Private jet rental, what is the impact of the pandemic?

The effects of COVID-19 on private jet rental.

The restrictions on national and international circulation currently in force in practically all countries of the planet are severe. In France, for example, after the lockdown, from May 11 on, travel by individuals will be still limited to 100 km, except in cases of extreme emergency. Across Europe, the percentage of planes grounded is close to 90%. This is a little less serious for private flights, which can be rented for emergency services, transportation of politicians, ambulances, footballers, business leaders and executives. I have reported here a survey by Avinode, a kind of digital market place serving private jet charter companies and operators of private jet fleets.

COVID-19 survey of Avinode members

In total, we interviewed 7,000 Avinode and Schedaero users. We listened to their suggestions on what help we could offer them, as well as their thoughts on what COVID-19 will mean for their business. Thanks to everyone who participated, we now have a clear idea of ​​the challenges ahead, how we can help and an action plan for the future.

Broker predictions - image Avinode
Broker predictions – image Avinode courtesy

Thoughts on private jet charter

We asked what impact COVID-19 will have on the demand for air charter and their activities in the spring, summer and fall. Responses show that brokers and traders expect lower demand than usual in the spring (around 90% reduction for both sides), which will have a significant impact on business in the spring (around 60% reduction for both sides).

However, the forecast for the fall is much more optimistic, the most common response being that COVID-19 will have “no impact on business” (35 to 40% for both parties). When asked about demand in the fall, a majority of both sides (65-70%) think it will return to normal levels or higher than usual.

Operators predictions - image Avinode
Operators predictions – image Avinode courtesy

My take: these forecasts are too pessimistic

Why any forecast can prove wrong and you have to navigate on sight

The demand for private jet rentals for the coming months depends on the epidemiological situation of a virus, Covid-19, of which we know very little. Worse, given the urgency of the situation, on the one hand the scientists hasten to communicate any positive result concerning the care and the vaccines, in order to sensitize the public authorities and obtain as quickly as possible, if necessary, the commercialization of their discoveries. On the other hand, the media is trying to get attention and gain audience with anything that represents hope, or danger, for the masses. For example, during this week, some French media announced with some enthusiasm that tocilizumab, a medical substance marketed by Roche with the name of Actemra, had obtained considerable improvements in the health of 77 out of 100 seriously ill COVID-19 patients. This news is quite credible, however it did not move financial markets, as one would have expected, given the enthusiasm of some journalists. In fact, even though the epidemiological study was done this week, Actemra has been used in intensive care rooms for several weeks, with positive, albeit not miraculous, effects.

Negativity exaggerated on purpose

When I hear Boeing CEO say that it will take at least three years for the aircraft manufacturer to return to pre-pandemic order levels, I suspect that he is exaggerating the problems of his business to obtain more funding from his government, and he is not alone. Besides, the CEO of Airbus is much less pessimistic in his forecasts.

Positive news that could be game-changing

Until yesterday, it was feared that patients with coronaviruses would not develop immunity. This could lead to renewed sickness, as has been verified in approximately 10% of cases. This would imply that it is impossible to develop the so-called herd immunity, thanks to which viruses stop its spread, as soon as more than 60% of the population has become immune. The implications for air traffic in this case would be much more negative and longer lasting, the only hope of completely stopping the virus being the discovery of a vaccine. Well no, today some media is publishing a Chinese study that says all coronavirus patients would develop immunity. The conditional is required.

Conclusion: any aviation expert’s forecast is useful, but fleeting.

Since every day something new is discovered about the coronavirus, any forecast may turn out to be too optimistic, or too pessimistic, in the space of a few days.