Page 70 - World Airnews Magazine March 2021
P. 70
COLUMN
SMOOTH SKIES AHEAD
By Dale Buss
• Reckoning for business travel. The true nature of company
communications will be tested in a post-pandemic environ-
he pandemic created promising new contours for the ment. Tim Lynes, managing partner for the law firm Katten
Tcorporate-aviati on market that should conti nue well into Muchin Rosenman, said, “People will want to go back to the
2021. But the post-virus recovery will test whether industry dy- office and travel. That’s going to drive the market. We’re not
going to stay in a phase where everyone wants to do a Zoom
namics have changed for good - or are just one-year wrinkles. call.”
“People still have travel needs they want to meet, and they’re International travel likely will lag more than domestic, with
not comfortable with airlines,” said Elis Olsson, director of oper- experts predicting about a one-third drop in the long-term
ations for Martinair, an aircraft-management outfit in Richmond, business need for foreign trips and the stabling of most long-
Virginia in the USA. range airplanes for at least two to three years.
Business-jet usage rebounded to as much as 85 percent of 2019 • Conflicting financial considerations. “Phenomenally inexpen-
levels by late 2020 and should fully rebound by mid-2021, Hon- sive money” to finance deals will continue to drive the plane
eywell Aerospace forecasted in October. In Honeywell’s annual market, Lynes said. And if President Biden raises corporate tax
survey of business-jet operators, their five-year purchase plans rates to 28 percent from President Trump’s cut to 21 percent,
were down less than one percentage point compared with the the deduction a company can get for buying its own jet also
2019 survey. will rise. Yet the Biden administration is expected to deep-six
Here are several of the major dynamics for private aviation in 2021: immediate 100 percent depreciation of corporate-aircraft
• Expanding customer base. Virus effects on airlines have purchases that bolstered sales under Trump’s tax cuts.
brought new corporate customers to the private-aviation fold. In any event, Covid overhang could continue to drag on sales.
Post-Covid, companies may want to avoid any new Transpor- More than 95 percent of business-jet operators in the Honey-
tation Safety Administration protocols at airports that could well survey expected no change in their fleet size due to cuts
slow things down. in commercial travel. And, said Greg Cirillo, founding member
“Flying commercial, even in first class, is viewed with trepida- of HCH Legal, “Buying and selling is slower and more difficult
tion as an increasingly brutal and hazardous affair,” said Paul because inspection and repair facilities are imposing opera-
Jebely, aviation partner at Pillsbury Law. tional limits and reduced staffing.”
What’s more, said Mark Dombroff, partner at the Fox Roth- • Missing pilots. The furlough of thousands of airline pilots should
schild law firm, “It now is somewhat easier [for CEOs] to be good news for a private-aviation industry that has faced an
justify adding corporate flight departments to the board and acute shortage of pilots for years. But that’s not the case.
shareholders.” For one thing, amid contraction, airlines have prioritized keep-
Yet, such first-time buyers are why some believe used jets will ing junior pilots who can help them rebuild. So, most pilots
experience more growth than new-plane sales in 2021. shed were senior operators of larger airline jets who “were on
“The market that’s going to flourish now is pre-owned turbo- the edge of retirement anyway,” said Craig Picken, managing
props up to low-cost, pre-owned jet aircraft,” said Ken Qualls, director of NorthStar Group, an industry search firm in Wilm-
president and CEO of Flight Management Solutions in West ington, North Carolina. Another thing: Training and obtaining
Palm Beach, Florida. “type ratings” for flying a particular business jet can cost an
• Flourishing of time shares. Choices including charters, frac- operator as much as (US) $100,000, even for an experienced
tional ownership, leasing and ‘jet cards’ should fare well as de- pilot. “It’s not like switching from a Chevy Suburban to a Ford
mand for private flights grows - yet many customers hesitate Excursion,” Lynes said.
to purchase their own plane. • Rising table stakes. Jet makers are adding Covid-era sanita-
One indication: In November, Zanite Acquisition, a holding tion protocols to lush digital connectivity as key appeals. Le-
company for major fractional-share brands such as Flexjet and veraging internet bandwidth in the plane has become crucial,
Sentient Jet, launched a (US) $200-million IPO. as illustrated by communications giant Viasat’s recent promise
Even some airlines are pushing to provide “home-like performance in
into the private-aviation market. the sky” for large Gulfstream G650 and
Delta struck a pre- Covid agree- G650ER business jets.
ment to provide its 200-plus Already, cabin ionization has become
private jets to the 8,000-plus de rigueur. And Safran, a leading
members of hourly charter giant provider of business-jet interiors, just
Wheels Up. And some carriers signed a deal with 3M for hygiene
are pitching a socially distanced enhancements that include perma-
onboard experience in small nently embedding anti-microbials into
regional jets as a reasonable interior surfaces during the manufac-
alternative to flying privately. turing process. Q
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