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How the COVID-driven private jet boom continues to fly high

Flying is a way of life for Stockbridge and other employees of his company, Elite Team Offices, based in Clovis. For years they have flown both privately and on commercial flights from Fresno, about 15 miles from Clovis. Then the COVID-19 pandemic hit, and owning a private jet became increasingly attractive.

“Buying a jet has been on my mind for years, but Covid has definitely added to the equation!” Stockbridge told Reuters by email.

He is not the only one.

The shift to private flights, which more affluent Americans saw as a necessary luxury during COVID-19, is now showing signs of becoming something else: an expensive but sought-after alternative to a premium ticket on a commercial flight.

Many have stayed for convenience, with analysts and industry executives saying they are seeing both more first-time jet owners and families and even small and medium-sized businesses flying privately.

According to Alton Aviation Consultancy, airlines have an 80% share of premium travel in 2021, up from 90% pre-COVID-19.

Business jets were often associated with artists and senior executives. They now make up a quarter of US flights, roughly double the pre-pandemic share, according to research and advisory firm WINGX.

And consultancy McKinsey & Company estimated that before the pandemic, only 10% of people who could afford to travel in private did so.

Private flights cover a whole range of transport. For some, like Stockbridge, that means owning a private plane. There are also charter flight operators that sell either at headquarters or the entire aircraft, as well as services that sell fractions or shares of jets.

All of this has a cost.

Stockbridge took delivery this month of a Cessna Citation M2 Gen2, a light jet made by Textron, which it says can turn trips to its out-of-state businesses into a day trip. The plane, which seats up to seven people, sells for $5.85 million.

Stockbridge was clear on the business benefits. “Our out-of-state job is driving the need for a private jet, the distance and time to get to work is critical.”

“Yes, we still fly commercially, but much less frequently…probably 10% commercial, and 90% jet/charter,” he said.

Charters and other private jet services may be cheaper than owning a plane, but they still come with gold prices.

Booking a Gulfstream G280 with nine passenger seats for a one-way New York-Miami flight costs $18,100, according to Jettly, a charter booking platform. By comparison, the average cost of a one-way business class ticket from New York to Miami is $421, before taxes, according to data from airline analytics firm Cirium for the month of January.

Still, for many, the price is not a deterrent.

“I think the people we see converting from commercial are not going to come back to commercial,” said Jamie Walker, chief executive of US-based Jet Linx, which manages planes and operates private flights through a “jet card” subscription type program.

Jet Linx charges a $25,000 membership fee plus a per-flight fee, according to its website.

The subscription-based Wheels Up Experience said its service costs members $80,000 a year.

Jet Linx saw jet card sales jump 40% last year compared to 2019, Walker said.

Other operators are also seeing gains.

“We always see new entrants continue to come into the market,” said Megan Wolf, chief operating officer at Flexjet, a global provider of fractionally owned jets.

Despite a slight increase in the supply of pre-owned business jets, the market remains robust, with companies like Jet Linx capping sales because they cannot meet demand.

The boom is benefiting aircraft manufacturers like Textron, General Dynamics Corp’s Gulfstream, and Bombardier.

Last week, Textron released quarterly results that beat estimates, signaling that the expected slowdown in business jet demand has yet to occur.

“The demand has rather accelerated,” said Robert Stallard, an analyst at Vertical Research Partners.

Private aviation traffic in the United States is up about 15% from its 2019 levels, while air traffic remains down about 13%, according to data from the flight tracking website FlightAware.

Analysts do indeed expect a rebound in commercial flights to eventually bring some wealthy travelers back to scheduled airlines. But there are signs that some of the transfer to private jets could be permanent, especially on short-haul US flights.

Not only are major carriers pulling out of these routes due to pilot shortages, but the flights are comparatively cheaper than using private jets for overseas travel.

RESUMPTION OF AIRLINES

The trend is not lost on major airlines.

Delta Air Lines, the number 3 US airline by fleet size, holds a 20% stake in Wheels Up.

Delta, like other US carriers, is seeing demand return. Its revenue from high-performance premium cabins reached 77% of the pre-pandemic level in the first quarter, compared to 27% a year ago. And Atlanta-headquartered Delta is seeing higher demand from leisure travelers who are paying more to make up for the 10% of business travel that may not return.

Ed Bastian, Delta’s chief executive, acknowledged the rise of private flights, but said many of those passengers were also taking commercial flights.

“I don’t think it took a lot of traffic off our plane – a little, yes,” Bastian said in an interview.

Some competitors in the private jet sphere see things differently.

Jettly saw demand flights more than triple from December 2019 to December 2021, with more than a quarter of estimated demand coming from passengers who previously flew business class, said Toronto-based company chief Justin Crabbe.

“Some of them are blowing up, much to the annoyance of the airlines,” he said.

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