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Ascend by Cirium, Expert view, Industry outlook

U.S. Business Jet Flight Activity on the up, but is the fleet under utilized?

November 15, 2021

Just how efficiently is the current business jet fleet being utilized – is there opportunity for further flying with existing resource?

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Daniel Hall IATA senior appraiser

By Daniel Hall, Senior valuations consultant, ISTAT appraiser, ASA senior appraiser at Ascend by Cirium

Much has been made of the increased business jet flight activity taking place through the pandemic, particularly in the USA, which is home to over 14,000 business jets, or 63% of the global fleet. Major fractional and charter operators, such as NetJets, Flexjet, Wheels Up, and VistaGlobal group have seen hours flown increase by 25 – 50% in many cases, when comparing first-half 2021 to H1 2019. We have also seen how inventory levels for sale (supply) have vastly reduced as demand has pushed operators to acquire additional lift. For somebody entering the market today, they would find it a challenge to secure an aircraft, and approaching the manufacturers they would be faced with multi year order backlogs.

But taking a step back, just how efficiently is the current fleet being utilized – is there opportunity for further flying with existing resource?

We have looked at FAA flight activity data and compared with Cirium Fleets Analyzer data on the US operated business jet fleet. Like all sectors, utilization was impacted with the onset of the COVID-19 pandemic; departures plummeted and did not recover to pre-pandemic levels until Q1 2021. But perhaps what is most interesting is how US departures hit approximately 220,000 back in October 2007 and never returned to that point following the global financial crisis (GFC) until May 2021, when they were matched, and then went on to further grow to 230 – 238,000 departures per month during the June – September period (peaking in the month of July).

US Business Jet Flight Activity
Source: FAA ETMSC, Cirium Fleets Analyzer. Number of monthly departures per aircraft is determined from the FAA ETMSC departures data and the end-of-month US fleet size of this type from Cirium Fleets Analyzer.

This is great news, however, the US based fleet has grown from 10,000 to over 14,000 which means that on a per aircraft basis we fell from 20 – 21 departures per month (on average) pre-GFC, to 15 – 16 during 2019 – 2020. This year has seen departures per aircraft peak at 17, but still stuck at the average of 16 for the entire Q1 – Q3 period. The below chart illustrates:

The simple conclusion is that the US business jet fleet remains under-utilised; in effect, there is excess capacity / resource which is not being fully used. If the entire US business jet fleet flew at the average of 20.5 monthly departures, flight activity could grow to 290,000 monthly departures, an increase by over 20%.

To get to this point we would need more of the privately owned fleet to go under management and provide supplemental lift for charter operators, because it is likely that at this point the charter and fractional operated fleet is being used to its maximum ability.

This may be easier said than done, as the industry starts to grapple with challenges such as pilot and AMP shortages. These findings could also mean that the privately owned fleet itself is in effect not being efficiently used – i.e. those owners may be better off with a membership / charter / fractional solution because their individual utilization of the asset is not at its most effective.

The average age of the U.S. fleet has increased from 14.5 in the early 2000’s to over 17 years today. We could argue that more of the fleet needs to retire, but due to a lack of part-out value retirements commonly happen at age 35+ once the aircraft is economically obsolete from a technology or maintenance standpoint. We don’t foresee change to this.  

Furthermore, the growth in private aviation usage could have implications for commercial airlines. We are already hearing remarks about high-yield business travellers moving away from airlines to private. The industry has gained a lot of new users, and we increasingly feel many of them will remain. This could be a major revenue threat, and is worth keeping an eye on.

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