The main challenge for US charter operators will continue to be aircraft availability, according to Andy Priester, chairman and CEO, Priester Aviation. He told Corporate Jet Investor availability would be determined by a variety of factors including increased demand, crew shortages and supply line issues. Which means operators will have to “adjust the expectations” of their clients in terms availability, said Priester.
“What we’re really seeing is high demand in metropolitan areas. Given they’re highly congested, it’s just a function of the higher number of people looking to use the corporate jet market,” said Priester. “Take Chicago, New York or Dallas; there’s more new entrants in those congested areas and there is not a significant amount of new charter aircraft in those regions. Therefore, servicing that demand gets that much more challenging.”
Looking at charter, the traditional US economic regions and business centres, such as New York, Chicago, Dallas and Houston, have had a higher growth rate when compared with available charter aircraft. “In other words, the supply/demand problem is worse in metropolitan regions. As a result, aircraft from secondary cities have been picking up the slack which inevitably increases repositioning costs and drives up overall prices,” said Priester.
Priester Aviation forecasts demand to moderate, but it should still remain strong throughout the remainder of 2022.
“The main challenge will continue to be aircraft availability, due to a combination of factors. In addition to the supply/demand issues and crew shortages noted, prolonged maintenance down time caused by supply chain challenges and too few qualified technicians takes its toll as well,” said Priester. “Keeping aircraft out of service longer obviously means less availability, which ultimately means operators have to adjust expectations for availability for their clients.”
Despite anticipating an overall slowdown, Priester said demand should still be ahead of where it was three years ago. The company expects a significant portion of the people who have become new users of the corporate jet market in the past 24 months to remain. “They’ve experienced the benefits of private aviation – the safety, security, flexibility and productivity – and won’t be eager to return to the airlines.”
Priester has been in business aviation for decades and has seen a host of market changes. He thinks everyone is still trying to figure out how to adjust their operating model to succeed within the current marketplace. “In reality, the past 30 years has been punctuated by reasonable consistency in product and pricing.” But Priester points out you could argue that these new products developed are not new products, rather just new packaging of an existing product.
“We see some consistency in product however we do predict ‘constant change’ in cost and terms of delivery models. This level of change and uncertainty stems from the variability of costs and aircraft availability. The companies that will be most successful are the companies that educate and manage the expectations of corporate jet users,” concluded Priester.
