Private Jet Rental
The global economic problems that have affected just about every industry worldwide has certainly had a negative impact on manufacturers of new private jets. According to the General Aviation Manufacturers Association (GAMA), sales of new jets have fallen by as much as 38% since the crisis began in late 2008. Honeywell has painted a much bleaker picture, stating that new jet sales across the board were down 50% last year. Despite the bad numbers, the slowly recovering economy means the bust for new jet producers could possibly be a boon for the private jet rental industry.
With corporate entities almost universally still in belt-tightening mode, many are selling their aircraft and moving into a chartering model to meet their travel needs. Additionally, many companies that were planning aviation purchases just a few years ago are reconsidering the cost-benefit and leaning towards private jet rental. A recent UBS Business Jet update showed an encouraging 7% increase in private jet rental activity so far this year, leading to a forecast suggesting an increase of 8-10% for all of 2010.
One example of the up-tick in the air charter sector comes from American company New Flight Charters (NFC). NFC had a very strong December 2009, following it up with a 52% increase in sales for the month of January 2010. The increase was based on a year-to-year comparison looking at the January time period from both '09 and '10. Company officials knew the private jet rental demand was increasing and that January would be a good month, but they were surprised that the sales increase was so great.
Some of the more interesting numbers regarding NFC's sales increase show budget constraints still play a large role in private jet rental. Nearly 56% of the company's January charters utilized light jets, as opposed to the mid-sized jets and large luxury jets which didn't fare so well. Even more remarkable is that the numbers hold true even outside the U.S., where NFC operates internationally through partnerships with other independent aircraft owners. The numbers suggest that the priorities for private jet rental are changing right along with the slow economic climate.
As far as destinations are concerned, it's not surprising that the top five destinations for NFC were all domestic. The most popular international destinations were Santiago, Chile; Liberia, Costa Rica; and St. Petersburg, Russia.
Charter X, an international charter broker reported similar findings based on numbers extrapolated from FAA flight records. The one major difference being that it reported a higher increase in mid-sized jets and a smaller increase in light jets. But like NFC's numbers, the Charter X findings clearly shows a nose dive among heavy jets and luxury flights. So the trends appear to be consistent even if the numbers aren't identical.
For operators of private jet rental companies the improvement in charter activity is good news. For plane manufacturers it may not be so good. But as the world's economies get stronger, they may also usher in a new paradigm that could change the face of private air travel forever.
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