Lower Prices, Safety Concerns Drive Charter Resurgence

May 27, 2020

Following weeks of steep declines across nearly all segments of the industry due to COVID-19, two business aviation charter brokers report a stronger-than-anticipated rebound in May fueled by pent-up demand, travel safety concerns and lower prices.

“There’s been a slow ramping back, and the last couple weeks have been very positive for charter with smaller aircraft leading the surge,” said Todd Weeber, chief operating officer for Magellan Jets. “However, things were so bad in April that we’re just now approaching the ‘halfway there’ point compared to last year’s numbers.”

Richard Zaher, founder and CEO of Paramount Business Jets, reported his company experienced a significant increase in trip requests throughout the pandemic, with inquiries including those related to critical business travel. “Even with the increase in online communications and meetings, when contracts need signing, clients still prefer to do so in person,” he said, adding repatriation flights, relocating family members and transporting medical personnel and COVID-19 test kits also added to the increase in trip requests.

“In April, charter requests increased 53% in North America and 103% worldwide,” Zaher added.

Weeber also noted that “more than half” his company’s new clients are people who are also new to charter travel. “It’s clear they feel safer travelling in smaller groups and a more isolated environment until there’s a vaccine,” he added. “That’s where the demand seems to be coming from.”

Another significant factor driving these increases are lower prices from operators, which brokers may then pass along to their clients. Zaher noted he’s seen quoted trip prices from some operators as much as 20% lower than normal.

“There’s major competition right now to lower costs, and some operators are willing to do whatever it takes to earn business and keep their aircraft flying,” he said. “Combined with the suspension of 7.5% FET tax, flying privately is more cost effective today than it was last year at this time.”

Despite the price advantage, Weeber also expressed concern about the trend toward lower prices.

“Our industry is well-positioned to plan for uncertainty, but I won’t pretend to understand why some operators are dumping lift into the marketplace right now,” he said. “Low prices are not sustainable, especially if there’s a second wave.”