Blackstone Group Inc. and Gates’s Cascade Investment LLC are teaming up to buy Signature Aviation Plc. Signature is a company whose business mainly focuses on private jet fuel but also offers other services related to aviation. The partnership has already made an offer of $5.17 a share. However, they would need to bid higher as Global Infrastructure Partners made a $5.50-a-share proposal. Fortunately, Cascade has a preexisting 19% stake in Signature so they still have the upper hand.
The question is, with the still ongoing pandemic, why are their eyes on such a company?
How Badly Did The Pandemic Affect Private Aviation?
The COVID-19 pandemic has made traveling very difficult. In fear of spreading the virus, airports temporarily closed down. In March 2020, flights across Asia were canceled. In the following months, almost the rest of the world followed. The airspace was clear since all aircraft were grounded. Although they were allowed to fly again, later on, the impact the lockdown had on the industry was glaring. According to the International Air Transport Association, global airline passenger traffic was reduced by 66% in November. But that was only for commercial flights.
Surprisingly, private aviation has seen success in the year it was supposed to crash. In fact, private jet activity was down only by 11% in December. Aviation data and consultancy company WingX stated that it was the industry’s best monthly performance since the pandemic began.
Why is This Happening?
Commercial flights are risky because of the number of passengers on a flight – which is undesirable in current circumstances. There are also lots of guidelines and restrictions that should be followed. Flying on commercial flights on its own is already a hassle, but combined with these, it became so much worse.
The thing is, these challenges aren’t issues for private aviation firms like Signature’s largest customer—NetJets. Services are provided to a smaller, select group rather than a crowd. Naturally, an aircraft carrying fewer people is a safer way to travel right now. So, those who can afford it prefer private jet travel over traditional flights. For more insights, see private jet vs commercial airline.
Evidence of this was very visible in Europe in August. During that time, Mediterranean beaches were popular tourist destinations, and the safest way to get there was by private jet. Needless to say, private aircraft were busy at that time due to high demands. Likewise, in December, private jet traffic to and from Florida increased by 12%, according to the data provided by WingX. This is due to the Caribbean being another hot spot for tourists.
NetJets has stated that this side of their business went back to normal as early as July. This leisure side was less affected by COVID-19 than the corporate one.
If anything, 2020 gave a huge boost to private aviation. NetJets has gained customers thrice as many as they had before the pandemic.
The Industry on Climate Change
Of course, climate change is always a concern that needs addressing. Carter Copeland of Melius Research answered this issue by saying that while private jets have a larger carbon footprint parallel to the number of passengers they carry, commercial aviation still does worse. He believes that this will make Climate change activists focus more on the commercial side of the industry.
Moreover, that statement does not mean the private aviation industry will ignore environmental concerns. There is a startup called Otto Aviation that is making quite a stir. The startup aims to produce private jets that are both affordable and eco-friendly. Their concept and innovation will pave the way for new improvements in the industry of aircraft manufacturing.
What Kind of Future Lies Ahead of The Industry?
Some raised concerns about what would happen to the industry once COVID-19 is not a big problem as it is right now. Will the demand for private jets decline?
Optimists believe that it is less likely to happen. They think that once a person has tried traveling through a private jet, he or she will never want to go back to commercial flights again. The industry believes that the comfort and convenience private travel provides will be enough to keep flyers magnetized.
Furthermore, the corporate side of the industry has yet to make a comeback. Soon, other businesses will go back to normal operations. Once that happens, executives will fly again to attend meetings and negotiations. This will provide another leg of growth for the industry.
Aircraft manufacturers have slowed down production at the start of the pandemic. However, as things started to bounce back, they got back to their normal phase. They continued designing and manufacturing new aircraft as preparation for when the world is open again.
Some notable new jet models are the Dassault Falcon 6x, Airbus Corporate Jet TwoTwenty, and Otto Aviation’s revolutionary Celera 500L. Meanwhile, charter operator Vista took 2020’s first delivery of the Bombardier Global 7500, and FlexJet got its first Embraer Praetor 600.
The manufacturers were optimistic about their ability to win new customers. Textron Chief Executive Officer Scott Donnelly told investors that people are coming into business aviation. These people have not historically been in business aviation or owned an equity piece of an aircraft. They were coming because the commercial flights were largely unavailable. This situation is making it very difficult for them to travel in the country without taking a whole day doing it. Thus, they resort to traveling via private jet.
The world is constantly changing, thus, all industries’ future is uncertain. Present circumstances will pass, and new ones will occur. Everything is a risk and a challenge. Corporations need to weigh the odds before making investments.
Right now, things are looking good for the industry of private aviation. There is a high demand for their private jet services. Charter firms and manufacturers are getting achievements one after the other. Developments, innovations, and ideas keep on coming.
All people involved are hoping and are doing their best for this streak to continue.
Conclusion
Bill Gates’s interest in private aviation through the partnership with Blackstone Group highlights the potential and resilience of this industry, even during challenging times like the COVID-19 pandemic. Private aviation has demonstrated its unique value proposition—offering safer, more convenient travel options for those who can afford it, while also adapting to the evolving needs of its clientele. For those exploring affordable private jets, this growing demand presents an opportunity to access luxury travel like never before.
Despite concerns about climate change and the potential decline in demand post-pandemic, the industry is taking proactive steps toward innovation and sustainability. Companies are investing in eco-friendly designs, cutting-edge jet models, and services that appeal to a broader range of customers, ensuring relevance in a competitive and uncertain future. Travelers now have unprecedented access to convenience through technology, including options like an iOS app for private jet travel and a Google Play app for private jet travel that streamlines the booking process and enhances user experience.
The question remains whether the surge in private aviation is a temporary trend or a long-term shift. However, with increasing customer satisfaction and continued technological advancements, the sector appears well-positioned to thrive. As the world slowly recovers and businesses return to normal operations, the opportunities for growth in private aviation remain sky-high.
Ready to experience the convenience and luxury of private jet travel? Contact JetsOnset today to explore tailored solutions that elevate your travel experience to the next level.
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