The private aviation industry, particularly charter operators, is ripe for consolidation, according to a video by investment banker Brooks Crankshaw, the managing director of Balmoral Advisors. “Private aviation presents a new and interesting opportunity for buyers and sellers to participate in what could be a larger consolidation of this growing industry,” he said.
Because of the Covid-19 pandemic, Crankshaw argues that private aviation has become a “popular alternative” to airline flying. Citing a variety of data from Argus, FlightAware, McKenzie, and JetNet, he said private aviation has rebounded to 85 percent of its 2019 levels, fueled by leisure fliers as opposed to business ones, as well as more first-time fliers.
However, the industry is highly fragmented, with a strong divide between major players and smaller operators, Crankshaw explained. Further, the top 25 charter operators flew nearly 550,000 hours in 2019, which he said represents only about 35 percent of the charter activity in the U.S.
“Industry players can benefit from [consolidation] multiple ways,” he said. “Smaller or midsize players can get a leg up in the competitive landscape with technological advances that they otherwise could not afford. Operators can overcome the barriers to growth [such as] finding qualified pilots or securing more aircraft. Owners can diversify by offering an expanded portfolio to include jet card, maintenance repair, or brokerage. The benefits of a buy-and-build strategy can lead to economies of scale, diversification, and horizontal or vertical integration.”