This increase in demand is due to a shift in travel preference despite the emergence of new Covid variants

by ANIS HAZIM / pic by BLOOMBERG

PRIVATE jet business is currently facing a global shortage as the demand for private jets is soaring due to a shift in travel preference amid the emergence of new Covid variants.

Asian Sky Group MD Jeffrey Lowe said there is also an increasing demand for private jets where people are paying higher prices to own a used aircraft.

“People are paying the asking price or whatever they can to have a private aeroplane more than 10 years old. So, we are actually seeing for the first time that the used aircraft value is actually increasing,” Lowe told The Malaysian Reserve (TMR) in a recent interview.

“The market has been so strong that there is a shortage of supply — this is one of the issues we face and people who want to buy airlines have a hard time finding them.

“There are many new entrants that have come into the market and acquired aircraft and the supply of good aeroplanes is now at record lows,” he noted.

Similar to other businesses during the pandemic, Lowe said Asian Sky had made some adjustments and necessary changes to operate in the pandemic environment.

“From a transaction side, the market has been quite strong — given the issue that the commercial airlines had — so there has been an increased interest in private jet aviation,” he said.

He opined that the private jet businesses will accelerate in the short term as more businesses are choosing to fly using private jets. The last two years have been good for the business and he expects 2022 will be a better year, just like pre-pandemic.

“A lot of the corporations are being forced to look at business jet aviation, which is a very effective tool to continue to do business as they can’t get commercial airline services.

“So of course, all these just leads to more awareness and more people using business jets and getting familiar with it,” he explained.

With the increasing demand and higher shortages for aircraft, it is no surprise that the fuel price will be higher than before.

According to the International Air Transport Association, the price of jet fuel has doubled to almost US$750 (RM3,143) per metric tonne over the past year.

Meanwhile, the jet fuel demand is expected to rise to 5.7 million barrels per day in May 2022.

“One of the ways that we will get mitigated with the rising jet fuel price is when the pandemic ends, hence it will take some time as the supplies need to increase. When there are enough supplies, the pricing will probably return to normal,” Lowe said.

Asian Business Aviation Association Malaysia chapter head Aida Ismail said the demand for private jets is increasing tremendously since 2021.

“People are concerned about the safety of travel with commercial airlines due to its frequent cancellation, retiming and spending more time at the airport with Covid-19 viruses around, so people are unlikely to do that,” Aida told TMR recently.

She noted that the travelling preference where many people have opted to fly with business jets or private jets is fuelling a boom in the industry.

According to her, the private jet industry is expected to continuously increase this year due to the emergence of Omicron.

“With the surge of Omicron, people are considering their safety so the demand will certainly increase.

“We (private jet industry) received tremendous inquiries and demands not only in Malaysia but also in the region. So, we can see the uptrend,” she said.

In 2020, Malaysia delivered four business jets with a combined value of nearly US$100 million as coronavirus pushed more high-net-worth individuals to fly private.

Typically, two private jet deliveries per year in Malaysia is already considered a good year.

Meanwhile, Aida said the private jet business model is fixed and consistent amid the health pandemic.

“The business is very easy — we have the jet and passengers — we transport them safely and comfortably from point A to point B, however, the restrictions, standard operating procedures (SOPs) and the requirements for every country might be very different,” she added.

Aida said industry players need to be very mindful about all the SOPs and follow the requirements in every country so that they can continue their operation and remain profitable for the company.