“Anyone who knows, and knows that he knows, Makes the steed of intelligence leap over the vault of heaven.
Anyone who does not know, but knows what he does not know; Can bring his lame little donkey to the destination, nonetheless.
Anyone who does not know and does not know that he does not know Is stuck for ever in double ignorance.”
Written by an anonymous Persian poet seven centuries before Donald Rumsfeld’s famous “known knowns” statement, these lines are just as relevant now.
One known-known, is that many leisure travellers have booked business jet charter for the first time during the summer. Data from WINGX shows that European business aviation activity for August 2020 was 3% up on August 2019. US flights, however, were down 21% in August 2020 (domestic flights down 19%).
Airlines are hurting. European airlines were down 77% for the same month. IATA is not forecasting a return to 2019 passenger levels until 2024.
But the biggest known-unknown since April has been when will business travellers return to business aviation? And the answer is still not clear. Has Zoom fundamentally changed business travel or will people see the value of face-to-face meetings even more when restrictions are lifted?
“Once the frolicking at the beach is over and people return home, the focus normally turns to business trips in the fall. However, all one needs to do to predict the strength of the upcoming business travel season is to look at their own trip calendars, which for most road warriors are scant compared to last year,” says Brian Foley, founder, Brian Foley Associates.
Another know-unknown is how bad will the economic downturn be? Covid-19 has clearly hit some industries very hard. S&P says that up to August 23rd, a total of 445 US companies have entered bankruptcy proceedings in 2020. This is the highest level since 2010. We have not seen many distressed sellers. JETNET data shows that just 10.07% of the business jet fleet is for sale. In 2009 it hit 18%.
“Make no mistake, the market for business aircraft is under stress and this crisis is not helping. But many of the underlying reasons for this stress were in place prior to the crisis,” says Paul Cardarelli, Vice President of Sales, JETNET. “So far this year brokers, dealers and sellers of business aircraft are showing restraint to not over-react to the negative stimuli that now surround the market. They are taking a short-term position on the crisis – a temporary anomaly that can be waited out. As a result of this discipline many key market metrics have yet to turn exceedingly negative.”
Business aviation has always been slow to climb out of downturns. “We still haven’t been hit by the decline in corporate profits and equity markets that will probably outlast this pandemic.” says Richard Aboulafia, Vice President, Analysis, Teal Group Corporation. “That will impact business aircraft orders.”
There is no point trying to list unknown-unknowns. You know that.