Nine days from the World Health Organization declaring the Covid-19 outbreak to be a pandemic, the global aviation industry is engaged in an exhausting day-to-day scramble to assess the impact of the crisis and how it can best react to it. It seems as much as companies and their employees can do to deal with the short-term ramifications, and while these, for the most part, seem unremittingly negative—especially for the airline sector—business aviation seems to be trying to focus on the glimpses of opportunity.
Over the past week, some charter operators appear to have been kept busy carrying people needing to get home in the wake of rapidly expanded travel restrictions. Among corporate flight departments, overall flight activity appears to be significantly reduced as companies severely curtail or entirely cancel business travel—either by choice or under government orders.
Given the rapidly diminishing airline schedules worldwide, the Covid-19 crisis still has the potential for burnishing business aviation’s value proposition. But, more immediately, it seems that operators and the supply chain that supports them are faced with significant challenges to maintain service.
The U.S. ban on the vast majority of citizens of the European Union and the UK has inevitably impinged on west-bound traffic across the Atlantic. This restriction, which also applies to citizens of China and Iran, remains in effect indefinitely.
From March 18, the European Union introduced a 30-day exclusion for most non-citizens. This severely restricts inbound traffic to the 27 member states. Russia is now barring foreign visitors at least until May 1, as part of a rapidly expanding border closures that now also includes Australia and New Zealand. From midnight on March 22, India is suspending all international flights to and from its airports.
At the same time, the U.S. State Department yesterday issued its highest level of warning to citizens to avoid all international travel, expressly warning those overseas to return home or accept having to stay overseas for an indefinite period. Many countries worldwide have issued similar warnings to its citizens, advising against all non-essential travel, while not necessarily defining what might be considered essential travel.
Similarly, as of early Friday, the U.S. and Canadian governments had yet to define how the midnight closure of their shared border would be applied in practice. The U.S. border with Mexico is also set to close.
The state of California on March 19 issued lockdown orders to 40 million residents. However, for now, the prospect of a nationwide travel ban in the U.S. seems not to be an immediate prospect.
Aviation data analyst WingX reported European business aviation flight activity down by 6.9 percent during the first 17 days of March. “There have been big fluctuations day-to-day and a trend towards severe overall decline during the last few days,” the Germany-based company said in its Market Tracker report published on March 19.
According to WingX, France has so far seen the largest decline with a 12 percent reduction in flights and Germany seeing a dip of 4 percent. By contrast, it reported that departures in Spain, the UK, and Sweden were all higher compared with the same period in 2019. Paris Le Bourget saw the biggest decline for an airport with an 11 percent dip in traffic, while in the London area Farnborough, Luton, and Biggin Hill were all described as “well up.”
The data showed significant reductions in large jet flying. On the other hand, it appeared that all other categories of business aircraft have been kept fairly busy in Europe so far. WingX also said that aircraft management operations have seen big reductions in activity, while charter operators have enjoyed an increase and private flight departments have also stayed busy during the early part of this month.
WingX managing director Richard Koe confirmed the perception that prospects for business aviation could be about to get markedly worse before they resume any longer-term rebound. “Business aviation is clearly impacted by the Coronavirus, with accelerating declines in the last few days belying the overall seven percent drop month-to-date,” he commented. “We expect flights to dry up next week once restrictions are stricter and the repatriation rush is done. Looking forward, the economic impact of the Coronavirus, already well evident in stock markets and bond yields, is bound to strike the business aviation industry relatively hard, particularly when expenditure has been discretionary.”
In a commentary published on March 19, charter marketplace Avinode said, restrictions permitting, there is still strong demand for flights “for the next week or so.” The company confirmed that demand—measured by requests made for flights through its system—started to surge at the start of March and remains significantly higher than in the same period of 2019.
Avinode’s latest data shows the projected demand flattening in April and on track to be lower than that seen last April. Requests for May are currently around 16 percent down on the same period in 2019, with the outlook for June and July uncertain (as might be expected even in more normal times).
“Currently, demand reductions are primarily driven by travel restrictions, so demand could bounce back quickly when they are lifted,” commented Harry Clarke, Avinode’s head of insight. “Whether it does or not depends on the state of the global economy by that point.”
Despite the European Union restrictions introduced on March 18, requests for flights within Europe through March 22 were still ahead of last year. However, trips requested for the week beginning on March 23 are 20 percent down on 2019.
“Right now, the status for U.S.-domestic demand is less immediately alarming,” said Clarke. Avinode data shows flight requests at levels comparable with 2019 demand curves, although the company said the latest projections suggest that demand “may struggle to keep pace in the coming days.”
In Clarke’s view, if the U.S. is not subject to domestic travel bans, charter operators will be well placed to serve travelers concerned about commercial airline service. “However, the data does not suggest that this stream of demand will amount to a boom for private aviation in the U.S. Overall demand is still likely to suffer,” he cautioned.
Meanwhile, Avinode is seeing big swings in projected demand for intercontinental charter flights. The company explained that for much of the first half of March, demand was largely driven by people seeking repatriation flights across the Atlantic, but that more recently flight requests have been more focused on trips into Asia and the Middle East from Europe and the U.S. Its data shows a continuing upward trend into April.
Clarke’s analysis of the market for intercontinental flights seemed to anticipate the possibility that Asia, which has borne the brunt of the early stages of the Covid-19 pandemic may be ahead of the curve for recovery. “As different regions of the world experience the peak of the Covid-19 curve at different times, global repatriation and reopening [of countries] will continue and shift focus,” said Clarke. “The intercontinental market could prove more resilient than other parts of our industry.”
U.S. charter operator JetSuite reported demand as steady for ad hoc flights while acknowledging variations in uptake for its sister company JSX’s scheduled charter service. On March 16, the company suspended some service on JSX’s routes in the Pacific Northwest but said that other markets are performing well.
Social media channels populated by business aviation flight crew continue to be full of updates from the frontlines. There were several confirmations that corporate flight department activity is at a low ebb, with some resulting layoffs. On the other hand, charter operator flight crew reported continued activity and more than one company still appeared to be hiring. Other comments indicated that the situation at flight schools is extremely varied, with some shut down but others appearing to be almost fully operational for now.
This week Europe-based charter and management group Luxaviation offered to let smaller operators tap into its procurement system to get more competitive pricing on goods and services. What it calls a “solidarity initiative” is due to run for three months.
In response to the new EU border restrictions, the European Business Aviation Association appealed to governments for relief measures to support a sector that it pointed out employs more than 370,000 people in Europe, in particular appealing for medical flights to be allowed to continue. “It is still too early to fully evaluate the extent of the crisis’s impact on the business aviation sector,” said EBAA secretary-general Athar Husain Khan. “But we have been receiving reports of operators’ aircraft grounded, airport closures, and staff being put on leave across Europe due to the rapidly evolving crisis and travel restrictions.”
EBAA has established a special resource center to provide business aviation companies with information and support during the Covid-19 crisis. Further information is also available from NBAA.