Summer is coming
Like the Stark family in Game of Thrones, a lot of operators and charter brokers in the Northern Hemisphere are concerned that winter is coming. This makes sense. Not only is betting on the seasons one prediction in 2020 that has a chance of coming true, but with business travellers not rushing back, demand for flights is dropping – particularly in Europe.
WINGX says that European movements were down 6% for the first two weeks of September compared with 2019. The US, which typically has a stronger third quarter, is down 13%. But this could improve as the markets move up.
South African operators, however, are gearing up for the summer. But you would not know it. The country, which was in recession in 2019, is slowly coming out of one of the toughest lockdowns anywhere in the world (alcohol and tobacco sales were banned). The South African economy shrank 16% in three months bringing its GDP back to the same level as in 2007.
“It is fair to say that it has been devastating nationally,” says JP Fourie, executive director at National Airways Corporation. “From an aviation perspective it has really, really hit the industry hard.”
Some sectors – emergency medical services and mining contracts – are still performing, but with the border closed, tourism has been hit hard. “Tourism is very important to us – normally we would be having VIPs and long stays coming into Cape Town and between 20 and 40 flights to Antarctica,” says Gavin Kiggen, vice president Africa, at ExecuJet. “And we don’t see it picking up.”
Both see opportunities for business aviation to replace airline flights. But both Kiggen and Fourie are not confident that business aviation will get to 2019 levels until around 2024.
David Minty, head of aircraft finance Investec, is slightly more optimistic. “If you can successfully survive, there is a sharp recovery to be had. But there could be quite a quick recovery for businesses that can sustain and thrive afterwards.”
The three were speaking as part of our Corporate Jet Investor Middle East and Africa Conference this week – attended by several hundred people who networked and shared their views. The Middle Eastern panels were more optimistic, but no one was claiming that it is just blue skies ahead.
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