Author Archives: Alexandra

  1. Autumn’s demand and pricing trends

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    Internal demand within Europe

    The charts below are rolling 14-day indexes of demand for trips requested through the Avinode marketplace within the 4 regions specified. Each chart shows relative demand within the region for 2020 in green, 2019 in dark grey and 2018 in light grey, with day of year along the horizontal axis. Being indexes, the exact figures on the vertical axis are not relevant, although it is worth noting that the axes do start at zero.

    Internal demand within Europe (Green = 2020, Dark grey = 2019, Light grey = 2018)

    In Europe, seasonal leisure demand was clearly pushed later into the summer. Trip requests fell sharply when the holidays ended, and demand is now more consistent with previous years. Of the major country markets, Germany and Italy have the most positive year-over-year outlooks for the next few weeks.

    Demand for travel within Europe looks to be most challenging from mid-November, before recovering as we approach Christmas. Some of that leisure demand looks to be heading Transatlantic. Demand curves to the Caribbean from Europe (and particularly the UK) are approximately 50% ahead of their last year positions for travel from mid-November till mid-December. Barbados, the Bahamas and Saint Vincent are the most requested destinations.

    Internal demand within Russia & CIS (Green = 2020, Dark grey = 2019, Light grey = 2018)

    From Russia to Europe

    We observed a similar late summer boost from Russia to Europe. Turkey was the biggest beneficiary year-over-year from Russia and demand curves for this country pair are still ahead of last year over the next four weeks.

    The biggest upcoming peak for the Russian market is to the UAE around the 24th October, with over 200% more requested trips on this country pair than at the equivalent point last year. The Maldives have an arrival spike the following weekend. Within Russia & CIS, demand has been notably higher during August and September than previous years, although no match for the 2018 World Cup spike. 

    Domestic demand within the United States (Green = 2020, Dark grey = 2019, Light grey = 2018)

    Domestic demand within the US

    In the United States, the initial spring peak in demand was matched in intensity by an early summer surge. Since this time, demand passing through Avinode has slowly decreased, but remains at a substantially higher level than in prior years. Many in the industry have commented on a shift in the passenger make up to first time private flyers, travelling for leisure, rather than businesspeople. New flyers’ enquiries have probably contributed to this increase in demand through Avinode. 

    Looking forward, demand curves for US domestic travel are slightly ahead of last year’s level for the next 5 weeks. The markets driving this behaviour are the East Coast corridor to and from Florida, as well as a notable year-over-year increase in travel to remoter states. Trip requests for departures to and from Montana, Idaho and Hawaii have all increased by over 100%, with Wyoming and Colorado not far behind. Demand to states in the Mountain time zone is highest from the Northeast US – but is elevated from all corners of the country. Demand for shorter flights is still down. 

    Internationally, there are positive trends for travel to Latin America from the US for the next six weeks, mostly driven by trip requests to Mexico. Other popular destinations are Costa Rica, Sint Maarten and the Turks & Caicos islands. Unfortunately, the major US – Bahamas market is still seeing fewer trip requests than last year.

    Internal demand within the Middle East (Green = 2020, Dark grey = 2019, Light grey = 2018)

    Internal demand within the Middle East

    Trip requests through Avinode for travel within the Middle East has been much higher than previous years, as shown in the chart. Increased charter demand from the UAE has driven this, particularly to Saudi Arabia. Looking forward, there are major demand peaks forming from Dubai around the 1st and 8th November for travel to Russia, matching the flow in the other direction a week earlier. A smaller demand peak to the UK is appearing around the 31st October.

    Avinode pricing index for intra-European trips

    Intra-European pricing index

    Charter rates have adjusted to reflect the shifting demand environment. The above chart is a rolling 14-day price index based on quotes in the Avinode marketplace, normalised to 1st January 2018, for travel within Europe. There was a steep and sudden fall in hourly rates during the spring which recovered somewhat due to returning demand in August. Rates have recently settled slightly lower than that level.  Entry level jets have beaten the trend, with hourly rates now similar to pre-COVID levels. 

    Avinode pricing index for US domestic trips

    US domestic pricing index

    In the United States, the drop in hourly rates during the immediate aftermath of travel restrictions was greater – although this was heavily influenced by a very significant decrease of 29% in hourly rates for super midsize jets. They have now recovered to only 1% below pre-COVID rates, outperforming most other categories. 

    The summer taught us that leisure demand increased quickly when travel restrictions were lifted. The return of business travel looks to be a more gradual process. It remains very challenging to predict what patterns will emerge as we head towards winter in the Northern Hemisphere.

    Harry Clarke,
    Head of Insight, Avinode Group

  2. When variation is the trend: Key takeaways from summer 2020

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    “Leisureav” the first to recover

    For starters, the pandemic has taken much of the “business” out of business aviation, with an abrupt stop to in-person meetings. Mid-week flights dropped off sharply in April, and have been very slow to recover even as lockdowns have lifted. 

    Armando says of customers in Florida, “Previously, when people had to be somewhere for a meeting, they would have no option but to fly on a specific date and time. With things the way they are now, everybody is taking things slower.” 

    The days that have recovered best are the days that are typically leisure travel — the weekends. Tuesdays and Wednesdays are still lagging behind. This is unlikely to reach previous levels any time soon, with workforces successfully making the transition to remote work structures and staying like that — potentially for years to come. In its stead, we’re seeing leisure travel and other forms of “optional” travel. This includes getting a vacation in, going to see family, or moving from one home to a second home. 


    Florida’s spike 

    These optional and semi-optional reasons for travel can explain the spike in traffic between Florida and the northeast United States.

    Reflecting on trends in the Avinode system, Harry Clarke (Head of Insight & Analytics at Avinode) says, “We’ve seen a lot of demand from Florida. There were a lot of people in the Northeast who went down to Florida, and there are a lot trying to get back up north. It’s hard to know if the normal ‘popping down for the weekend’ is back or if people are still staying put but just trying to find what the prices are to return.”

    This graph shows this summer’s trips per week in the southeast US, 2020 (blue) compared to 2019 (red). Despite the uncertainty caused by the coronavirus, demand in this part of the US increased.

    The increase in demand can also be a reaction to the spread of the coronavirus. As Armando surmises, “We have a high number of cases down here in Florida. Maybe because of that, people just want to get out. But it could also be that people have vacation places down here and big properties with a lot more space to quarantine than other places like New York.” 

    It is likely that demand from Florida is spiking for all of these reasons, not just one of them. It’s a complex landscape, with varying motivations to fly. But one thing is clear: if someone is going to get on an airplane, it’s much safer and more convenient to charter a flight. Which has led to new interested parties.


    The hunt for empty legs 

    Armando reports, “We’ve been getting a lot of interest from people who have never flown private before. The consequence is that people think that money-wise it’s just going to be twice or three times as expensive as an airline ticket. So, when they see the actual price they say: ‘Wow, this expensive.’” 

    The sticker shock has led many brokers to hunt for empty legs for these new clients. Since their travel is optional, it helps that they have more generous time frames. 

    “I’ve been seeing a lot more flexibility in the time frames that the customers can fly. Now they will give us a range of days. When they are flexible, that gives us more time for a margin and to find an empty leg,” says Armando. In short: more time to find them a good deal. 


    How the changes show up for us 

    Over this 2020 summer, we’ve welcomed a sizable increase in Avinode members. We can attribute this to the need to present more charter options to a new, price-sensitive clientele. In fact, in July we saw a 21% increase in requests compared to last year. While these are just requests and don’t necessarily reflect flights booked, it does point to expanded interest in private charter. 

    As Harry says, “I think if there are a lot of new customers coming into the market — new end clients — they’re going to search more and try out more options. For their existing customers, brokers are likely to have a set of operators they typically use. Whereas for a brand new customer, maybe there’s less certainty and they want to provide a range of options.”


    How does the fall look? 

    The prospects for the fall vary between the US and Europe, with things looking slightly better for the US. Brokers and operators in the US enjoy a longer window to make a recovery, as travel tends to continue quite steadily into the autumn and winter. In contrast, Europe-based outfits typically have the tail end of summer to cash in for the whole year. August saw a bump in travel, with European vacation-goers trying to squeeze in a bit of beach time. 

    Countries with a large amount of domestic travel stand to do better going into the fall. This was evidenced in Russia throughout August, where a relaxation in restrictions gave way to a spike in travel second only to that seen for the 2018 FIFA World Cup. Here again the singular market of the US will be easier to navigate than in Europe, where travelers need to gauge more complex restrictions that vary from country to country. 

    Lastly, everything really depends on the spread of COVID-19 and resulting government restrictions. Colder weather, with more people on public transportation and spending time in indoor spaces, could see lockdowns return and travel drag to a halt. 


    A tough year

    Despite the promising entrance of some new customers into the bizav space, there is no denying: this was an incredibly tough year for bizav. In the short term, these new customers will not be able to offset the drop in business travel. But an opportunity is an opportunity, and it will be interesting to see what this customer conversion rate is in the coming months.  

  3. Webinar: The top 5 pain points of scheduling

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    About the webinar

    In this webinar, Sandro Chiappe & Genesis Dela Cruz (our Schedaero experts) highlights the top five pain points and key solutions you won’t want to miss.

    Topics covered includes:

    • Improving charter operations quotes
    • Removing some of the unnecessary manual processes 
    • Running an operation smoothly from start to finish
    • Bringing your scheduling system into the modern era


  4. What’s really happening in bizav right now?

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    The American angle

    Michael Slavin, Key Account Manager, Americas

    We saw a high amount of industry activity at the end of March through repatriation flights for the coronavirus pandemic. April was very quiet and then, as restrictions lifted, there was large demand for departures from the south-east US. Since the crisis began, light jets have been utilised more than large or super midsize aircraft.

    Across the US, many operators have needed to change their processes and establish new policies to keep employees and customers safe during the crisis. Logistics have become difficult, as many pilots have needed to be on the road while making sure their exposure to the virus is minimised.

    As a long-term result of COVID-19, new clients might enter the lower end of the US bizav market, particularly for short trips on light jets. Private aviation is a safer way to travel than a commercial airline flight but there is a price gap new entrants must consider.


    The European experience:

    Gustav Andreasen, director of sales, EMEA

    Since the coronavirus crisis began, European markets with a lot of domestic travel have done better than markets reliant on cross-border flights. As a result, Russia and Turkey have performed relatively well.

    Across Europe, we’ve seen operators and brokers being creative to respond to the situation. Some aircraft have been converted for ambulance and cargo operations and, similarly, I’ve talked to brokers who have moved from only handling business charter flights to arranging medical and freight flights too.

    It will be very interesting to see what this summer is like and even more interesting to see activity in 2021, considering all the major events that have been pushed back until next year.

    Although restrictions have not been as tight here in Sweden as in other parts of the world, my entire team has been working from home, as have most Swedish ‘Noders’. It’s tough and we miss the daily interactions but I have to say we’ve performed superbly.

    Looking for positives, going through this crisis will help us, as an industry, be prepared if something unexpected happens again. But let’s hope we’re never in this kind of situation again.

    I’d say the mood of the industry remains fairly optimistic right now. Following COVID-19, we may see a growing number of people and companies flying privately for health and safety reasons. A lot of brokers tell us this trend is already underway.


    The Middle East market:

    Ian Croxton, account manager, Middle East

    The virus has had a massive impact on business and on private aviation across the Middle East. Aircraft were basically grounded, as owners didn’t want to fly, or couldn’t, and didn’t want their jets being used for charter. Regulations were changing almost on a daily basis, so it was extremely difficult to know which flights could and could not be flown. Some operators chose to put their aircraft into maintenance.

    I expect aircraft values to take a hit as a result of coronavirus but I also expect the overall health of the industry to be stable. I’m sure there will be casualties but I’m very confident there will be new players in the market too. As far as I can see there has been minimal long-term damage. Most aircraft are still there, which is a great sign. We just need to get those jets back in the air and we can start to return to normality.

    This pandemic has brought many travellers into bizav for the first time. I’m convinced a high proportion of these clients will continue to use business jets, whether for all trips or just one family holiday a year.

    After COVID-19 we may see stronger demand than before for clients wanting to share flights to common destinations. The new ‘normal’ might be passengers who used to buy first- or business-class airline tickets looking into private aviation. As the weeks pass and restrictions ease, we are seeing a steady increase in clients planning holiday trips for the months ahead. People are desperate to fly again after lockdowns, for business and leisure. When this initial wave subsides, I’d expect traveller numbers to go back to pre-coronavirus levels at the end of the summer and into autumn.

  5. Charter rates gradually increase as demand recovery continues

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    Trip demand index

    The chart below is a rolling 7-day index of demand normalised to 1st March, for trips requested through the Avinode marketplace. New restrictions have seen demand for US domestic (blue) charter flatten in the last week or so. Demand for intra-European flights (red) continues to steadily increase.

    US domestic demand significantly higher

    Since the start of June, demand for US domestic travel through Avinode has been significantly higher than the same period last year, supporting reports of a surge of customers new to charter. Regionally, travel on the East Coast has led the way, but demand is now more equally spread across the country. The slowest segment of the market to recover has been for travel within the Northeast, but it is trending in the right direction. Within the Northeast, demand for travel next week (6th to 12th July) is down 33% compared to the same stage of the booking cycle last year, compared to down 42% for last week (22nd to 28th June).

    “Demand for US domestic travel through Avinode has been significantly higher than the same period last year.”

    Changes in charter rates have reflected the shifting demand environment. The below is a price index based on quotes in the Avinode marketplace, normalised to 1st February. Most categories saw a decline to around the -20% level, followed by a gradual improvement from early-May. The category that saw the biggest price changes was Super Midsize. These rates have now recovered to nearly pre-COVID levels having been 50% lower at one point.

    Steady improvements in Europe

    European demand has continued to increase in recent weeks. The chart below shows the number of trips by requested date for each departure month, for travel within Europe. Demand for travel in June (green) finished 33% below last year. July (orange) has just reached the same level it had at this stage last year, with a steeper gradient suggesting it will improve further. August (black) is gradually closing on its last year position. Demand is starting to surge from the UK, amid expectations of a loosening of quarantine on return rules for certain countries. France, Spain, Italy and Switzerland continue steady improvements. Demand from Germany has softened slightly, from a peak in mid-June when restrictions were first lifted.

    European charter rates reflect the improving demand environment. Hourly charter rates have been in slow recovery since early-May, having hit a low of around -22% when compared to 1st February. Entry level jets have been able to recover more quickly than the other categories. Turbo-prop rates stand out for having not started their recovery yet.

    Outside the US and Europe, Russia continues to see improved demand in July with the most popular trips being domestic travel, and to Italy, Spain and France. Demand to Italy and France is lower than last year (-7% and -28% respectively), whilst Spain is significantly higher. Demand from the Middle East is greater from the UAE than Saudi Arabia; the most popular destination from the UAE is Greece, whilst from Saudi Arabia it is Spain.

    Harry Clarke,
    Head of Insight, Avinode Group

  6. What shape will recovery take?

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    What are bizav’s hopes right now? Can we expect U-shaped recovery?

    Encouragingly, some industry experts believe traffic could return so dramatically month-on-month that a forecast U-shaped recovery (of gradual return to pre-crisis levels) will actually become much sharper and nearly V-shaped. That’s less of a long slog at the bottom of the curve and more of a quick rebound.

    Does our head of insights and analytics, Harry Clarke, agree? He says: “Forward-looking demand data shows promising signs for July and August travel in the European charter market.”

    In the US domestic market, Harry says demand for travel in June surged and is recovering strongly for travel in July, with encouraging signs for August too. Whilst demand patterns are not normal, they are at least showing a positive trend.


    What are the expectations for global economic recovery?

    Laurence Boone, chief economist of the Organisation for Economic Co-operation and Development (OECD), says: “Most people see a V-shaped recovery, but we think it’s going to stop halfway. By the end of 2021, the loss of income exceeds that of any previous recession over the last 100 years outside wartime, with dire and long-lasting consequences for people, firms and governments.”

    Robert Johnson, a finance professor at Creighton University in the US, fears the ‘double dip’ of a W-shaped recovery, as the economy falls and rises before quickly falling again. He’s worried about premature complacency and the notorious ‘second wave’, saying another outbreak of coronavirus “could force another round of social distancing, stalling the recovery”.

    Most economists seem to agree we’re not heading for the painfully slow return of a dreaded L-shaped recovery. Research by professional services giant EY reveals only 8% of companies expect recession to last until at least 2022.


    Evidence suggests the health of the bizav industry often mirrors the health of the overall economy. Will we see that pattern as we emerge from COVID-19?

    Let’s hope the OECD’s gloomy prediction turns out to be wrong or, at least, bizav doesn’t follow the global economy this time. We all want that V-shaped recovery. Here’s a proactive and positive spin on the situation – business aviation could kick-start, not just mirror, the economy.


    Are there reasons for that optimism?

    Let’s keep the impact of COVID-19 in perspective. Not every sector of our industry entered a steep decline when coronavirus arrived.

    Charter demand surged briefly in the early days of the pandemic, providing vital humanitarian evacuation and repatriation services, starting around January 24 with a spike in flights departing China.

    And let’s continue to applaud the tireless and inspiring work of medevac teams throughout the crisis.

    Sales specialists including Jetcraft confirm aircraft deals have continued to close during the pandemic. In the global financial crisis of 2008, some bizjet prices fell by more than 30% almost overnight. Coronavirus hasn’t hit the market anything like as hard, to the disappointment of some opportunistic would-be buyers.

    As an industry, bizav was sitting at the bottom of a far deeper hole in 2008 than we are now.


    Could there even be mid- and long-term benefits for bizav after coronavirus?

    Right now, people need to fly as soon as possible to keep their companies alive. Airlines will simply not offer the capacity or routes to meet that demand for months ahead. Bizjets are ready to fly the moment borders reopen.

    After this health scare, many vulnerable people may never want the anxiety of moving through a crowded airline terminal again. Safety, check-in and boarding protocols could take forever. Can you imagine the stress and delays at airports when people flood back for their long-awaited vacations and much-needed business trips?

    Perhaps no one can predict the shape of bizav’s recovery with certainty but, one way or another, our resilient industry will return and prosper.