Alasdair Whyte

Magna Charter

Everyone knows the joke about the economist forecasting nine out of the past three recessions. But there are lots of negative signs if you want to look for them. US inflation is at a 40-year high. Last week the Fed raised interest rates 50bps to slow inflation. The Nasdaq closed down 5%.

In a Bloomberg interview Jamie Dimon, CEO of JP Morgan estimated that there is a 33% chance of the US having a soft landing where inflation falls without a recession. (He put the odds of the US entering a mild recession or a heavy recession at 33% each as well.)

Charter is often seen as a leading indicator but so far, business aviation passengers do not seem worried.

ARGUS International says that April saw a record number of flights in North America – up 17% from a strong April 2021. Global business jet sectors, 500,000 operated worldwide in April, were up 16% compared with April 2019, according to WINGX. The flight analyst says there may be signs of tapering, with the last week of April seeing comparative growth of 11% versus 2019. This was down on the monthly trend but is just one week.

Anecdotally, charter brokers and operators have not noticed any drop.

“We are tracking the markets, but we are seeing more demand now than we did in the height of the summer of 2021,” says Alain Leboursier, MD, LunaJets in Geneva. “The challenge that we all face now is finding supply. We are telling our clients to tell us their plans for July and August now.”

Leboursier says they are seeing clients who flew with them for the first time in 2021 return. They are also seeing many new clients charter for the first time. “We were up 61% on April compared with last year,” he says. “We have seen no sign of the demand falling this year or this week – in fact it is the complete opposite.”

Jim Segrave, chairman and founder of flyExclusive, tells Corporate Jet Investor that if demand is falling it is not noticeable. “We are still seeing so much demand. Frankly, it is overwhelming – we have everything we could possibly handle. If we had twice as many aircraft we would have twice as much business,” he says. “There is such little inventory available for sale and the inventory that is available is outrageously expensive.”

Private Jet Card Comparisons says first quarter 2022 one-way US charter prices were 21% more than the last quarter of 2020 (which saw a 5% increase). It says that the average US jet card charter price has increased by $1,799 per hour since the end of 2020. “The increase in demand is also acting as a catalyst for a drop in operator quality,” says one broker at an operator.

“We have not seen any decrease in demand globally,” says Andy Christie, group private jets director, Air Charter Service, the global broker. “We are 125% up on pre-Covid levels.”

Nothing lasts for ever. We all know another recession will come. Just not when. Few people on Main Street or Rue Principale will ever fly on a business jet. But they do drive the economy (70% of US production is consumer spending). Charter will definitely feel a sharp downturn or recession, but if Dimon’s one-in-three chance of a soft landing happens, it may just give the market a chance to catch its breath.

 

Seats soon to be filled. Alain Leboursier, MD LunaJets, tells Corporate Jet Investor: “We are telling our clients to tell us their plans for July and August now.”

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