Bizav Industry Puts a Brave Face on Covid-19's Impact

 - April 3, 2020, 7:57 AM

This story is part of AIN's continuing coverage of the impact of the coronavirus on aviation.


With the Covid-19 pandemic’s impact on business aviation having reached every part of the world, this week has seen a concerted effort by the industry to demonstrate a positive response to an irrefutably negative situation. The latest data from respected analysts confirmed that the impact of the Covid-19 pandemic on business aviation is completely global. On April 2, WingX reported that traffic levels worldwide were 30 percent down in March compared with the same month in 2019.

The most optimistic projections do not appear to see any sort of sustained market recovery at least until the end of May. Even these are heavily predicated on the unconfirmed assumption that virus infection rates will have peaked in some regions of the world by the end of April.

In the U.S., the NBAA and NATA trade associations joined forces to press treasury secretary Steven Mnuchin to resolve their concerns that the business aviation sector might find it harder than expected to benefit from a share of the nearly $80 billion in financial aid committed to aviation a whole under the Coranavirus Aid, Relief, and Economic Security Act. On the other side of the Atlantic, the European Business Aviation Association appealed to European governments to help sustain the industry through a mixture of financial relief and judicious relaxation of operational restrictions and regulatory requirements, such as extensions to pilot licenses and airworthiness certificates.

Bucking an otherwise downward trend in flight activity, business aircraft have increasingly been put to good use in flying missions to support the medical response to the Covid-19 outbreak. These included a pair of NetJets Global 6000s that made a rapid round-trip to China to collect medical equipment to relieve shortages in the U.S. Similarly, rival private flight provider VistaJet offered complimentary empty leg trips for government and medical transportation.

Both Argus International and Wing X reported that U.S. business aviation flight activity was down by around 30 percent during March, with the loss of more than 100,000 sectors compared with March 2019. Argus’s TraqPak flight tracking data shows traffic falling more steeply—by 46.8 percent—between March 11 and 17 as U.S. authorities started to impose restrictions.

Looking ahead through April, Argus on April 1 said it sees U.S. traffic being down on the same period last year by 43.8 percent, while warning that this could rise to 60 percent if lockdown travel restrictions continue. In its view, the U.S. government is now unlikely to impose comprehensive domestic flight restrictions, as some in the industry had feared.

The company’s aspiration is that the U.S. will reach peak infection rates during April. It predicts that six days after this peak point, traffic might return to 50 percent of normal demand levels for weekends, and then rise to 75 percent a week later and to 80 percent after a further week.

On this basis, Argus’s most optimistic projection is that normal rates of flight activity are highly unlikely to be achieved before the end of May. It expects that the “rebound” will likely manifest itself first in states like Texas, Florida, and Georgia, and more slowly in California, New York, and New Jersey, which have seen the country’s highest infection rates.

Travel restrictions and heavily suppressed business activity levels have yielded even greater reductions in flight activity in Europe last month, with Eurocontrol data showing a 72 percent decline in all traffic compared with the same period last year. According to WingX’s latest Global Market Tracker published on April 2, departures from Europe were 34 percent down for March, with the highest drops being in Italy (70 percent) and France (43 percent). Sweden, which has yet to impose full lockdown restrictions, saw departures increase by 1.3 percent. Traffic in Asia was reported to be down by almost 35 percent.

WingX’s data showed the greatest decline in traffic for long-range aircraft, with activity by managed aircraft down by 50 percent and that by branded charter operations and corporate flight departments falling by 20 percent. By contrast, air ambulance and emergency support flights doubled in volume last month.

“The abruptness of the decline in business aviation activity this month [March] is only comparable to the effect of the Eyjafjallaj√∂kull volcano eruption back in 2010, only with much longer and more severe consequences,” commented WingX managing director Richard Koe. “WingX expects a trough in flight activity in April, which may see some countries completely shut down flights. With an optimistic outlook for ending virus containment, we might see renewed demand for flights by the summer, at which point business aviation may have a window of opportunity to meet pent-up demand whilst the airline capacity is still parked.”

On April 2, charter marketplace Avinode reported continued weaker projected demand based on its forward-looking analysis of flight requests. Its latest data showed demand for April departures to be 13 percent lower than they were at the same time last year and Harry Clarke, the company’s head of insight, said the same trend is set to continue into May.

One week on from his last report, Clarke confirmed that charter demand for U.S. domestic flights had ceased to be the world’s last remaining positive market segment and that, “unfortunately the trends have been fully negative” since March 25. “We hoped that one effect of Covid-19 would be that commercial passengers would fly private instead,” he commented. “Right now, with so few people traveling at all, that does not appear to be happening to a significant degree. I think we may see some benefit from this effect when the strictest restrictions are lifted.”

Avinode’s latest data provides a revealing picture of how demand for U.S. domestic flights next week (April 6-12) fluctuates by region. So, while year-on-year flight requests for trips within the central, mountain, northeast, southeast, and western regions of the country are between 60 to 90 percent down, requests for flights outside each region are declining by only between 8 and 44 percent.

Once again, Avinode reported that projected demand in Europe, while still down overall, shows some improvement closer to each departure date. The company said that there are still positive trends in terms of requests for intercontinental flights, with slightly higher numbers of trip requests for movements between Europe and Asia (in both directions). It also reported elevated demand for flights between North America and Asia, and also those connecting Africa with the Middle East and Europe.

On March 27, investment bank Citi reported that the market for business aircraft is “stalled” with customers getting “cold feet” and wanting to delay deals. In its view, this is partly due to concerns over perceived negative “optics” around companies buying jets at a time when they are laying off workers. Its latest report said that deals involving “real money” are continuing because they are backed by significant and non-refundable deposits but warned that transaction times are slowing due to difficulties in completing regulatory requirements.

On a brighter note, Citi’s analysts indicated that they don’t feel the fallout from Covid-19 will necessarily extend what they have characterized as business aviation’s “lost decade.” In their view, while the industry is facing a, hopefully, short-term dip in demand, it will not have to contend with such a severe over-supply problem as it faced the painfully slow recovery from the 2008/09 financial crisis. This, it claimed, is because aircraft deliveries are now around 40 percent below the 2008 peak.