Thanks to new technology, flying in a private jet is no longer just for business titans and the super-wealthy. But in a paradox, that means aircraft manufacturers like Cessna and Bombardier Inc. are selling fewer planes.
The general aviation industry is undergoing a major shakeup as new business models attempt to match idle aircraft with passengers, many of whom now can’t afford their own plane. Membership companies, ride-sharing programs, on-demand charter providers and start-ups claiming to be the Uber of private aviation are all looking to introduce more people to the convenience of flying without the hassle of commercial airports.
“Unfortunately for airplane manufacturers, these new programs aren’t out buying a lot of new jets,” said Brian Foley, a business-aircraft consultant who spent 20 years as director of marketing for the North American jet unit of France’s Dassault Aviation SA. “They’re just trying to use existing assets out there and get more utilization out of those parked airplanes.”
Manufacturers have throttled back production of some models to adjust to weaker demand for private aircraft. New jet deliveries are expected to drop 6.4 percent this year to 645 and slip another 3.7 percent to 625 next year, according to JPMorgan Chase & Co.
Those declines contrast with an increase of more than 5 percent for flight hours for the charter market in the October-to-September period for the past three years, according to Argus International Inc.
Industry ‘Democratization’
The increase in charter activity is partly because of the new options that have opened up the market beyond super-wealthy customers, said Brad Stewart, chief executive officer of XOJet, which operates a fleet of 41 preowned aircraft for hire.
“The democratization of private aviation is a huge theme, and it’s here to stay,” he said. “That’s really taking an access point of private aviation and bringing it from the top 10 percent of the 1 percent down to the merely rich.”
XOJet has partnered with JetSmarter, a company that charges members an annual fee with no extra cost if they hitch a ride on a private plane already scheduled by another member. JetSmarter, which owns no planes, buys flight hours from XOJet and other operators, which enables it to guarantee flights for its users. The upshot is more passengers on the same number of private planes.
It costs about $12,000 to charter a small, four-seat jet from New Jersey’s Teterboro Airport to Miami Executive Airport on a weekday, according to PrivateFly, a flight-search website. By contrast, a JetSmarter member would pay $2,000 to book a seat on a business jet at a time of choice. However, there’s no charge to hitch a ride on a flight already booked by another member. A membership costs $15,000 for the first year.