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Is the market for new business jets really on the upswing?

by Allen Howell 11. April 2011 15:11
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Molly McMillin of the Wichita Eagle recently reported  that the market for new business jets “appears poised for a new growth spurt, although it’s coming from a severely depressed base”.

 

She is not kidding about the severely depressed base. Wichita has experienced something closer to the great depression than a severe recession. Who could have predicted in mid 2008 what has happened to the business jet market in the past two and a half years. Production of new aircraft has fallen though the floor and hit the basement. In the mean time competition from down south in Brazil is not going to go away.

 

Will this upturn continue up if jet fuel goes up another dollar a gallon this year? What happens if we get into an inflationary cycle that slows the economy down?  And what will happen to the economy when the states and the feds realize they cant keep spending like they have in the past two years. Most honest economists will say that curtailing government spending in a serious way will at least temporarily slow the economy down, especially when the money being spent is borrowed and will not come back to the private sector.

 

I don’t get the same warm fuzzy these analysts get about the upturn in business jet demand in the US.

Our industry has been operating on the same old business models for a couple decades now.

 

The last real innovation in business aviation was the fractional concept pioneered by NetJets and successfully copied by others. That concept brought in a whole new market of business jet travelers (fractional owners) because it disaggregated the costs of owning a jet. It was brilliant and it kept the manufacturers and others in the supply chain alive throughout the 2000’s. Fractional operations have a permanent place in business aviation but they won’t save us in the next 10 years.

 

If we as an industry want to grow the market, I would suggest that we can’t count on the US economy, or quantitative easing monetary policy, or bonus depreciation to do it for us.

 

We have to innovate and come up with new ways to reach the market of travelers with what we sell.  Travelers really want what private aviation has to offer which is hassle free, time saving, user friendly,  and socially productive travel. The limiting factor has always been price, especially when compared against airline ticket prices. 

 

The airline experience has not improved in the last year. In some ways it has deteriorated, as load factors have climbed to all time highs causing most flights to be packed. My  three recent experiences in the airline system have all involved delays, lost baggage, rerouting of flights, and full cramped flights. As you walk through airline terminals you can see the fatigue and frustration on the faces of the road warriors.    

 

Can Social Technology be a part of the next innovative breakthrough in how people buy private aviation? I would suggest that it can by facilitating people to aggregate around their travel intentions and buy flights as a group but pay by the seat, thus breaking through the price barrier that has limited our ability to reach a larger market.

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