Taking flight: How private jets are picking up where commercial airlines were left grounded

TO SAY 2020 has been a turbulent year for aviation is putting it mildly. But while business and leisure travel dropped off a cliff early in the year, it soon emerged that there was urgent demand from a "need-to-fly" segment - repatriation flights and essential movements. These were needs that could not be adequately met by commercial airlines with grounded fleets and shrunken capacity.

Private jet operators and air charter services providers in Singapore tell The Business Times they are seeing a pickup after the initial slump. It started with a shift towards repatriation flights after border restrictions kicked in.

To be sure, volumes remain depressed today, even with air travel starting to open up again. International travel on airlines was still about 90 per cent below 2019 levels as at late-September, according to industry data.

Ramesh Krishna, general manager of Pacific Flight Services, says: "With a gradual easing in travel restrictions, we have been seeing a rebound in charter demand since around May."

Based at Seletar Airport, PFS - a unit of ST Engineering - has a fleet consisting of a Gulfstream 550, two Gulfstream 150s, a Learjet 45, a Learjet 35 and two Beechcraft Kingair C90s.

Since the outbreak, Singapore-based OJets has seen a "shift in demand towards repatriation, charter cargo of essential supplies", in addition to demand from executives who need to make business trips, says Keith Tsang, vice-president of sales (Asia Pacific). He declines to comment on the volume of business affected by the pandemic.

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OJets' customer base includes entrepreneurs, C-level executives, ultra high net worth individuals and private jet brokers.

Presently, demand is largely for essential business trips, as well as some leisure trips to countries which are starting to open up, he adds. Its current split between repatriation flights and private charters is about 50:50.

OJets' fleet of Bombardier long-range business aircraft include three Global 6000s, a Global 5000 and a Challenger 650.

Another private jet charter company which declined to be named told BT that volumes have not recovered after collapsing by 90 per cent this year, down from 30-40 flights monthly before the pandemic struck. It typically does both medical and private charters.

Meanwhile, Singapore Air Charter's business manager Nick Johnstone says: "2020 has seen a paradigm shift in the charter market with emphasis shifting to a more 'humanitarian' perspective, with numerous requests from consortiums eager to secure charter aircraft for repatriation flights, particularly India to Australia where we've utilised Boeing 787s."

When the pandemic first erupted, the air charter services provider saw charter requests plummet by 60 per cent, but says demand later picked up to back near pre-Covid levels. Requests largely came from big groups and families struggling to make their way home, and in some cases, larger groups which organised "crowd funding" initiatives to split the cost of a dedicated charter flight, Mr Johnstone adds. It organised some 25 charter flights in September.

Seletar Airport declined to disclose figures for air traffic when asked. According to aviation solutions provider Honeywell, global business jet usage is expected to climb to 80-85 per cent of 2019 levels by the fourth quarter this year, and rebound fully by mid-2021.

Performance differs by geography. Countries and regions which have a sizeable domestic market and a mature private aviation market appear to be faring better.

Malta-based VistaJet's most popular routes in the last six months have been between the United Kingdom (UK) and France, the United States and China, as well as between the UK and Italy.

In the first half of 2020, a high percentage of enquiries were from families trying to get home. VistaJet also saw some interest from students trying to get back to schools that aren't located near key travel hubs. Since the summer, demand revolves around "safe, remote places" as travellers look for safe destinations to holiday, it says. For instance, it offers trips to the Velaa private island in the Maldives, which eased border restrictions for tourists back in July.

"For corporate flying, we have seen a surge of 49 per cent in corporate interest globally since the start of the pandemic as corporates have critical travel," says Ian Moore, chief commercial officer of VistaJet. Corporate demand for VistaJet is fuelled in large part by the US, and technology firms are driving corporate demand.

What's new for VistaJet is that some 70 per cent of VistaJet's incoming requests are from passengers who have not regularly used business aviation before, Mr Moore goes on to say. It also saw an increase in memberships around the world, with the number of new members joining VistaJet growing year-on-year in July. In August, the volume of new members was flat.

The perks of going private

While some reckon corporate travel may never fully recover in a post-Covid world after companies were forced to adopt virtual meetings, those who have to travel - and can afford to - are likely to go private. In a vote of confidence, European plane-maker Airbus this month launched the ACJ TwoTwenty business jet, citing "promising demand" for the model in the burgeoning business jet market even as the commercial market languishes in the doldrums.

After all, in a year where masks and hand sanitiser are de rigeur, the biggest upside to flying private is arguably the reduced exposure to crowds and strangers.

"The number of touchpoints significantly decreases with private jet travel - as few as 20 touchpoints as opposed to 700 touchpoints when flying commercial," says Mr Tsang, pointing to oft-snaking queues at the airport, crowded terminals and jam-packed planes.

Private jet operators have also stepped up sanitisation and implemented the strict measures that have become standard the world over - such as temperature checks and protective equipment - to keep aircraft clean and travellers safe.

Operators also pointed to other advantages, such as the time saved from flying out of - and into - a dedicated private jet facility or private airport, speedy customs clearance, the flexibility to pick a preferred travel time as well as the in-flight luxury and privacy that business jets afford.

"Commercial travel may take more effort and a longer time due to the multiple flight connections, possible flight cancellations or delays," Mr Tsang says.

These perks don't come cheap of course. As an indicative guide, a round trip from Singapore to Beijing would cost US$100,000 to US$140,000, while a round trip from Singapore to Jakarta would cost US$15,000 to US$27,000, depending on the aircraft and number of passengers, says PFS. An executive charter would be able to carry up to 16 passengers, it adds.

The additional precautionary measures that the pandemic has brought has also resulted in increased prices and operating costs this year, PFS tells BT. It declines to elaborate as costs vary depending on the region.

"Charter rates generally did go up due to the pandemic, especially with increased cleaning and disinfection procedures to ensure a safe cabin, quarantines for both crew and passengers, aircraft parking and added repositioning hours," says Mr Tsang. Meanwhile, operational costs have spiked "dramatically" by up to 50 per cent for some countries, partly due to the ramp up in sanitisation and safety precautions.

On the other hand, VistaJet, which operates a membership programme, says that its prices have remained unchanged.

Restrictions still in place

But going private doesn't mean that travellers can circumvent the prevailing measures that individual countries have implemented to curb the spread of the virus. According to recent 11-market survey of travellers by Iata, 83 per cent of those polled said they would shelve travel plans if it there was even as chance of being quarantined at their destination.

The International Air Transport Authority (Iata) has been lobbying for systematic testing of all international travellers pre-departure. This will require Covid tests that are quick, affordable, scalable and accurate, as well as the development of global standards to incorporate testing into the travel process, the airline association highlights in a recent statement.

Singapore has said it is looking to establish "travel bubbles" with other countries in the region which have low rates of infection to resuscitate air traffic flows. Just this week, Transport Minister Ong Ye Kung announced Singapore's first two-way air travel bubble with Hong Kong. While details are still being worked out, travel could resume in a matter of weeks.

These travel bubbles - which will likely have a daily quota and require Covid tests - are separate from the so-called green lanes that have already been set up with Brunei, China, Japan, Malaysia and South Korea to facilitate essential travel.

Within the Asia-Pacific itself, border closures are very restrictive and the region has been the worst hit in terms of air traffic, Airbus' Asia Pacific president Anand Stanley tells BT in a recent interview. Citing Singapore's efforts to open up more routes regionally safely as the right way to begin reviving travel, he argues in favour of countries adopting a standard testing protocol and against the risk adverse strategy of simply shutting borders.

In fact, a major challenge for private jet operators and charter services providers has been keeping up with the ever-evolving litany of personal travel and health requirements, which also differs from country to country.

Singapore Air Charter hasn't had to turn away anyone to date, but to ensure a smooth ride, "you have to be on top of it from the word 'go'," says Mr Johnstone.

Not all arrangements are bilateral either. For instance, Singapore has lifted border restrictions against some countries such as New Zealand, Brunei and Australia (except for the state of Victoria). However, these countries (at the time of writing) have not lifted restrictions for travellers from Singapore, which means that travellers who come here to Singapore will still need to self-isolate when they get back to their home country.

"People are still not travelling owing to the travel restrictions and (need for) quarantine," says Alex Khalil, commercial manager at Executive Jets Asia Group. "Even if travellers don't mind being quarantined upon arrival, (sometimes) they are not allowed entry to certain countries. Most countries require visas now and they are not easy to obtain, unless there are arrangements under the fast lane agreements or through diplomatic channels."

Recovery

Still, players in the private jet space appear sanguine that the recovery will come sooner rather than later.

Singapore Air Charter's Mr Johnstone says: "With the ongoing limitations of commercial travel and accompanying health concerns, I think we'll see a more rapid return to pre-Covid levels of business well before 2024. In fact we're seeing it already."

He adds: "With a private jet, you come into contact with fewer people, spend less time travelling and fly only with those you know. It's an attractive way to travel and those who've 'resorted' to this method during Covid may not want to return to the relatively time-consuming world of commercial flights."

Executive Jets Asia Group's Ms Khalil shares a similar sentiment.

"We expect travel restrictions to be lifted gradually before 2024. Once lifted, charters will return to normal or even busier, clearing backlog," says Ms Khalil. The Johor Bahru-based group has a fleet of four light jets.

"There is undeniably pent-up demand," she adds, pointing to neighbouring countries such as Indonesia.

Executive Jets Asia, which does predominantly medical charters, has also been receiving enquiries of late from prospective customers exploring their options - including a query relating to a flight to nowhere - although these may not necessarily translate to bookings.

Global Jet Capital, which specialises in financial solutions for the business jet market, also sees clear skies ahead for the region in the long term. Today, the Asia-Pacific is home to 1,245 business jets, of which 60 are based in Singapore, it estimates.

Sales director Violet Kwek says: "The industry's value proposition - random access, productivity, and security - is now firmly embedded in the business environment. The challenges associated with the pandemic have actually enhanced this value proposition, with new considerations related to health security."

Global business jet activity declined in March and April, but has gained ground since to "near normal" operational levels, she says. "We believe the recovery will continue through the balance of 2020 as the world gains control over the pandemic and business returns to normal," Ms Kwek adds.

Global Jet, with a portfolio of 170 aircraft mostly on operating lease, serves a customer base of large corporations and high net worth individuals. It has an office in Hong Kong from which it serves the region, including Singapore.

According to Global Jet, there are 2,500 to 3,000 transactions for new and pre-owned jets worth some US$25 billion to U$30 billion each year. This year, industry analysts have projected a 15-20 per cent slump in dollar volumes year-on-year as the pandemic paralysed factories while planemakers slashed headcount and production rates. "Looking forward, we expect a steady climb back to 2019 levels by 2022, and then continued growth as new aircraft models made their way into the market," she says of transaction volumes.

In contrast, the recovery for airlines has proven far slower than expected.

With international travel still largely on hold, flag carrier Singapore Airlines (SIA) has projected that its capacity is likely to remain firmly under 50 per cent of its original levels by March 2021. By year-end, SIA and its regional wing SilkAir will still only be operating about 15 per cent of their initial capacity, although this has nearly quadrupled from April when air travel was at its trough.

Iata forecasts that international travel for the commercial aviation market may only recover to pre-Covid levels by 2024, suggesting that the private aviation market could see a far smoother recovery trajectory.