Business aircraft utilization has made a recovery from its Covid-19-induced low in April that can best be described by industry watchers as a reversed square root symbol—a V-shaped recovery that plateaus before it can fully return to pre-pandemic levels. “Activity was so suppressed that it was bound to come back,” Argus International v-p of market intelligence Travis Kuhn told AIN.
That plateau was expected to be reached last month in the key North American market, with traffic returning to about 83 percent of normal levels, he said. Kuhn expects activity in the region to then level off at about 15 to 20 percent of normal for at least the next two months due to minimal business-related travel, international travel bans, and health of the overall economy.
“If the August forecast holds then we will see approximately 225,000 business aviation flights in North America for the month. That is off from the 2019 monthly average of 260,000 but it would represent a 300 percent increase from our April low of 74,771,” he added.
Much of the recovery to-date has been driven by an increase in leisure travel demand as those who can afford to fly privately seek a safer, virus-avoiding alternative to the airlines. This was reflected in recent Argus TraqPak flight data for North America, which shows the top-five states for business flying are vacation hubs: Florida, Texas, California, Colorado, and Arizona. “But leisure can’t carry the water,” Kuhn warned.
JetNet iQ managing director Rolland Vincent agreed with Kuhn’s assessment. “Recovery in flight ops is proceeding, but the flight patterns are very distinct from years before,” he said. “Florida figures prominently and ‘business’ trip purpose is limited in the rationales for flying, but I think that’s too simplistic. Folks are relocating themselves and their families to nicer/greener/bluer spots while they work remotely.”
The last 15 to 20 percent of the recovery—that predicated on a rise in business travel—will be harder to recapture because it will be more or less tied to Wall Street, according to Kuhn. The fact that New Jersey, typically a hotspot for business aircraft thanks to New York City gateway Teterboro Airport, didn’t rank among the top states in the Argus Traqpak data speaks to the current lackluster demand for business travel.
Kuhn warned that business aviation entered this environment in a global pandemic and will likely emerge in a recession, so “all bets are off on exactly what our recovery will look like.” For business aviation, a recession would be “heavily tied” to Wall Street, Kuhn said.
If the financial damage is on the milder side and international travel restrictions come to an end, he believes the industry could make up the remaining losses over the next six months, versus about another nine months for the airlines. But if the financial impact turns out to be deeper or travel restrictions remain in place, then it will take longer.
Kuhn said October will be a bellwether month, saying, “We’ll be six to seven months out from the start of this pandemic, so we’ll have a little more clarity.” October is also traditionally the busiest month for business aircraft traffic and when companies finalize plans for the coming year. The month will also likely get a boost from the run-up to the U.S. presidential election in early November, he said.
“So if organizations are reluctant to travel in October, then we could see a suppression in business aviation’s recovery,” he said. But if travel is more robust in October, that could indicate a full recovery is just around the corner, Kuhn indicated.
Outside of North America, Europe is the next region poised for recovery as lockdown-lifts accelerated in Europe last month. WingX managing director Richard Koe said that these relaxed travel bans have “led to a return in confidence is evident in the quicker recovery in flight activity.”
In the second week of July, European business aircraft activity was back up to 77 percent of normal activity, inversing its negative trend in April, according to WingX data. The busiest European countries in the first week of July were France and Germany, down by 24 percent and 10 percent year-over-year, respectively. Like the U.S., most flights in Europe are still domestic, Koe added.
Given its 14-day quarantine for all arriving passengers, the UK has unsurprisingly been the hardest hit in the European market, with flights down more than 55 percent.
“Whereas in North America the overall recovery has cooled, and although certain U.S. states are seeing growth in activity, this may well be reversed if virus outbreaks require further lockdowns,” Koe noted. “This is clearly the case in Asia where mid-month virus outbreaks have stalled recovery. Clearly we are entering a delicate phase in the recovery, but assuming restrictions continue to lift, we expect pent-up demand for flights to materialize this summer.”
Kuhn is equally optimistic. “We live in a global, connected world and business aviation will be vital to our recovery,” he concluded. “As we face down this new, unforeseen challenge, our industry will rise to the occasion and it will play a key role. Business aviation isn’t going anywhere and maybe we’ll see that 10,000 daily flight average in the not-too-distant future.”