Private-Jet Operators Fly High, Before Requesting Bailout

Originally published by Forbes on March 24, 2020.

Though demand for private jets is higher than ever, operators are buckling under the weight of pandemic.

Credit: Getty

First, private-jet operators touted a surge in demand, sending them scrambling to keep up with the “biggest month” in their corporate histories. Then, within the same month, they were forced to turn customers away as governments around the world closed their borders, hotels shuttered, and citizens entered a surreal new reality: quarantine by mandate. Now, these symbols of high-flying wealth are joining America’s commercial airlines in asking for a $54 billion U.S. government bailout. Without hotel partnerships and open airstrips, they too are facing bankruptcy. 

The National Business Aviation Association (NBAA) made their case last week in this letter to Congress. The NBAA represents more than 11,000 companies, including NetJets, WheelsUp, FlexJet, Sentient Jet, and Tradewind Aviation. On their behalf, it argues that excluding commercial airlines and the military, air travel “supports 1.2 million jobs and $247 billion in economic impact,” as well as $77 billion in labor income. Given that the industry is facing “increasing financial uncertainty,” due to the COVID-19 pandemic, the private-jet companies should be included in the aviation bailout. Or, so the argument goes.

Meanwhile, They’re Still Flying

While we wait to hear the bailout verdict from House Speaker Nancy Pelosi and Majority Leader Mitch McConnell, private jet operators are flying customers wherever they can feasibly land. 

“We are still operating in the U.S. Demand has been good in recent days but will fall off precipitously once people get to where they are hunkering down. In April, we are poised to fly 75% less passengers than normal,” says David Zipkin, Co-Owner and Vice President of Tradewind Aviation. His remarks come on the heels of being “shut down” in the Caribbean, after St. Barths airport closed to inbound passengers March 19th, Anguilla airport closed to all traffic March 21st, and Turks and Caicos closed all airports on March 23rd.

Airports in the company’s primary Northeast locations—Nantucket, and Martha’s Vineyard—are still open, and flights continue. Yet, neither are safe havens. Nantucket is under a ‘shelter in place’ order, while Martha’s Vineyard and Nantucket Cottage Hospitals issued this statement: “We will not have enough staff to care for you or your loved ones.” 

Despite these challenges, Sentient Jet, which is part of the multi-billion dollar OneSky private aviation portfolio, also remains in operation for its 6,000 high-net-worth customers. “I have seen a surge in demand in the month of March. The request volume is at an all time high,” says Andrew Collins, CEO of Sentient Jet. “The requests we’re getting are from all over the world. We have to chase it down and figure out if we can fulfill it, because of the constantly-moving regulations that are being enacted.”

April might tell a completely different story. Among Sentient Jet’s most popular destinations is Aspen, Colorado. Though Aspen Airport remains open, Pitkin County just issued a public health “Stay at Home” order, effective through April 17th. Sentient is also known for flying jet card members to the annual Kentucky Derby in Louisville, which has been postponed until September of this year. 

If you do fly private, will any hotels be open when you get there? The most important hotel brand partnership for Sentient in 2019, per customer redemption rates, was the Peninsula Hotels. Last week, the Peninsula Hotel Chicago and the Peninsula New York closed until further notice. Subsequently, in a sobering public address, Marriott CEO Arne Sorenson announced the closure of “hundreds of hotels,” some of which may never reopen.

Still, flights to safety continue as private jet operators buoyed by high-tech flight management systems, 24-hour mobile communication, and electrostatic technology used to disinfect planes make the ‘we’re the safest way to fly’ case to customers. It’s working, if only because it’s the only game in town.

“A good bulk of our business is in the 48 contiguous U.S. states. We’re flying everywhere, so people are booking. If they can’t fly to a particular destination, we find out very quickly and alert them,” adds Collins. “Right now, we’re operating 24/7, 365.”

Collins spoke with Forbes on March, 16, 2020, one day before the NBAA sent its bailout letter to Congress. What a difference a week makes. 

Here’s the Rub 

Nearly every industry is sending its lobbyists to ask Congress for handouts, including the private jet and the hotel industry — which alone has requested a $150 billion bailout. Companies in both industries will almost certainly face bankruptcy if no stimulus is received. 

The trouble is, aviation on the whole is drawing the ire of the taxpayers paying attention. Two years ago, the U.S. government enacted a corporate tax cut that saved U.S. airlines billions of dollars. Instead of saving it, they paid it to shareholders.

“We are angry that you did not conserve your cash for this rainy day, and if we did not have an economy to save and millions of Americans to help, we would just let you fail,” writes Henry Blodget, CEO of Business Insider in this recent opinion article.

No matter what Washington decides to do with their power of the purse, private jet demand will remain robust. Therefore, this business will survive. The form it takes might look a lot different. But, if the industry is forced to take greater fiscal responsibility, that might just be a good thing.