Corporate Jets Experiences Increased Flight Demand
The second quarter of 2011 ushered in higher than expected charter demand for Corporate Jets. This was a welcomed occurrence after a slower than usual first quarter. This second quarter surge is an unusual one, but hopefully a sign of a turn around in the air charter industry.
With fresh budgets and New Year’s resolutions in hand, January is typically the busiest month in the charter industry while April, on the other hand, is the slowest thanks to the April 15th tax return deadline. These two months are enough to set the tone of the quarter and statistics back this up.
After a disappointing first quarter, analysts and operators were expecting the worst, but they were all pleasantly surprised. Beginning in April, the charter industry started to see an increase in activity. There was a 20% increase in the large-cabin segment with the total demand increasing over 12%. “The increase in large-cabin aircraft charter was dramatic. We averaged 55 hours of charter per month on our Gulfstream IV for the second quarter,” stated Richard Hodkinson.
It is unclear what exactly sparked this uptick of charter activity. Some think the stigma that the private aviation industry had brought on by congress in the auto industry hearings, finally started to fade. The Obama administration seemed to get over the problem they had with Private Aviation, when Congress extended accelerated depreciation schedules which encouraged corporations to invest in large equipment (e.g., corporate aircraft) by reducing their tax burden on new purchases. However, President Obama has been quite vocal recently about reducing incentives for businesses to invest in aircraft. “It’s unfortunate because private aircraft manufacturing and servicing provides huge employment and export opportunities for the United States.” said Hodkinson.
The President’s comments will no doubt affect our industry in a negative way and help to slow the charter demand in the third quarter, which tends to be a bit slower anyway. With that said, July has turned out to be fairly good at Corporate Jets and we have reason to believe August will be as well.
If history repeats itself, which it so often does, the charter industry as a whole should see an increase of activity starting in September as kids head back to school and businesses make the push to increase their forth quarter numbers. However, a lot will depend on the US and world economy, as well as the current debt ceiling negotiations. For now, Private Aviation will just have to wait and see what other outside influences surface to shine a light good or bad on the industry.
