SAN FRANCISCO, Aug. 14, 2021 /PRNewswire/ — Nathan Sassover, Founder/CEO of WRLD1 / TVNET shared his views about the platform’s motivations and intent in launching Jetflites.com:
«It is now widely known and well publicized that COVID-19 has had and continues to have a profound and continuing impact on the global private aviation market.»
Sassover continued: «TVNET wondered how the evolutionary process in ‘private air’ life and perceptions of need and value conjoined with mandatory health and safety priorities could translate to engagement with this rarefied audience.
«It became evident that the eclectic nature of this community drives an established global dialogue among users of Private Aviation who comprise a compelling, generally low key universe of like minded people.
«What we saw was a decentralized but intriguing community that may respond to an online forum and social destination for this highly engaged affinity group.»
Private Air – Global Snapshot
The market for the business jet was valued at USD 15. 25 billion in 2020 and is anticipated to register a CAGR of 2. 50% during the forecast period (2021-2026), to reach a market value of USD 17. 86 billion by 2026.
- The COVID-19 pandemic affected the business jet market in the short term as the orders and deliveries witnessed a decline in 2020. However, no long-term effect has been observed on the market as the charter service providers’ (and other business jet providers’) fleet modernization plans have not been hampered. Furthermore, due to the increase in charter operations owing to the COVID-19 pandemic, the demand for business jets is expected to increase in the coming years.
- Approximately 1/3rd of the business jet fleets currently in operation are more than 10 years old. This is driving the business jet operators and charter providers to invest in the fleet modernization programs and enhance their fleet’s capabilities. This is expected to propel the growth of the market during the forecast period.
- With the growth of the tourism sector in Latin America and Southeast Asia, many charter operators are making plans to introduce new charter routes in the regions and further expand their presence. This is generating demand for lightweight and fuel-efficient business jets.
Private jet owners look to Asia for planes as. US shortage of private jets continues
- Wealthy Americans are turning to Asia for private jets due to a shortage in the US.
- Asia-based aircraft were considered less desirable due to the lack of private aviation infrastructure on the continent.
- One firm, Jetcraft, is buying up aircraft and bringing them to the US to sell
Private aviation has not been immune to the shortages plaguing nearly every industry.
America’s wealthy realized the value of flying private instead of flying commercial during the pandemic and began buying up private aircraft in anticipation of a return to travel. And just like in the housing market, a drop in inventory is driving prices up, and forcing buyers to look elsewhere for aircraft.
Jetcraft, an aircraft sales and acquisition firm, has been buying up private jets in Asia and bringing them to the US to accommodate increasing demand. Continued lockdowns in Asia, Jetcraft says, have made owners are more willing to sell.
The firm has already bought up four aircraft in Hong Kong, Malaysia, and Indonesia to hopefully sell to US buyers. The US is by far the largest market worldwide for private jets, but Asia-Pacific is also growing, according to a report by Fortune Business Insights.etcraft
Private jets from Asia were once considered less desirable than US-owned aircraft but are now fetching a premium among the wealthy jet-set.
«There are challenges with Asia compared to the US,» Dan Kilkeary, Jetcraft’s senior vice president for sales in America, said. «They just don’t have the infrastructure like we have in the US to house the airplane.»
Getting buyers to Asia to see the aircraft is also costly and has proved difficult during the pandemic thanks to lingering travel restrictions.
Jetcraft, as a result, has been flying the aircraft to the US where they can be serviced by their manufacturers and be easily viewed by potential buyers. Two aircraft are already in the US at Gulfstream and Bombardier service facilities in Illinois and California, respectively.
Minor fixes including removing non-English placards, updating the in-flight entertainment system to English, or converting power outlets to 110v AC are often required. Kilkeary says a paint job – costing a few hundred thousand dollars – is often required for aircraft from Asia.
«The other thing that should give people assurances on airplanes coming out of almost any region is that the pre-buys now are extensive,» Kilkeary said.
Philip Rushton, president of international aircraft sales and acquisition consulting company Aviatrade, told Insider that his firm is selling some aircraft previously based in Asia for around 20% higher than normal pricing due to the shortage.
«Chinese buyers were once focused on buying brand-new aircraft from manufacturers complete with pricey extras, and paying much higher rates in what was known as a ‘China premium,'» Rushton said. «But these days, the flow of aircraft into China has expanded to include late model pre-owned aircraft as Asian business jet buyers are more cost-conscious and better informed.»
The result has been a sell-off of once-new aircraft with low utilization rates that are now finding their way to homes in America.
Rushton did acknowledge the potential differences compared to US standards and added that «expectations need to be managed» when dealing with US buyers and sellers in Asia.
High sales prices can only be obtained if the aircraft has been maintained properly, has been equipped to US standards, and is correctly inspected, he said.
Over the past few years, there has been a significant increase in high-net-worth individuals and ultra-high-net-worth individuals globally. This is generating demand for private travel, subsequently driving the procurement of private jets with enhanced cabin interiors.
Key Market Trends
Large Jet Segment accounted for the Highest Share in the Market in 2020
The large jet segment currently dominates the market in terms of market share. This can be attributed to relatively higher prices of the large jets than light jets, despite the former’s lower deliveries compared to the latter. In 2020, demand for large jets was high, as they have a large cabin space that can accommodate approximately 19 passengers.
- However, the segment’s growth was affected due to restrictions on long-distance travels, globally. Nevertheless, in the coming years, the segment will witness positive growth as the travel restrictions are now lifted. For instance, in October 2020, Airbus announced that the company has received six orders for new ACJ TwoTwenty extra-large aircraft based on Airbus’ A220-100 with a range of more than 10,000 kilometer.
- The order for six aircraft included two from Comlux, a Switzerland-based charter company, and four from other undisclosed companies. The interior of Comlux aircraft will include a business and guest lounge along with private entertainment space and a private suite, including a bathroom. The first pair of aircraft for Comlux are expected to enter service in early 2023.
- Furthermore, fractional ownership of jets may also rise as owners try to avoid overhead costs and choose shared aircraft because of the market’s economic downturn and uncertainties. Such factors are anticipated to propel the growth of the market during the forecast period.
North America Held the Largest Market Share in 2020
North America currently has the largest share in the market and is expected to continue its dominance during the forecast period. The region holds the most extensive operating business jet fleet (more than 14,000 aircraft) in the world, with the United States accounting for the majority of its share.
- Due to the presence of many high-net-worth individuals and corporate companies, majority of the demand is for light jets and large jets. Furthermore, there has been an increase in the demand for charter services over the past few years in the region. Due to the impact of COVID-19 on commercial aviation, there has been an increase in demand for business aviation.
- For instance, Monarch Air Group, a US-based charter company, announced that the company has witnessed an increase (Year-on-Year) of 125% in total bookings till June 2020 compared to June 2019, and approximately 50% of its new charter contracts were received in June 2020. In addition to this, the charter companies have also decreased prices to take care of the business jet opportunities.
- The growth in charter operations in the region has propelled the fleet modernization programs by the charter operators to enhance their fleet efficiencies. According to Honeywell, approximately 15% of North America’s business jet fleet is expected to be replaced in the coming years. In June 2020, NetJets announced that the company had received its 25th Challenger 650 under an order placed during 2010-2012. The order included procurement of 75 Challenger 350s, 50 Phenom 300s, 30 Global 5000/6000s, 25 Challenger 650s, and 25 Citation Latitudes.
- Such fleet modernization programs are anticipated to accelerate the growth of the business jet market in North America during the forecast period.
The market of business jets is highly competitive with the presence of several major players. However, in terms of market share, few players, such as Bombardier Inc., Textron Inc., Gulfstream Aerospace Corporation, Embraer SA, and Dassault Aviation SA, among others, are currently dominating the market. Gulfstream and Bombardier, together accounted for 68% of the market share by revenue in 2020. To further increase their presence in the market, the companies are developing new advanced business jet models with enhanced cabin interiors and better fuel efficiencies.
Such innovations are expected to attract new potential customers, which in turn will help the aircraft OEMs to increase their share in the market in the coming years. The aircraft OEMs are developing region-targeted strategies to enhance their sales.
For instance, Airbus is currently in plans to further enhance its geographical footprint in the Middle East region as the company plans to take advantage of growing opportunities of the larger aircraft. Such targeted plans of the aircraft OEMs are expected to help the companies increase their sales and profits in the coming years.
Private Jets And The Ultra Wealthy
The ultra wealthy enjoy a global lifestyle. Extensive domestic and international travel is often a requirement for ultra high net worth (UHNW) individuals with at least US$30 million in assets. UHNW individuals are active players in the world’s aviation market; some frequently use commercial airlines, whereas others charter private planes or have fractional ownership plans.
For a portion of the ultra wealthy population, however, outright ownership, whether in their name or through their corporation, is an efficient and cost-effective solution to their increasingly busy schedule across multiple countries and time zones. Although North American UHNW individuals essentially dominate the world of private aviation, the region’s share of new orders has declined over the last 20 years, whilst regulatory changes in many emerging markets have resulted in the beginnings of an internationalisation of private aviation demand, according to a new white paper by Wealth-X, WINGX Advance and industry expert Hardy Sohanpal.
Combining Wealth-X’s intelligence on the ultra wealthy with WINGX Advance’s analysis of aircraft activity and an industry expert’s operating insight, the white paper creates a profile of the average global jet owner, with a focus on opportunities in the Middle East for the private aviation business.
The typical global jet owner is 63.6 years old, with an average net worth of $US1.66 billion and an average liquidity of US$195.5 million. UHNW individuals who own planes are overwhelmingly male, at 96.8%, and self-made, at 75.1%. Of global jet owners, 16.9% gained their fortunes through a blend of inherited and self-made wealth, and 8.0% entirely inherited their wealth. Jet owners spend about 1.0% of their net worth on private aircraft, with an average value of US$16.4 million per plane.
In contrast, the average Middle Eastern aircraft owner is younger than the global norm (59.1 years old versus 63.6 years), with a net worth of US$1.09 billion and liquidity of US$385.5 million. Middle Eastern UHNW individuals tend to buy more expensive planes than their counterparts — US$48.8 million on average, nearly three times the global average — highlighting the opportunity in the region.
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Even most multimillionaires can’t afford to own a private jet
As the number of extremely wealthy people worldwide has grown, so too has the market for private flights.
But the lion’s share of that growth in private aviation is not due to people buying their own planes, according to a recent report from VistaJet, a private jet charter company, and Wealth-X, a firm that specializes in researching ultra-high net worth individuals.
Instead, rich people are turning to more economical means of private air travel such as fractional ownership of planes (where you split the costs and title to the aircraft with a small group of other users almost like a timeshare), jet card membership programs (where travelers typically pre-purchase a package of flight hours on a specific model of plane to be used by a certain date), and on-demand chartering (think an Uber-style service for private planes where you can book one on short notice).
How to fly on a private jet for under $150 per person
In the U.S., the number of flights by fractionally-owned aircraft increased 4.7% between 2016 and 2017, but the number of on-demand charter flights and flights through jet card memberships rose 9.2% over that same period, according to ARGUS International, an aviation technology firm.
Luxury travel expert Doug Gollan, who is also editor of travel website Private Jet Card Comparisons, estimates that 25,000 to 30,000 people hold jet card memberships, versus 8,000 to 10,000 people who are fractional owners of private jets.
«Jet card memberships are the sweet spot of the private aviation market with the number of providers and programs having more than doubled in the past decade against a backdrop of lower deliveries of new aircraft and a static market for fractional ownership,» he said.
Nevertheless, private ownership still represents most private air travel in the U.S. In 2017, privately-owned planes represented 62% of private jet departures, versus 11% for fractionally-owned aircraft and 27% for charter flights, according to data from JETNET, an aviation market intelligence firm. In Europe though, 51% of private jet departures were made by chartered flights. Gollan added that the number of charter companies has doubled since 2008, whereas the number of firms offering fractional ownership option has remained static.
Charter and membership companies continue to attract a younger clientele. VistaJet, for instance, saw the average age of its passengers drop from 40 to 38 last year.
And millennials could be fueling this trend for years to come, experts said. «Ownership is one of those old-school things in a way,» said Winston Chesterfield, director of custom research at Wealth-X. «For the older generation of ultra-wealthy people when you made a certain amount of money and wanted to travel in peace you had to own your own plane. That’s not necessarily the case now.»
Even most multimillionaires can’t afford to own a private jet
Despite what people may assume from reading tabloids, being rich and famous doesn’t automatically mean you fly private. «It’s the celebrity effect of wealth,» Chesterfield said. Even the Queen of Pop must endure flying commercial: Madonna was spotted traveling in economy class while visiting her eldest son in the U.K. last year.
A private plane itself costs tens of millions of dollars to purchase. And private-jet owners will need roughly ten times that in net worth to afford the cost of upkeep, which includes storing the plane, hiring staff to operate and maintain it and redoing the interior as needed.
In fact, the average person who owns a private jet — including Berkshire Hathaway BRK.A chief Warren Buffett and Google GOOG co-founder Larry Page — has a net worth of $1.5 billion. Members of private jet programs are nearly as wealthy though, with an average net worth of $1.16 billion.
Some multimillionaires and billionaires don’t have a choice when it comes to flying privately, though. Apple AAPL CEO Tim Cook, for example, is required by his company to fly private in part because of security concerns.
The average private-jet owner could qualify for AARP
The vast majority of wealthy people who fly private are self-made: 75% of private jet owners amassed their own wealth, as did 68% of private jet program members.
And contrary to the image created by tech billionaires such as Facebook FB chief executive Mark Zuckerberg or Snapchat SNAP CEO Evan Spiegel, it’s very rare to amass the wealth needed to own a private plane at a young age. Private jet program members are 61 years old on average — and owners are even older, with an average age of 65, according to the VistaJet report.
Lots of people use multiple methods to fly privately
There’s a big overlap in the share of wealthy individuals who use more than one option to fly privately, Gollan said. This is in part because of the limitations of private air travel. Smaller planes may not be able to fly longer distances, meaning their owners may need to use an on-demand charter service or hold a jet card membership to be able to make those trips.
«It’s a bit like cars in a driveway,» Gollan said. «You might have a light jet you’ve been using for business but as you go global, you need a longer range solution but you keep your light jet for current missions.»
Contact: Karen Howard-News@TVNETINC.com
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SOURCE TVNET Inc