As the industry continues to endure pandemic-related obstacles, Avinode Group is facing these challenges head on through numerous approaches ranging from creating new features to scaling our team.
We recently sat down with our Director of Customer Success, Saskia de Jong, to discuss the recent industry hurdles and how you can best utilize our platform.
Any advice for operators on how they can make the best use of Avinode?
We know it can be challenging to meet the current demand, but if you’re an operator and have hours to fill, our team will work with you to make it known. Our Take Off Ready feature lets you market any last minute availability. You can also block the schedule when an aircraft is not available. This makes it easier for buyers to see which aircraft are truly available. Our onboarding team recently wrote this article with more advice to help operators setup for success.
What will increase brokers’ chances of securing an aircraft?
One of our recommendations is sorting search results on estimated price, to get better transparency on pricing. Using Avinode TripManager is also a great way to set up a better quoting workflow, and save valuable time. We know all our members are under a lot of pressure, so respecting each other’s time and considering the amount of requests you send for one trip will be important.
To hear more from Saskia about the current industry climate, you can catch her at CJI Miami 2021, on November 2-3, where she moderates the session “Managing charter and jet cards during a boom”.
Various commentators have spoken about the huge surge of private charter movements in July 2021 compared to 2019 data, particularly in the USA. The increase in demand coupled with constrained supply is causing hourly charter rates to recover from their COVID lows and even surpass the levels seen pre-pandemic for some categories.
In the US domestic market, heavy and ultra-long-range jets are recovering but still behind where they should be. Smaller categories of jet are all doing well and are broadly similar to pre-pandemic rates. The category really surpassing historical rates is super midsize jets (up 15%), an interesting symmetry given that this category dropped by far the most in the immediate aftermath of COVID restrictions in Spring 2020. The operators of these aircraft have been very reactive to market conditions and optimizing their rates for them.
The patterns in the intra-European market are a little different. Here rates have been recovering rapidly in July but are still below pre-pandemic levels for the summer season. The exception is for entry-level jets, which have rocketed in recent weeks to around 7% above pre-pandemic rates. This could be caused by first-time flyers entering the market choosing the most affordable jet option and so driving up the prices. As with the US market, it could also partly be due to the operators of this category more quickly optimizing their revenue when the opportunity allows.
Intra-European charter demand through Avinode has just reached its summer peak and is now trending down again; it appears that we are returning to the traditional summer pattern of 2019, rather than the elongated demand into late August that we saw in 2020. However, the Russia to Europe market is still following its 2020 curve; looking at the routes being requested, we should expect to see extra demand from Russia to the Adriatic and Eastern Mediterranean in the next couple of weeks.
Within Europe, Greece has been the star attraction this summer. Early demand patterns, compared to at the same stage of 2019 and 2020, suggest that will continue until at least mid-September. France, Italy, Spain, and Germany all show robust demand compared to 2019 over the rest of the summer. Compared to normal levels, UK demand to France remains poor for the next few weeks, with domestics taking up some of the slack.
In the US, demand for charter through Avinode continues to increase, albeit more slowly than a few weeks ago. When trips are being requested for has changed. The percentage of trips being requested within 4 days stands at 43% in July 2021 – compared to 34% in July 2019. These figures support the commentary that it is proving challenging to source charter to meet jet card demand in such a low supply environment.
It is the shortest duration trips that are recovering most strongly versus 2020, for example between Las Vegas and California. Last year the most popular charter routing was from the Southeast up to the Northeast, whereas this summer that pattern has reversed and demand is from the Northeast again. Of the major cities, demand from airports around New York City and Dallas is most notable compared to 2020, for the next 5 weeks. Travel to the Caribbean is led by Mexico, the Bahamas, and the Turks & Caicos.
Despite the threat of the spreading Delta variant that caused cases to rocket again in the UK, pent-up leisure demand has been released in Western markets. European demand is robust but still very seasonal. In the USA the boom is continuing and with business travel still to fully return, it looks like we could be witnessing a step-change in the size of the US market – further increasing its significance in our global industry.
“There’s an old saying in Ireland, that once you’ve drank whiskey, you’ll never go back to water. In parts of the UK, they wonder why you would go back to burgers after eating steak. The same rationale applies to aviation – once you go private, you’ll never go commercial again.
First-time flyers are the latest trend in the market, keeping many brokers and operators busy trying to educate them on best practices in the private charter industry. And being ‘busy’ is a far cry from this time last year. While demand is high, we keep hearing that we need more supply. Avinode products, such as our web apps and APIs, are helping to relieve some of the work burden on both operators and brokers.
The Canadian region has really suffered with tight restrictions, just like the EU. Where domestic and US flight demand was down, we’ve seen a huge increase in demand for flights from Canada to the Caribbean. With restrictions lifting across the board, we hope this brings a change and the trend continues to grow.”
Ceci Hayssen,Customer Success Manager
“Over the past few months, we’ve seen a steady return to travel, and the private aviation industry should be prepared for that trend to continue.
Since the start of the pandemic there’s been a large shift in the popularity of smaller aircraft, which has continued in recent months. Turboprops, VLJs and light jets are seeing growing demand, and this is in part due to the increased number of short range domestic trips. That’s unsurprising given the question mark that still hangs over Europe’s travel policies, but it’s also largely due to the number of new entrants to the market.
As travel begins to open up, commercial airlines’ regional routes are not returning as quickly as many would like and travellers are finding themselves looking into private as a more viable option – especially when you consider the health and safety benefits post-pandemic. Operators and brokers are seeing a large increase in first-time customers. It creates a new challenge of responding to the influx of requests, vetting for the most viable leads and educating new consumers.
As we gear up for summer in the US, operators should be prepared for a continued increase in demand. As the country starts to open up, the return to office is inevitable. With lots of major corporations continuing to offer flexible work from home options, post-summer there’s an expectation that employees will be much more tethered to their home base office and the concept of a working vacation in a new or sought after destination will be no longer be the norm.
Operators with management contracts are seeing a larger number of owners reserve their aircraft for personal use rather than offering it up for charters. Owners want the flexibility to travel this summer and utilize their own plane, the luxuries of which have been halted for the last 14 months. This is indicative of the larger demand for private travel but paired with the large volume of aircraft available for sale and changing hands, it also points to potentially less aircraft being available on the market for charter.”
Kristen Jurn,Customer Acquisition Manager
“Most everyone agrees that there is a “new normal” coming in all aspects of daily life as we emerge from lockdowns and restrictions. We still don’t know what that “new normal” will be until we arrive there. So, what does this mean for our beloved private and business aviation sector of the industry so far?
Overall, business travel, which is traditionally the main event behind driving revenue, is way down. Yet, this factor did not impede the many mergers and acquisitions we have seen with some of the larger and most prominently recognized charter brands. These new fusions led to operators having to redefine additional lift partners and/or agreements, and in some instances, new operations software partners.
Additionally, international travel was also greatly halted by the pandemic and a more regional service uptick was experienced by several operators, leading to higher utilizations of smaller aircraft. I suspect this may also be responsible for the current trend of newly formed/forming small fleet charter and management start-ups across the regions.
Where has this all led? A flurry of demand from wealthy and leisure travelers has become the new biggest driver for the current private aviation and charter service providers, which has turned out to be a sustainable revenue source for this industry sector throughout the pandemic post peak.
Despite a dreadful pandemic, will we have finally broken through the barrier to a time when more of the ‘masses’ understand the convenience, safety and value of private and charter flying as a more relatable means for travel? Time will tell.”
Gina Commissiong,Account Manager
“Cautiously optimistic, that’s the general mood amongst our members. I handle the East/Southeast US, and travel within the US is definitely trending up, but international travel is still lagging as the situation in the EU remains uncertain. As a result, there’s a greater demand for light jet categories and turboprops.
After a year of turmoil and shutdowns, the surge in requests for private aviation services is refreshing and encouraging, and the trend is towards Caribbean/vacation destinations. The restrictions are around COVID quarantine rules at certain destinations, and questions about the need for vaccination passports.
As the summer begins, the seasonal travel trend will offer a much-needed boost to the industry. Another bright spot is the return of organized sports and live, in-person entertainment. Many sports teams have published their rosters and music shows that were postponed last year are being rescheduled.
Business travel is still lagging, as most companies are wrestling with travel policies going forward, preferring the convenience and safety of virtual meetings for now. However, once business travel resumes, the thought is that business executives will opt for private flight solutions.
After surviving the hurdles of the last year, the private aviation industry is well-poised to take on any eventualities.”
15 months on from the emergence of COVID in China, its prevalence continues to have a huge impact on demand trends. The recent outbreak in India saw demand for travel from the country increase to levels never seen in Avinode, entering the top 10 of requested departure countries; it was driven by demand to the UAE, which increased 900%, and to the United States. Demand for travel from India continues for the next 2 weeks. Even as demand patterns normalize, we will no doubt continue to see sudden peaks due to outbreaks for the duration of the pandemic.
Right now, Intra-European charter demand through Avinode is tracking along similar curves to 2018 and 2019. Demand from the large UK market has struggled all year due to lockdown, but the addition of Portugal to the “green list” of countries, from which one can avoid quarantine, has seen demand rocket for the school holiday week, further boosted by the Champions League final featuring two English teams taking place in Porto on 29th May. Despite the need to quarantine on return, Spain is top of the demand rankings from the UK for travel until 1st August, with Portugal second and domestic travel third. From the other major European markets, domestic travel is most popular from France, Italy, and Spain. From Germany and Switzerland, the sunshine of Spain sees it take the top spot.
COVID resulted in hundreds of events being cancelled in 2020. As limited crowds return to events in 2021, we are seeing events driving more demand peaks. The Europa League final in Gdansk caused a modest peak this week, and the Monaco Grand Prix saw nearly five times as much demand into Nice on Friday 21st May, compared to the week before. Events are returning and that is great news for private charter – although the Olympics is a notable exception.
From Russia, the story is a little different. The winter and early spring saw international demand focused on longer haul travel to the UAE and Maldives. That has now stopped. With the weather improving closer to home, demand has shifted to the Eastern Mediterranean for the summer. For the next couple of months, demand is up year-over-year to Turkey, Greece, Cyprus, Italy, and Montenegro. Outside the top 5, demand to France and Spain is struggling. Domestic demand for Russia on Avinode has been high all year, and that trend will continue as well. Moscow to Sochi and St. Petersburg are the top routes.
Private charter has been recovering well in the USA, dominated by a strong domestic market and robust demand to Latin America. Florida is the star performer, caused by travel up to the Northeast and intrastate, but it is encouraging to see that for the next couple of months, demand is up year-over-year from all fifty US states. Spreading demand is resulting in some airports that weathered the pandemic well last summer seeing decreases year-over-year, including KPBI, KBCT and KAPF. KVNY and KTEB are back at the top of the rankings. Demand from Vegas is up 172% compared to last year.
International travel is coming back too. Over Memorial Day weekend, demand from the West and Central areas is headed to Mexico whilst demand from the East is headed to the Bahamas and the Turks & Caicos. Demand to further afield is still slow; demand for transatlantic travel from the US is down on last year until at least mid-June. The US is still the main market for travel from Canada, but Mexico is showing the strongest year-over-year performance, up until late-June.
Thankfully, charter rates are also recovering – the long-term improvement trend continues in the United States. Rates have been particularly buoyant for super-midsize aircraft in the last two weeks, comfortably above pre-pandemic levels.
In Europe, rates are recovering too – particularly for larger aircraft – although they remain a long way below pre-pandemic levels.
Demand is being driven by different factors in different parts of the world. Pent up leisure demand is there and starting to be released in some markets as the weather improves. Events are gradually returning. Elsewhere, COVID continues to ravage, and demand is anything but typical. Domestic and short haul demand is still dominating as entry restrictions remain for so many countries. Demand is coming back in summer 2021… but normality remains elusive.
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.
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.”
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.
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.