Air Charter Association Sees Charter Taking The Place Of
Individual Corporate Jets
The chairman of the Air Charter Association of North America
recently told the NBAA that, in many ways, business conditions are
especially ripe for a turnaround in air charter. Davic McCown says
that with economy is growing, business travel is increasing. And
for those who use business aircraft, or plan to, air charter offers
a cost-effective alternative to outright aircraft ownership;
something that is especially attractive to budget-minded business
travelers and companies during these cost-conscious times
“You don’t have the capital outlay; you don’t
have the depreciation risks, the outright cost of ownership,”
McCown, a senior consultant to Air Partner said. “As long as
that’s how people are thinking about things, I think that
will continue to benefit the air charter industry.”
McCown says that explains, in part, the improvement the air
charter industry is seeing as the economy slowly begins to improve.
For the most part, the industry’s shift into positive growth
is mirroring the trend seen in business aviation overall.
Incremental industry growth began last year, and McCown expects to
see the trend continue well into 2012 and beyond, provided the
overall economy continues to expand.
“I think it’s safe to say that 2010 saw an
improvement from 2009. [The fourth quarter of] 2010 has turned out
to be strong for many suppliers and is carrying over into Q1
2011,” McCown said. “However, I would not characterize
it as a robust turnaround. It will very much mirror the state of
the broader economy, which is pointed in the right direction, but
looking backwards has been somewhat anemic in its
improvement.”
McCown indicated that, while business is improving, it’s
coming in many cases with a squeeze on profit margins as business
travelers shop for the best prices. While many air charter
operators and brokers are countering by offering more services,
such as one-way ticket pricing, McCown said many are forced to be
more competitive in pricing.
The growing popularity of VLJs also is helping to keep air
charter pricing in check, although McCown said their impact on the
market at this point has been modest.
“I think they will have a positive impact, but I
can’t say at this point that it’s been
significant,” he said. “Again going back to the theme
of value…when a light jet or a mid jet can do the job, that
will be the aircraft of choice.”
As with business aviation overall, air charter has a long way to
go to recuperate to the levels of three or four years ago. The last
two years saw quite a shakeout in the industry, with several
players exiting the market. For those who are left, even sluggish
market growth offers a chance to pick up market share.
“I think in some ways it’s healthy to have a
shakeout,” said Scott Bickford, CEO of Air Planning.
“Some of the more marginal brokers and operators are
gone.”
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