“The best way to predict your future is to create it.” The 16th US president Abraham Lincoln offered characteristically objective advice about the difficult business of predictions.
At the start of 2022, five key factors are likely to shape business aviation. Those are: Rising demand, Falling inventories, Environmental and social governance (ESG) pressures, Greater government scrutiny and New technology.
First, rocketing demand for business flights – most particularly in North America. Business jets flew 3.3m flights across the globe last year, reveals WingX’s latest Global Market Tracker. That’s 7% higher than the previous record set in 2019.
This demand will continue, as high net worth individuals and their families, plus corporate fliers, seek the sanctuary and convenience of private aircraft cabins. It’s a demand heightening by the slow recovery in airline schedules – particularly serving regional designations. Plus, there are signs that as corporate travel begins returns, it’s not just c-suite executives who are flying but a wide range of other colleagues too. New entrants to business aviation are finding these increasingly persuasive arguments.
Second, with rapidly rising demand for business aircraft has come the deepening scarcity of supply. Both for charter and aircraft. One US industry leader described the US pre-owned market as “looking like a carcass after vultures have picked over it”.
In the pre-owned market, AMSTAT data shows that just 3.78% of the total fleet is for sale. But even this figure is high. Of the 3.25% of heavy jets for sale about half are older than 20 years (the oldest is from 1966). The same is true for medium jets with 3.24% available. With light jets, 4.6% of the fleet is available – but the median age of these is 30 years old.
OEMs are not rushing to increase production. JetNetIQ is forecasting 770 jet deliveries in 2022, up 12% on 2021. New aircraft buyers are increasingly signing up for 2023.
There’s not just a shortage of pre-owned aircraft. Experienced pilots, airframe and power plant mechanics and other engineers are also becoming increasingly difficult to source.
The third challenge this year will be the ratcheting up environmental pressures together with growing scrutiny of business’ ESG policies and practises. While 2050 seems a distant date – for business aviation to reach net zero carbon, as identified by the International Business Aviation Council (IBAC) – every year the pressure intensifies.
Sustainable Aviation Fuel (SAF), plus carbon offsetting schemes, offer hope. (Air BP estimates that its SAF, depending on the fuel stock, can cut carbon emissions over the life cycle of the fuel by 80% compared with standard fuel). The technical wizardry of OEMs’ aircraft and engine designers also promises much. But much substantial progress is needed to meet these demanding goals.
Fourth, is the greater involvement of law enforcement and government agencies in business aviation. The less regulated parts of business aviation – particularly transactions – are being exposed to far more scrutiny.
This will continue. Last year, we saw how the Aircraft Guaranty Corporation indictment led to greater focus on US aircraft exports. Other investigations continue.
The US Department of Treasury’s Office of Foreign Asset Control (OFAC) has warned the aviation industry about sanction breaches in recent years and is known to be investigating several business aviation companies. The UK and US have also recently sanctioned business jets and helicopters related to Belarus (not all of these are registered in the country). If you are not already sanction checking the people and aircraft you deal with, you should be.
The industry will also continue to be targeted by fraudsters and cyber criminals. We feel so strongly about this trend we have launched Semaphore Intel to help the industry manage these risks.
Fifth, is the impact new and rapidly developing technologies will have on business aviation. These are not confined to airframes and engines – although the progress of inflight engine diagnostics and communications is truly impressive.
Finally, there is the promise of advanced air mobility (AAM), powered by hundreds of start-ups, which are continuing to attract vast investment from manufacturers (aircraft and autos), Wall Street and investors worldwide. Integrating AAM into current transport systems promises to change all our futures. But it cannot be accomplished with technical advances, regulatory support and a fair measure of good will from everyone concerned.
In confronting these opportunities and challenges, business aviation needs to take the best advice it can find if it is to shine in 2022. Even if that guidance does come from a nineteenth century US president. So, thank you Mr President for your wise words and sage advice. We still have need of them – even after all these years.
President Lincoln’s wise words are still resonating more than 150 years after his untimely death.