The private aviation sector experienced unparalleled demand last year due the unpredicted influence of a global pandemic. Whilst many industries are still suffering negative repercussions, research states the private jet industry had fully recovered by August 2020.
Industry insights demonstrate the sector is capturing a wider market share with new growth stemming from a further diversification in clients. Market research suggests that this new trend is only expected to rise in 2021 with a growing number of clients changing the way they travel, has this temporarily re-structured the industry or will it reshape its future outlook?
The rise in private travel has derived from a new client perspective that underpins safety as the essential priority. The essence of service in private aviation is delivering clients with a truly memorable and seamless experience that encompasses the epitome of luxury. Private aviation brands possess a distinct brand image that is built upon strong core values expressing trust, quality, reliability and security. Loyal clients in the sector typically expect an exclusive, bespoke service that offers personalisation in state of the art products which revolve around comfort and refinement in every aspect.
Whilst clients primarily opt for private aviation to expect such specialized services, the driver behind the recent spike in growth is the emphasis clients have placed on higher safety measures. The level of luxury private jets have to offer translates into the quality of safety they can provide, the consistent maintenance of supreme sanitation and cleanliness of the aircraft and an exclusive, spacious environment that offers enhanced distancing measures. The independent nature of service is segregated which brings unique benefits such as access to private terminals, private parking or chauffeur services.
With safety placed at the forefront of client’s minds, private jet companies have been forced to reassess their current branding message to ensure that clients are aware that these new, important measures are being enforced and carried out to the highest of standards. Brands that realign their approach are more likely to diversify their client base and create relationships with enhanced trust which is a key factor when forming brand loyalty.
The sector has experienced an unusually high influx of first-time flyers which suggests that clients are adopting a vigilant approach that prioritises the enhanced measures and segregation private travel has to offer. Clients identified as typically travelling in first or business class in a commercial aircraft are transitioning to private air travel to avoid crowded airports and constricted, communal space. Insights from private jet data from the European Business Aviation Association (EBAA) state there is a larger market share of clients utilising private aviation for leisure with a significant peak in the summer months. The consistent rise in families travelling for leisure in private aviation has created a new market, it indicates that as global travel has regained momentum clients’ behaviours have responded to the new circumstances which have acted as a catalyst in reshaping the industry.
Corporate jet use has been just as active and expected to rise in 2021 as its set to create a 5-10% increase in sector growth identified by Forbes. Corporate shuttles which carry a larger number of passengers are ideal solutions for companies transporting groups of employees for business trips. Corporate clients are not only prioritising private jets for business but for leisure trips too with an increase in demand of families with young children and pets. Remote working from second homes in holiday resort locations is another trend which may indicate new demand entering the industry. The unpredictable global environment is affecting countries across the globe differently which has proposed new challenges for commercial airlines, forcing many to reduce or cancel flights in response to factors out of their control. The reliability of service private jet companies are providing clients is placing them at a competitive advantage, the independent service is providing increased dependability which may be a key reason why the sector is experiencing an increased diversification in clients.
Another key trend shaping the private aviation sector is a rise in private jet ownership. There was a 52% increase in second quarter sales in 2020 reported by the International Aircraft Dealers Association. Whilst Global Jet Capital predicts by 2025 there will be $11.3 billion new and used private jet sales which results in a 7.4% annual growth rate. High Net Worth Individuals and Corporates capitalised on the decrease in aircraft value in 2020 which surged the private jet re-sale market. The sector has also experienced a high inflow of ‘concept buyers’ which are people purchasing an aircraft for the first time, plus buyers exploring various purchasing options such as fractional ownership of an aircraft.
Private jet charter companies have capitalised on this new gap in the market by lowering their prices and releasing special offers to attract existing clients and entice new clients. Market research also demonstrates there has been an increase use in JetCard programmes in the private aviation industry. The program is essentially a loyalty scheme that provides clients with a higher level of personalisation, JetCards have various aircraft categories and fixed hourly rates across preferred cabin sizes to choose from which offers ultimate flexibility to suit individual client requirements. The program has many unique member benefits such as guaranteed availability in 24 hours for last minute flights, free cancellation and prepaid flying hours that never expire.
The sector operating in an unprecented landscape has forged new trends in the sector which have been recognised as shaping the future for private jet travel. The realignment of client expectations could be an irreversible shift with clients rethinking the way they travel for many years to come. The sharp increase in private jet ownership demonstrates this and determines that many clients will be looking to register their aircraft in an attractive location. An ideal jurisdiction will hold a secure regulatory body and fiscal structure which proposes clients with many efficient solutions. Clients typically look for unique, tailored ownership structures or some that entail a variety of benefits such as multi-jurisdictional EU VAT registrations. The Isle of Man is recognised as a leading jurisdiction in the sector and holds a prestigious regulatory body, the Isle of Man Aircraft Registry.
Here at Affinity Group, our heritage in the aviation sector dates back to 2004 when registering one of the very first aircrafts on the Isle of Man. We hold the professional expertise to implement a variety of tax-efficient ownership structures. Our bespoke approach involves comprehensive VAT planning to suit personal client requirements. We assist with a diverse range of services to support our clients with the entire process of registering an aircraft. We handle importations and exportations in various jurisdictions and recently have experienced an influx of new business in setting up Malta AOC certificates.
Eliza Rayner is our Group Strategy Analyst at Affinity Group. You can read more about her role at Affinity Group and how to contact her via our Meet the Team page.