There’s a range of evidence to consider. Most recently, reports last month that Wheels Up laid off more than 10% of its pilots blaming staffing imbalance. Also, the much-reported pause in commercial airline hiring is understood to have played a role. But how much does this reflect Wheels Up’s individual situation and what, if any light, does its cast on the availability of commercial pilots in general?

“Wheels Up has reduced its fleet size and primary service area, which would indeed make them overstaffed,” Brian Foley, founder and principal of consultancy Brian Foley Associates (BRiFO) tells CJI. “Flight revenues have also decreased suggesting fewer flight hours flown.”

Reduction in US charter

It’s likely to have been exacerbated by the continuous reduction in US charter utilisation, which the recent ARGUS report estimates to have fallen by 5.3% year-on-year, he adds.

So, taken together, the latest evidence could suggest aviation – both business and commercial – is seeing significant improvement in the availability of pilots to fly its aircraft. Foley puts it like this: “This, [slowdown in charter] combined with airline and freight carrier pilot hiring pauses, slowdowns and furloughs suggests a plateau in the pilot shortage and more available cockpit crew members.”

Bearing that in mind, can we conclude continuing reports about the impending shortage of pilots are overstated? Business aviation, unlike the airlines, has a distinct advantage when it comes to pilot recruitment, according to Foley. The sector requires fewer than 1,500 hours experience which, in turn, provides a more ready supply of pilot candidates than the stream available to the United, American Airlines, Delta and the like, he adds. 

This unlocks another significant point. “Our industry’s problem is more about pilot retention after attaining 1,500 hours and going to the airlines,” says Foley. “With airlines slowing hiring, this should become less of a problem in the near term.”

Unexpected silver lining

One unexpected silver lining to the supply chain cloud plaguing aviation is a beneficial impact on the supply of pilots. Boeing’s and Airbus’s inability to deliver new airliners in quantity will also have a positive impact on pilot availability, thinks Foley of BRiFO. 

It is a point picked up by Mike Stengel, principal of consultancy AeroDynamic Advisory. “There is still a shortage of pilots in the medium term due to unfavourable demographics,” he says. “But airlines are getting some temporary relief because they can’t get new airplanes fast enough, which has thus slowed down their hiring plans compared to the frenzy we saw in 2022 and 2023.”

The key word here for Stengel is “temporary”. Whatever the short-term challenges, the long-term direction of travel is clear. “As production rates increase at Airbus and Boeing, and Boeing also sorts through its own issues, we expect pilot hiring at major US airlines to accelerate again which will create ripple effects throughout the industry,” he argues. “This eventually translates into higher attrition at regional airlines and the business and general aviation segment that Wheels Up plays in since major airlines are often viewed as career destinations.” 

We did ask Wheels Up for comment but were told the organisation was unable to offer a view due to the media quiet period ahead of its second-quarter financial results expected on August 12th, 2024. In May, the company posted first-quarter 2024 financial results with total revenue down 44% year-over-year to $197m. (The fall was mainly driven by its exit from the aircraft management and aircraft sales businesses, as well as reduced membership and flight revenue).

11,000 airline pilots certified

Meanwhile, in March the Air Line Pilots Association (ALPA) highlighted FAA research revealing the US continues to certificate more airline pilots each month than in the years before the global pandemic. For example, more than 11,000 airline pilots were certified in the 12 months to March alone.

“Despite continued data to the contrary, corporate special interests continue to push the narrative that the United States lacks enough pilots,” the association said on its website. “ALPA has long maintained that while there were some pilot training backlogs coming out of Covid, the system is working and still producing record numbers of pilots. Passenger demand continues to be strong, and while mainline airline hiring has stabilised, resulting in a reduction of new pilots being hired, flight schools continue to have record enrolment.”

Urging against FAA legislative and organisational changes, Jason Ambrosi, president, ALPA wrote: “The system is working as intended, we’re producing more than enough pilots, and we’re experiencing the safest period in US aviation history, thanks in large part to the highly trained pilots on every flight. However, all stakeholders have an obligation to remain vigilant and play an active role in the operations of the most complex aviation system on the planet.”

So, it seems for now, at least, fears about an acute shortage of business aviation pilots and their airline colleagues may be misplaced. (Read the CAE Aviation Talent Forecast here).

*Planes need pilots – for now and the foreseeable future. No one disputes the tremendous progress being made with autonomously piloted aircraft. But do you fancy leaving the ground in one any time soon?

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If you walk through one of the many unmarked doors and go down a floor, you find a network of kitchens, storerooms, the staff canteen, loading bays and shortcuts. It typically takes staff a week to learn their way around the basement.

It is the same in business aviation. When things go well, customers do not see the grind that goes into making a flight happen or buying a jet. Unfortunately, they are increasingly seeing these problems. Particularly when aircraft are grounded or in pre-purchase inspections. Some 75% of the nearly 500 delegates believe supply chains are better than in 2022.

“For the first time in modern history, it’s all about the supply chain determining how many aircraft can be built. It is not just affecting production, it is affecting MRO and maintenance as well,” said Kevin Michaels, MD, AeroDynamic Advisory, on the supply chain panel.

Nick McBoyle, procurement director at Bombardier explained how the OEM has embedded about 60 interventions specialists into suppliers to help them manage their supply chains.

“There is a whack-a-mole effect where problems suddenly emerge,” said McBoyle. “We’re then into a cycle of operational gymnastics to make sure that we can continue the aircraft build as close to the schedule as possible and obviously get them out the door.”

Despite these efforts, 37% of delegates do not expect supply chains to return to pre-pandemic normality until 2025. (32% believe it will be 2026).

Predicting demand is much harder. Research firm Vertical Partners says that business jet OEMs had an average book to bill of 1.4x in the third quarter. It says that manufacturers had a 1.2x average for 2023. But delegates are worried that high interest rates and political turmoil could make 2024 a difficult year.

Some 69% of attendees were very optimistic about the next 12 months (with 19% fairly optimistic). But not everyone was that bullish. “Is it me or does this feel a lot like the spring of 2008?” said one delegate.

The general consensus from people at the event is that they expect fewer transactions in 2024 (although the first quarter may benefit from delayed fourth quarter deals) and demand for charter to soften.

Andrew Collins, co-CEO, Flexjet said that demand had clearly fallen from 2020: “Demand for jet cards was so strong I could have sold them by knocking on my neighbour’s door.” But he added that Sentient Jet and Flexjet are on track for great years in 2023.

Most believe that many of the richest customers that discovered business aviation will continue using it. “There is a reason why hearses don’t have luggage racks,” said Peder von Harten, president, Nicholas Air.

Every speaker agreed that predicting the market is harder than ever.

Michael Amalfitano, president and CEO of Embraer Executive Jets opened the conference by highlighting how business aviation is leading aviation decarbonisation. He stressed how business aviation is a test-bed for innovation.

Ed Bolen, president and CEO, NBAA also used this argument in his keynote. “Every new business aircraft model being delivered today is 30% more efficient than the aircraft it is replacing,” said Bolen, outlining the new Climbing. Fast. campaign. “Business aviation is an incubator for new technologies.”

Some customers like to see the workings of the industry. Apparently Frank Sinatra, Dean Martin and Sammy Davis Jr (who filmed the original Oceans 11 film at the Fontainebleau) used the underground passages to slip around the hotel without being spotted.

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Brian Foley, founder, Brian Foley Associates tells Corporate Jet Investor (CJI) that he  is not promising that it will live up to the last two years. “2023 is likely to be uncharacteristically normal compared to the recent past.” But he does expect the rising tide of new entrants to private jet aviation to ebb.

Less than 10% of those new to general aviation “will remain in the fold”, he says. That compares with some charter providers reporting new clients accounting for up to 50% of their business last year.

“First-time users can be lured by making the initial process as painless as possible, but keeping them is really outside the industry’s control,” Foley tells us. “Private aviation is a discretionary spend, and there are external factors that always conspire to end the romance.” Queuing up to sour that romance are: improved airline schedules, fewer health issues, unfavourable 2022 stock portfolio statements and worry about a possible economic recession. “It still favourably raises the baseline obtainable market for the industry from this point forward.”

Other key challenges of last year – including manufacturing supply chain disruptions and labour shortages (other than the pilot shortage) – have already begun working themselves out going into 2023, he says.

Richard Aboulafia, MD, AeroDynamic Advisory acknowledges that retaining newcomers will be a key challenge – albeit a little overstated. “Purchasers and fractional share purchasers have made commitments that aren’t easy, in the short term, to get out of,” he tells CJI. That leaves charter market entrants. “Here again, I’m not sure what, if anything, can be done, since it’s really just a function of airline service being restored to smaller markets (and with reasonable frequencies) over the next 12-24 months.”

The big challenge for manufacturers will be to maintain production discipline, particularly as supply chain disruptions are resolved. But at present, production rates are steady, prices are increasing, and backlogs are large and healthy again. “Rising production rates would jeopardise that. Here again, not sure I see a way to stop any OEM who starts trying to out-build the others.”

Environmental and social governance (ESG) concerns will remain a challenge – but one that can be mitigated by concerted industry action. “Making bizav a test market for SAF [sustainable aviation fuel], a pump-primer market if you will, would be a great message to send and it would be genuinely good for all concerned,” says Aboulafia. “Since bizav is less cost-conscious than the scheduled air crowd, there’s greater potential for up-front SAF adaptation.”

Sustainability was also selected as the third of six top challenges facing business aviation by Heather Gordon, legal director aircraft ownership and leasing specialist Martyn Fiddler Aviation. The industry needs a plan to boost decarbonisation and to “own that narrative”, says Gordon. The other five challenges are: The (real) war for talent, Coping with the downturn, Activism on social media, Crime, sanctions and politics and Investing in innovation.

The industry is changing and much of that change is coming from external forces, Gordon tells CJI. “The challenges predicted to affect us in 2023 are very much concerned about how to safeguard the future of business aviation; and that relies increasingly on the younger generation and new talent entering the industry.” Talent that will require private jet aviation to share its industry knowledge, pay forward opportunities and increase its diversity and inclusion.

But what do you think? What do you think are the top three challenges facing business aviation in 2023? And – just as important – how can the industry meet those challenges in the year ahead? Please let us know.

As Bowie said: “Tomorrow belongs to those who hear it coming.”

David Bowie’s advice for business aviation: “Tomorrow belongs to those who hear it coming.”

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“I understand the skittishness by investors. Bombardier is the only publicly-traded pure-play business jet prime. And historically, this market is sensitive to economic downturns,” Aboulafia told CJI.

Indeed the market is sensitive to economic downturns. In 2009, Bombardier was forced to cut over 1,350 jobs. Just before the pandemic, in January 2020, the Canadian OEM’s share price fell by 38% in a day after it slashed guidance by almost half on its 2019 earnings.

At that time the firm was reeling from problems with its, now-sold, rail unit and aircraft deliveries were also delayed. But Bombardier has just reported record first quarter aftermarket revenues and a growing backlog that rose by $1.3bn to $13.5bn since the beginning of the year.

But Bombardier’s share price continues to bottom out. It closed yesterday (28th June) at CAD$19.41 up 1.52% (+0.29) from the day before. However, over the past five days it is down -17.4% (-4.09) and over the month -37.89% (-11.84).

Shares fell to their lowest since March, 2021 on 14th June when Bombardier announced a US$350m offer to buy back some of its debt, ahead of schedule, using cash on hand. The day before, it completed a reverse stock split, whereby the firm consolidated its Class A and Class B shares at a 25-to-one ratio.

The stock closed at CAD$21.97 (-18.21%) on 14th June, finishing the trading day as the worst-performing stock on the Toronto Stock Exchange. That record was broken again on 27th June as the stock closed at CAD$19.12.

The move has moved some analysts to revise their 12-month price target for the stock. But others are optimistic that the share consolidation may help attract more long-term investors.

Mark Masluch, senior director, Communications told CJ the state of Bombardier’s financial performance in the last two years should be reflected through quarter after quarter performance. “Since we became a pure-play business jet company it has met its financial targets and exceeded market expectations with strong results. It has made considerable progress towards its longer-term financial goals and is on track to build a more resilient business.”

Bombardier is progressing toward a more financially flexible company, said Masluch. “We’re pleased with the compounding effects of our positive results quarter after quarter, which unfortunately is not reflected in Bombardier’s stock performance.”

Aboulafia added: “Management has been doing the right things, and the market is still holding up very well, but talk of recession makes people nervous. Removing Russia, and for that matter China, from the large cabin market doesn’t help either.”

But this could be a good time to invest in the Canadian OEM, according to Dhierin Bechai, founder, Aerospace Forum. “Bombardier has made the painful cuts and is successfully turning the company around with a focus on aftermarket sales expansion. Previously, I wasn’t really enthusiastic about Bombardier’s turnaround plans as they were plans that assumed perfect execution.”

The current plans are ambitious as well, said Bechai. “But Bombardier is now focusing on doing one thing well which is building and supporting business jets and the results are already showing while the company for instance for 2022 has been conservative with is guidance expecting stable flying hours while hours are actually increasing.”

Bechai thinks Bombardier might positively surprise in the best case and in the worst case it has built in sufficient buffers in its assumptions. “I believe that with the significant expansion into services as well as the focus on business jets, if you want to own shares of a business jet manufacturer Bombardier is a promising name,” he added.

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