Business aviation analysts predict v-shaped recovery after sharp drop

Avatar for Ben ForrestBy Ben Forrest | June 15, 2020

Estimated reading time 4 minutes, 17 seconds.

In March and April, as travel restrictions and stay-at-home orders hit Canada and the United States due to COVID-19, business aviation traffic plummeted almost immediately and at an unprecedented rate.

Eric Dumigan Photo
ARGUS data shows a steep climb in business aviation travel in May this year — an increase of 84 per cent over April according to Travis Kuhn, ARGUS’ vice-president of Market Intelligence. Eric Dumigan Photo

Flight data from ARGUS International, which includes aircraft movements in Canada, the U.S., Europe and the Caribbean, showed a 68 per cent drop in April compared to the same period last year.

But since then, the numbers have trended steadily upward and analysts are predicting a v-shaped recovery that may actually lead to a business aviation boom as corporations weigh travel costs against the risk of coronavirus exposure on conventional airline flights.

“What COVID has done is force people to think outside of the box,” said Anthony Norejko, president and chief executive officer of the Canadian Business Aviation Association, an industry group that represents about 400 companies that own private jets and helicopters.

“And for corporations in Canada that hadn’t yet explored what this tool can do for them … business aviation will now give them that reliability, the safety they need, when they’re looking after their employees.”

In Canada, business aviation has felt the impact of COVID-19 in three phases, starting with a tense period in February and March when operations moved tentatively forward as the virus spread and was eventually declared a pandemic.

The second phase was limited to essential flying during the lockdown, including repatriation flights for Canadians stranded around the world, said Norejko.

Now, the industry is in a third phase marked by the release of significant pent-up demand as travel restrictions loosen and the economy begins to open back up.

“Each of the charter management companies are reporting numbers that they haven’t seen in a very long time in terms of growth — new people, new charter purchasers, new partial fractional ownership purchases,” said Norejko.

The long-term sustainability of a business aviation boom will depend largely on Canada’s economic recovery and the impact of a potential second wave of COVID-19 later this year.

But some analysts see business aviation as a safer alternative to commercial flights because they can easily implement physical distancing and control who enters the aircraft.

“I think you’re going to see a sustainable growth,” said Norejko. “I think you’re going to see a short-term blip, but then it transitions to: ‘Wow, this is an alternative I wasn’t aware of before.’ ”

ARGUS data shows a steep climb in business aviation travel in May this year — an increase of 84 per cent over April, said Travis Kuhn, the company’s vice-president of Market Intelligence.

He expects the climb to continue rapidly in June and taper off to slower, steadier increases in July and August, ending the summer with flight volumes within 10 or 20 per cent of normal.

“What we’re seeing is, aviation will still happen even if there’s a recession,” he said. “Those who can afford to fly a private jet right now are going to do it.”

To put the current situation in perspective, bizav flights during the financial crisis of 2008 dropped only 30 per cent over an 11-month period, he said. This year’s rapid decline due to COVID-19 was steep, but the recovery may be almost as equally abrupt.

“No one knows what the rebound really does look like because we’ve never been in this environment before,” said Kuhn. “But the data overall has been strong, and what seems to be bolstering this recovery is pent-up demand. People are working to get back to work, businesses are reopening and you’re seeing activity come back pretty strong.”

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