Business travel demand changing with jet set growth
Demand for private business jet travel is expected to grow over the next decade as wealthier travelers migrate to more exclusive modes of travel, extending a trend that proliferated during the Covid-19 pandemic.
Operators in the business aviation sector are expected to take delivery of 7,400 new jets worth $238bn from 2022 to 2031, according to a global business aviation outlook released yesterday by Honeywell, a major manufacturer of aircraft components. That estimate was up by 1pc from the same 10-year forecast a year ago, reflecting low inventory for private jets and a customer survey in which 65pc of respondents anticipated increased business jet usage in 2022.
Whether because of Covid-19 concerns related to air travel or a rebounding stock market that has padded consumer pocketbooks, new customers have flocked to private jet travel firms since early in 2020, as commercial aviation counterparts struggle to regain pre-pandemic footing.
The number of private jet flights globally dropped about 23pc in 2020 compared to the year prior amid Covid-19-linked travel restrictions, according to data from the Federal Aviation Administration (FAA). While hardly a banner year for the sector, that decrease compared favorably to a 37pc year-over-year drop in traditional US airline flights on planes built to carry more than 60 passengers last year, according to data from the US Department of Transportation.
And demand for more exclusive business service has only continued to rise into 2021. This July, private business jet operators conducted 456,088 flights, the most for any month ever reported by the FAA as part of its monthly Business Jet Report, which dates back to January 2001. Year to date, private business aviation trends point to a nearly 50pc increase in flight hours in 2021 versus 2020, and roughly 5pc above pre-pandemic 2019, Honeywell said.
These dynamics have drawn the attention of Wall Street and private equity investors since the onset of Covid-19's effects on global travel. Signature Aviation, a UK-headquartered private jet services firm, was taken private in February in a $4.7bn deal led by the Bill Gates-backed Cascade fund, Blackstone and GIP. And investment firm KKR closed a deal on 7 June to purchase private jet services firm Atlantic Aviation for around $4.5bn.
Major carriers have likely taken notice, as they struggle to lure back business customers vital to their bottom lines. United Airlines projected during second quarter earnings that its business travel margins would pick up in September as customers returned to offices — expectations that the company later admitted were premature after it revised third quarter profit expectations below prior expectations on 9 September.
Delta Air Lines remained stuck at about 40pc of 2019 demand levels in its corporate travel area for much of the third quarter after concerns about the Delta variant of Covid-19 stymied growth in corporate travel, chief executive Ed Bastian said last month.
Compounding the issue, large corporations including EY and Bain have announced plans to cut corporate travel spending as a means of reducing company-wide emissions, potentially threatening major carriers' ability to ever fully recapture pre-pandemic demand. In the short-term, business air travel is expected to end 2021 down about 50pc amid a "lumpy and non-linear" recovery, Cowen analyst Helane Becker told MSNBC's Closing Bell on 11 August.
Delta Air Lines will be the first major carrier to kick off the third quarter earnings season when it reports tomorrow, with United following on 19 October.
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US job growth nearly halved in April: Update
US job growth nearly halved in April: Update
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US job growth nearly halved in April
US job growth nearly halved in April
Houston, 3 May (Argus) — The US added fewer jobs in April as the unemployment rate ticked up and average earnings growth fell, signs of gradually weakening labor market conditions. The US added 175,000 jobs in April, the Labor Department reported today, fewer than the 238,000 analysts anticipated. That compared with an upwardly revised 315,000 jobs in March and a downwardly revised 236,000 jobs in February. The unemployment rate ticked up to 3.9pc from 3.8pc. The unemployment rate has ranged from 3.7-3.9pc since August 2023, near the five-decade low of 3.4pc. The latest employment report comes after the Federal Reserve on Wednesday held its target lending rate unchanged for a sixth time and signaled it would be slower in cutting rates from two-decade highs as the labor market has remained "strong" and inflation, even while easing, is "still too high". US stocks opened more than 1pc higher today after the jobs report and the yield on the 10-year Treasury note fell to 4.47pc. Futures markets showed odds of a September rate cut rose by about 10 percentage points to about 70pc after the report. Average hourly earnings grew by 3.9pc over the 12 month period, down from 4.1pc in the period ended in March. Job gains in the 12 months through March averaged 242,000. Gains, including revisions, averaged 276,000 in the prior three-month period. Job gains occurred in health care, social services and transportation and warehousing. Health care added 56,000 jobs, in line with the gains over the prior 12 months. Transportation and warehousing added 22,000, also near the 12-month average. Retail trade added 20,000. Construction added 9,000 following 40,000 in March. Government added 8,000, slowing from an average of 55,000 in the prior 12 months. Manufacturing added 9,000 jobs after posting 4,000 jobs the prior month. Mining and logging lost 3,000 jobs. By Bob Willis Send comments and request more information at feedback@argusmedia.com Copyright © 2024. Argus Media group . All rights reserved.
Canadian rail workers vote to launch strike: Correction
Canadian rail workers vote to launch strike: Correction
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Shell's 1Q profit supported by LNG and refining
Shell's 1Q profit supported by LNG and refining
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