BUSINESS LOOKS UP, HYGIENE PARAMOUNT

GENERAL AVIATION: After the second Covid wave this year, charters and air ambulances are doing reasonably well, unlike the dormant commercial aviation sector

The ferocious second wave of Covid brought much tears and tension not only for individuals but companies who were trying to survive after the first wave. While commercial aviation is still very constricted, general aviation (GA) has done better with charters and air ambulances which ferried Covid patients. And the suspension of commercial flights by some countries left the super rich with the option of safe and hygienic luxury charters.

Also, the opening of an exclusive GA terminal in Delhi in September 2020 has been a boon as passengers prefer to avoid crowds at terminal buildings and have quick entry into their planes.

INCREASED DELIVERIES

According to the General Aviation Manufacturers Association (GAMA), during the first quarter of 2021, deliveries increased for turbine helicopters and propeller airplanes, while business jet and piston helicopter shipments were flat as compared to the same period of 2020.

GAMA President and CEO Pete Bunce reportedly said: “The first quarter of 2021 shows progress for the industry. It is encouraging to see manufacturers begin to bounce back from the impacts of the pandemic. Although, we are not yet in the clear. The industry continues to face headwinds, especially with ongoing supply chain issues and pandemic related restrictions and constraints to global travel.”

Airplane shipments for the first three months of 2021, when compared to the same period in 2020, saw piston airplane deliveries increase 7.3%, with 235 units; turboprop airplane deliveries increase 18.3%, with 84 units; while business jet deliveries were flat with 113 units.

According to the International Aircraft Dealers Association (IADA), during the first quarter of 2021, Iada-accredited dealers closed 211 aircraft transactions, had 246 aircraft under contract, and executed 119 acquisition agreements. IADA dealers were exclusively retained to sell 157 aircraft, and transaction prices were lowered on only 27 aircraft, while 41 transactions fell apart. GAMA members average over 700 transactions and $6 billion in sales volume per year, and registered over 1,200 global transactions, worth more than $10 billion, from April 1, 2020 to March 31, 2021.

According to IADA Executive Director Wayne Starling, the aviation industry has proven its resilience through the economic fluctuations brought about by the pandemic, and is now on a trajectory for continued success. “Furthermore, a perception survey of our members indicates they expect the next six months to demonstrate a slight increase in all market conditions, with the strongest areas of increase in the light and mid-sized jet markets,” he said.

GROWING DEMAND

Rohit Kapur, President, JETHQ Asia, said that sales were doing very well and the demand is high. “Many first-time buyers are in the fray to buy aircraft. This is across all segments of aircraft, including pre-owned and new. The US still remains our biggest market, but in the last three months, we have seen an increased demand from Asia, Middle East and Europe. The severe lockdowns and pandemic affects are fuelling the desire of the affluent to travel privately.” He predicts that this year, there will be about 20-25% growth as compared to last year, in sheer numbers of the deals that will close.

The demand for Gulfstream G650s and Global 6000s is as high as the demand for Hawker 850XPS and Hawker 900XPS, said Kapur. “However, the supply side is getting to be a major constraint as inventories seem to be drying up and there are hardly any good quality aircraft available for sale. If they come on the market, they get sold very quickly,” he said.

Interesting, Asian buyers tend to lose out to their western counterparts, who move quickly to secure deals. Asians, on the other hand, have a long decision-making process due to regulatory and cultural issues.

Many first-time buyers are in the fray to buy aircraft. This includes preowned and new planes

According to Rajan Mehra, CEO, Club One Air (COA), and former India Head of Qatar Airways, the ongoing Covid wave has seen a sharp rise in the number of passengers using private jets in India. “At Club One Air, we have registered a 40-50% jump in the number flights booked every month from October 2020, post the first wave. Then the lockdown imposed during the second wave reduced the movements of passengers as most countries banned travel from India. But this was compensated somewhat by Medivac ambulance movements which comprised around 10-15% of our business during the lockdown.”

Mehra added that they had special movements to places like Dubai as the UAE government had permitted a certain category of passengers to enter on private aircraft only. COA consciously did not operate exclusive Covid flights, to reassure its clients of the safety of their airplanes. “On the whole our drop in business during the April and May lockdown was around 20% of the post October figures. From June onwards, we have seen a 30-40% increase in business again,” he added.

Covid has highlighted that it is safer and healthier to fly private. Private jet flying, which was typically associated with the rich and famous, is now focused on health and safety. “Passengers want to avoid the crowds of terminal buildings and prefer the spaces available to them in private terminals and they are willing to pay the extra dollar for this. And the new general aviation terminal in Delhi has made a huge difference,” said Mehra.

Another trend seen during Covid times was that more and more clients choose to fly private on their international trips, said Mehra. Earlier, this was restricted to domestic journeys. “Whereas previously our flying ratio was 70% domestic and 30% international, that has reached 50:50 now, and in the coming years, we could see the scales tilt in favour of international travel.”

According to MD of the Business Aircraft Operators Association, Group Captain Rajesh K Bali, things are looking up and some purchases of planes have taken place. “While in the US, businessmen buy planes purely for business, India is just 10% of that level. I foresee things getting back to pre-covid levels in India by the end of this year.”

While a business jet is almost 90% used for business purposes, due to the pandemic, many are looking to private jets, said Kapur. While it could take commercial airlines a long time, perhaps over a year, to revert to normal business, private aviation should see an upsurge. Those who flew business class in commercial airlines will prefer the safety, convenience and hygiene of a private jet.