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Wealthy pilots worried about Coronavirus Go to private jet service

Commercial flights have fallen into the pandemic, but interest in private jet service is growing, especially among people who have not paid to fly privately before.

For many years, jet service providers have ferried business executives and wealthy leisure travelers. who paid high fees for privacy and security. Now these same companies are shifting to meet growing demand from people who are worried about getting on a commercial flight.

Over Memorial Day weekend, one of the busiest travel times in the United States for years, private jet traffic was 58 percent of the same volume last year, according to Argus, a company that tracks aviation data. But commercial flights went worse over the holidays, dropping to 12 percent of the 2019 level.

Five weeks ago, private flights had dropped to 20 to 25 percent at the same time last year, said Doug Gollan, founder of Privatejetcardcomparisons .com, a consumer research site. "Now to be back to 60 percent of the levels before Covid, shows that the people who have access to private travel are coming back out there," he said.

NetJets, the largest private jet operator in the world, is seeing a surge in interest from new customers, said Patrick Gallagher, the president.

"May is about to be the best month of new customer relationships we've seen in the last 10 years," Gallagher said.

Competitors are experiencing the same increase. Magellan Jets has seen a 89 percent increase in new customers from mid-March to the last week, says Anthony Tivnan, the president. He added that this came from a strong 2019, when the company's revenues increased by 34 percent from 2018.

Companies that cut out a niche with private international flights also report an increase. Thomas Flohr, founder and chairman of VistaJet, which has longer-range jets, said the company's refueling landings at Anchorage, a major stop for transcontinental flights to Asia, were up 250 percent since the coronavirus outbreak.

we had there the last 60 days is unheard of, ”said Flohr. "It was the east that was moving west, and when the pandemic moved, it was the west country that was moving east."

Unlike commercial airlines, the private jet industry sells its services by the hour. Private jets are faster and can fly directly to most airports, while flying commercial can involve connecting flights. Service providers make money selling charter planes, jet tickets with flight hours and fractions of jets and individually owned aircraft.

But as executives limit business travel during the pandemic, new wealthy pilots and existing customers are driving a private aviation boom. In some cases, they actually fly, and in others they rely on private flight hours. The desire is similar to the hoarding of toilet paper and flour at the beginning of the pandemic: The extra allocation gives peace of mind, even if it is never used.

"Everyone from five-to-six flight company companies to NetJets is in a good mood," Gollan said.

"There was a huge amount of people who had the wealth to fly privately but never bought into the runway business efficiency, "he said, adding that wealthy people now think less about the cost of flying privately then about the safety of flying commercially.

Marco Fossati, a member of the multibillion-dollar family that owns Star, the Italian the food conglomerate, said he had little need to fly privately since he became less active in the family business. But the corona virus caused him to rethink his plans.

"At this moment, with Covid-19, if you can afford it fly privately, "he said from Miami, where he has been since the on-site order was issued in March.

Mr. Fossati's attitude illustrates a change from just a few months ago: The richest are less concerned about the perception of flying privately

Sentient Jet, a private aviation flight attendance companies reported that it sold 5,000 hours in April, or the equivalent of around $ 30 million in flight time, significantly more than the $ 25 million it sells in a typical month. More than 2,500 of these hours were purchased by people with new aviation.

Andrew Collins, CEO of Sentient Jet, said that three-quarters of the company's flights since March had been by individuals and families, up from 40 percent before the pandemic.

Mr. Collins said he did not expect the increase. In the financial crisis of 2008, private aviation quickly fell off, and it took several years to recover. But the current crisis was countered by health problems, not financial markets, and demand for private aviation has continued.

In April he expected to book 200 to 300 flight hours, but the flight time was actually just under 1000 hours. "We're seeing 50 percent new customers," he said, while people buy cards that they can use now or save for later.

Concerns about the environmental impact of flying privately may also have taken a seat.

Concern for opulence and concerns about environmental issues is gone, says Gallagher of NetJets. Many wealthy people lined up to fly commercially because they had advantages such as first-class, TSA PreCheck and a status that allowed them various advantages. "But now," he said, "there are many people out there who will not fly commercially if they are part of an aging population or have underlying health problems."

A person on average commercial flight has about 700 points of contact with other people and objects, according to a recent analysis by the consulting firm McKinsey, but private flights have only 20 to 30.

For travelers concerned about the environment, private jet companies offer carbon offsetting programs. Terrapass, which has partnered with Magellan, can calculate carbon emissions based on the size and age of an aircraft and where it flies. Magellan includes carbon offsets in jet cards that are longer than 50 hours.

New flyers may drive some of the increase in sales, but existing customers refill their jet cards with several hours.

"We see members buy bigger steps, so someone in 50 hours renews after 75 hours," said Tivnan from Magellan Jets. These flyers want to lock in the availability for themselves and family members, should they need it, he said.

Prices are not cheap. Magellan's entry level jet card for a Hawker 400XP, which seats six to eight people, is $ 130,000 in 25 hours. For the 14-passenger Gulfstream 450, it is $ 313,950.

But tax breaks are available. The CARES Act, the economic stimulus package passed in late March, waives the 7.5 percent tax on all private jets and hours purchased this year. That savings adds up. The same 25 hours on the Gulfstream 450 would have been $ 25,000 more expensive before the tax break.

However, experts warn that supply may be in demand.

The cost of chartering a plane to fly in the United States States – as opposed to buying flight hours – are low now. A one-way chartered flight from New York to Los Angeles, for example, would typically cost around $ 30,000 for a jet that can seat eight people, says Jean De Looz, head of America for MySky, which helps jet owners manage costs. But that has dropped to $ 12,000 to $ 17,000.

"Operators are trying to get some cash flow," he said, so they offer cheaper rates.

But there are only so many private planes, and the number of people who want to use them is growing. If more people buy aircraft directly, fewer will be available for charter service.

There are fewer than 1,300 aircraft for sale built over the last 20 years – the time frame that banks use to fund the purchase of a jet. "The numbers are small," said Dan Jennings, CEO of Private Jet Company, a brokerage firm.

Of course, this type of economic imbalance assumes that commercial aviation is still hobbled by health fears. Even now, a billionaire like Mr. Fossati is weighing his opportunities to fly from Miami to Switzerland. He is waiting to see what safety protocols will look like for commercial carriers, but he has also asked for price estimates for flying on a private plane.

"Charging a plane for two to three hours is one thing, but over the ocean, it's very expensive," he said. "Being rich doesn't mean you have to waste money."

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