility of trying to predict anything. Like most forecasters I failed to warn you about Covid-19. Some of my predictions did come true – although I was completely off about demand for pre-owned jets falling before the US elections.

With much of the world in lockdown and fatalities rising, it is hard to feel particularly optimistic this New Year. But it is worth remembering it is darkest a few hours before the dawn. (Pedants will say this only applies in the two weeks after a full moon.)

There are lots of questions that need to be answered. Will vaccines cope with new mutations? Will people use them? To speed things up could we use vets to vaccinate people? (They regularly do a herd in the same time a doctor injects a handful of people – despite their patients trying to bite them). If President Trump pardons Joe Exotic, will Netflix get a second series out before the next lockdown? And many more.

As always there is a chance of an economic crash. With Tesla up 740% in 2020 and record special purpose acquisition company (SPAC) issuance, it does all feel a lot like the months before the internet crash of 1999. But let’s be optimistic and leave that for another year.

Groundhog year
It is no surprise that the start of 2021 feels a lot like much of 2020. Vaccinating 7.8bn people will take time. We can expect borders and regions to be closed and reopened again throughout the year.

The industry has shown that it can react quickly when demand rises. Data from Tuvoli shows that US flight hours before Christmas exceeded the same days in 2019. But the periods when markets are closed will be tough for companies that burnt through cash reserves in 2020.

Jab, jab, book
We know there is a pent-up demand for long-haul travel. Which is good news for long-haul jets. But when borders eventually open things will stay complicated. Governments will take a long time to work out policies for different vaccinations.

Business jet companies are much better placed to manage this. Companies and individuals are going to want to fly direct and in smaller groups.

Airlines are going to have a nightmare. No one wants to be stuck at the back of a long queue at immigration while people argue the merits of the vaccine they have had – even if it has not been approved in the country they have just landed in.

Come together
Wheels Up has led the way here already by buying Mountain Aviation this week. It is not a new trend. In the  past few years, we have seen a lot of consolidation in the top 20 US operators. Wheels Up has also acquired Gama Signature, Delta Private Jets and TMC Jets. Vista Global bought XOJET and Red Wing’s fleet; JetLinx acquired Meridian; Jet Edge bought Jet Select; and flyExclusive got Sky Night.

It is no surprise that most of the action involves larger operators. Buying smaller companies is just as much work. Although we could see mergers. Whether the market is really consolidating is arguable. Most operator acquisitions eventually result in someone launching a new competitor.

Green way
In other economic downturns we have seen environmental issues pushed back. This did not happen in 2020  and will continue to be a key issue in 2021 . The Green Party is likely to be part of any coalition in Germany, Europe’s biggest business jet market, this year. It is not just law makers demanding change, customers also want it.

The good news is that producers like World Energy and Neste are committed to making more sustainable aviation fuel and likely to announce new projects. You can also expect some exciting new ideas for business aviation off-setting.

Moving metal
Manufacturers are planning to deliver fewer aircraft in 2021 than in 2019. But this is good if it keeps values higher. They did an amazing job cutting production in 2020. We will see large corporate buyers return.

Demand for pre-owned jets should remain strong – particularly for smaller to super-mid-size jets in the US. Price conscious new entrants seem to be happy with pre-owned aircraft.

It looks likely to be a quiet year in China but demand from southeast Asia and Japan looks encouraging. The Middle East should benefit from a resumption in business with Qatar and may even see Iran open up.

Reasons to be cheerful
There are reasons to be hopeful. We have all adapted to things like Zoom and virtual conferencing. But humans need to meet and interact. Business aviation is uniquely placed to meet people’s need to travel in 2021. Many of the people who flew privately for the first time in 2020 are now getting ready to book again.

We are also aiming to run hybrid conferences (both face-to-face and virtual) in Dubai, Singapore and Miami later this year and can’t wait to see everyone.

Best wishes for a happy, healthy and prosperous 2021. 

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