Flightradar24 Note: In the latest in a series of analyses of Flightradar24 data, ICF examines business aviation in the US to see how the world’s largest market has been impacted by COVID-19.
Analyzing business aviation offers insights into a unique market. Although commanding a high premium over commercial flights, its core customer segments—corporations and high net worth individuals—are less price sensitive than airline customers and see business aviation as a necessity. While discretionary traffic such as leisure—a mainstay of commercial airlines—is often quick to disappear in a crisis, one would expect a continued need for rapid and flexible transport that only business aviation can provide. In this analysis, we investigate the impact from COVID-19 on the US business aviation market, which accounts for over 60% of global activity.
Since the travel restrictions and shelter-in-place orders started in the second half of March, business aviation activity dropped precipitously, declining ahead of and faster than commercial flights. By the end of the month, flights stabilized at about 20-23% of prior year levels—about 5% lower than commercial aviation and far below the demand for Cargo aviation. However, we must bear in mind that commercial flight activity is not representative of demand, as CARES Act conditions require airlines continue operating partial schedules. The reality is flights in the US are operating with very light loads, with the Transportation Security Administration (TSA) reporting that daily passenger volumes are less than 6% of prior year numbers. In contrast, the business aviation flights that are operating during this crisis are most certainly transporting passengers, suggesting that this segment has shown more resilience than commercial aviation to the pandemic. We can only speculate as to the reasons for this resilience, but we believe it has to do both with the role that business aviation plays in supporting the normal course of business of large corporations, many of which are continuing to function during the crisis, and as charters for aid, supplies or repatriations.
Now let us take a closer look at the pandemic’s impact on business aviation in closer detail. First, we can see that international activity has fallen more than domestic, with current flight activity at only 11% of prior year levels. This is easily explained by the border closures restricting international flights.
Then we look at the change in business aviation activity by aircraft category. All size classes experienced similar declines from prior year, although it is the smaller categories of very light and light jets (e.g., Phenom 100, Citation CJ4, etc.) that have held up stronger at about 30% of prior year activity, while large jets (e.g., G650, Falcon 2000, etc.) have suffered the sharpest decline at about 15% of prior year activity. This may be explained by limitations placed on international flying, which limits the utility of larger business jets.
Lastly, we examine changes by region, focusing on the top U.S. business aviation markets. This data also shows that activity dropped universally throughout the country soon after March 15, although New York and Florida lagged. One might infer that Florida’s lag stems from the state’s late decision to institute a shelter-in-place order (on April 4), but Georgia’s order also came into effect that day and yet the state’s business aviation activity decreased in line with states that were early to impose quarantines.
In summary, we can see that business aviation activity has also been severely affected by COVID-19, although the present level of activity suggests that there is still a base level of demand for such flights. It is too soon to speak of a recovery, but we will continue to monitor the evolution of business jet flights as shelter-in-place restrictions are progressively relaxed.
As with commercial flights, we expect domestic flights to recover before international. Furthermore, with the growing penetration of “asset-light” chartering models (e.g., jet cards) that have increased the addressable market, we may even see some customers trade airline first class cabins for private flights to avoid large crowds at airports and aboard commercial flights.
Importantly, because this pandemic has created a unique situation in which US commercial passenger flights may not accurately reflect underlying demand (for the reasons previously mentioned, existing commercial flights should fill up before additional flights are introduced), we may be able to detect a traffic recovery sooner in the business aviation segment. Stay tuned for more.
If you’d like to discuss this analysis or further analysis of specific areas, please contact us at Carlos.Ozores@icf.com, Alvaro.Ponte@icf.com and Alastair.Blanshard@icf.com
To learn more about using Flightradar24 data in your work, please contact Ian Petchenik.