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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Traffic – B

There are two ways of looking at traffic data. US traffic for the year is down 1% on a strong 2023, according to WingX. Compared with the 2022 post-lockdown peak US business aviation is down about 6%. Europe business jet flights are down 2% versus the first half of 2023.

But rather than focusing on this, it is worth comparing with before Covid 19. WingX says that US business jet traffic is up 28.9% compared with the first six months of 2019. The big winners  in the US are super mid-size jets (up 50.3%), turboprops (47.3%), ultra-long range (45.6%) and very-light jets (39.1%).

European business aviation flights are up 7.5% in 2024 compared with the first six months of 2019.

Traffic alone is not a guaranteed sign of a strong industry (it is possible to fly a lot and lose money) but it is an important metric for maintenance providers and OEMs. Who also have a lot to be happy about.

Aircraft and engine manufacturers – A-

Business jet manufacturers are not showing any signs of wanting to suddenly increase  deliveries. Some of this discipline is because supply chains are still catching up. To be fair, this is also because all of the senior managers at manufacturers vividly remember what happened after the global financial crisis when they had an oversupply of aircraft.

As well as building jets, they are also continuing to sell decent numbers at good prices. Demand for new aircraft is down from 2022 but the first-quarter results were very good. It seems likely that book-to-build ratios could fall in the fourth quarter, especially as production ramps up. But it has been a good six months.

Pre-owned market and residual values – C

The state of the pre-owned market is more balanced. The number of business jets for sale has risen significantly, In June 2023 Amstat listed 1,019 business jets for sale. Now it says there are 1,203 on the market. But this is not a massive rise.

The percentage of aircraft for sale is still relatively low. Amstat says that 7.65% of large jets are for sale, 7.22% of medium jets and 6.12% of light jets. This means the market was still balanced at the end of June 2024. Aircraft are not depreciating as you would expect.

Perhaps the biggest worry is that experienced brokers – many of whom have had a good start to the year – are finding it hard to predict what will happen in the next six months, let alone in 2025.

Fractional operators – A+

“Our biggest challenge in 2024 is beating 2023,” says Andrew Collins, co-chair of Flexjet, speaking from Flexjet’s new owner’s lounge in Mayfair, London. Like other fractionals, Flexjet has quietly been investing in new corporate headquarters, buying maintenance and interiors companies, and selling a lot aircraft shares. WingX says that fractional fleets are flying more flight hours than at any time in the  past five years.

Fractional operators are also increasingly important to manufacturers. NetJets has been unveiled as the customer who placed this order in December order for the 12 Challenger 3500 jets. It now has 232 Challenger 3,500 options outstanding. Fractional operators are also set to benefit from owners looking for privacy.

As everyone know, things can change quickly. Looking at the market in June 2007 would have felt very similar (and everyone knows what happened then). The first six months have been pretty good. A sudden economic downturn would, of course, change things very quickly – but worry about that when you are back from holiday. 

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Volocopter, a German air taxi operator, had announced plans to commercially operate five one-pilot, one-passenger electric Vertical Take-off and Landing (eVTOL) aircraft at next month’s Paris Olympics. It is now waiting for temporary approval to perform a few demonstration flights.

The mood amongst eVTOL manufacturers has shifted dramatically in the last few years. At last week’s Revolution Aero London conference just 35% of delegates expected to see profitable commercial passenger services in the next four years, with 43% expecting it to take between five and 10 years. Some 22% believed it could never happen.

This was an audience of people who had come together at a conference focused on the future of aviation and are pretty good at forecasting. In 2018, at the first Revolution Aero event, 61% went against Uber and said that commercial operations would not take place until between 2025 and 2030.

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On Saturday night, an earthquake monitoring station in Edinburgh, Scotland picked up a tremor. It was caused by 75,000 Taylor Swift fans jumping at a concert 3.5 miles (6km) away. Swift’s Eras Tour has set seismic records around the world – in Seattle a concert registered the equivalent to a 2.3 magnitude earthquake.

You would have to be fearless or foolish to attack Swift.

But this week, in the early daylight, two environmental protestors from Just Stop Oil cut through the fence surrounding the UK’s Stansted Airport. Their aim was to paint Swift’s gorgeous aircraft. They did not find it. Instead, they sprayed orange paint on two private jets and demanded an emergency treaty to end fossil fuels by 2030. They were arrested. The aircraft are no doubt clean now.

This is not the first time that pressure groups have criticised Swift’s jet use and tried to make her an anti-hero. But going after her reputation  could be a mistake. She is Miss Americana. A 2023 survey by Morning Consult said that 53% of adult Americans are Swift fans. Some 44% described themselves as Swifties. These mega-fans know her love story. They followed her flight back from Tokyo on a business jet to watch her lover Travis Kelce win the Superbowl with the Kansas City Chiefs.

The day before the protestors attempted to paint her jet, Just Stop Oil was widely condemned for painting some of the Stonehenge ancient stone circle orange, damaging rare delicate lichen.

In its wildest dreams, business aviation could not have picked a better role model. Swift uses business aviation to travel around the world in style, creating a gold rush in every country she performs in.

Sweden’s core inflation rose by 3% in May, with many blaming this on cash brought into the country by Swift’s fans (her friend Beyoncé also did this last May). A Bloomberg survey of economists estimated that just the five concerts in Singapore added between $225m and $300m (SGD400m) to the country’s economy.

Nomura estimates that the 53 concerts that made up the first US portion of the Eras Tour generated $5bn and raised US GDP by 0.02%. Ticket prices rose so high that many American fans are flying around the world to watch her.

We know all too well that this economic argument will not satisfy business aviation’s critics. At Corporate Jet Investor London green activists and politicians argued that business jets should be banned because of inequality as much as environmental effects (and that the two are linked – see below). It is champagne problems as much as carbon. There is nothing new about this argument.

“I think that’s where we should focus our attention in terms of conversation, as opposed to trying to fight off either those early adapters or the naysayers,”

At EBACE Michael Amalfitano, president of Embraer Executive Jets, said the industry should focus on winning the argument outside minorities. “You start to see the movable middle. I think that’s where we should focus our attention in terms of conversation, as opposed to trying to fight off either those early adapters or the naysayers,” he said. “It’s education. It’s collaboration.” The industry needs to fill that blank space.

Swift already buys carbon credits, but there is also the opportunity to publicise Sustainable Aviation Fuel. In 2019 Coldplay, a UK popular music group, said it would stop touring because of sustainability concerns. The band’s cardigan-wearing fans were delighted when it re-started concerts in 2022 after agreeing a deal with Neste to use SAF made from used cooking oil on its flights (not everyone agreed).

By targeting the enchanted Swift and her fans, protestors have pushed Amalfitano’s middle towards business aviation’s greatest ambassador. Ironically, one of the arrested protestors actually met Swift on a past UK tour. She knew better than to try to disrupt a concert. There would have been bad blood everywhere.

PS: Real Swifties should be able to spot at least 22 song titles in this piece.

The Green Party, Possible and Safe Landing were invited to Corporate Jet Investor London 2024 to explain why they believe that business jets should be banned. They did not hold back.

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Gama Aviation went public in 2014 when it acquired Hangar8 which was already listed on London’s Alternative Investment Market. In theory, the reverse takeover gave the company access to more capital for acquisitions. At the time, Gama Aviation was managing all of Wheels Up’s King Air flights and the merged company had almost 150 aircraft under management. (It later sold its share of its US aircraft management business to Wheels Up.)

Many listed company CEOs believe that the market does not truly understand or value their business. But Khalek was able to prove this last year when Gama Aviation sold Jet East, its fast-growing US maintenance business. Jet East made up a third of Gama Aviation. At the time Gama Aviation had a market capitalisation of about £60m.

In November Gama Aviation sold West Star for $131m (netting $100m). Steve Maiden, who led the fast growth of Jet East, was this week appointed CEO of West Star.

Some of the cash from this sale has been used to take Gama Aviation private. Perhaps surprisingly a significant number of investors have chosen to keep their shares even though they are no longer easily tradable. One high-profile UK investor bought 2% of Gama Aviation after the de-listing was announced. 

Khalek is excited to be back running a private company. He estimates that between 25% and 40% of his work life has been taken up by the demands of being listed.  Now freed up, he wants to grow Gama Aviation. “I am not sure everyone in the business is as excited that I will have more time,” he jokes.

Gama Aviation is looking to grow its FBO business. It has just completed a parking apron at Sharjah Airport, near Dubai, and is now starting on a new 14,000 sqm hangar and FBO due to open next year. The company is working through planning for its Jersey FBO in the Channel Islands. 

It has also hired Graham Williamson, formerly of ACASS Europe and TAG Aviation, to grow its aircraft management business. Williamson, who has been a competitor of Gama Aviation for many years, likes growing companies. He was at Emirates Airlines when it had three aircraft.

“It is exciting when you are growing and the opportunity for Gama Aviation is huge,” says Williamson.

Gama Aviation is in talks to buy Austrian operator Tyrolean Jet Services (one of its last stock exchange announcements was on this deal). Tyrolean Jet Services was the first Austrian business jet operator.

“We want to create bespoke operations in different locations like Four Seasons does with hotels”

“We want to create bespoke operations in different locations like Four Seasons does with hotels,” says Williamson. “We want to develop local presence in combination with our engine room in Farnborough. We want to provide great service, great product and be more focused on small numbers of highly bespoke clients.”

Khalek says it is not about trying to build one global operator. “One of the reasons that consolidation is tough is that aircraft management is a very personal business. You don’t want to grow into a big monster chain, you want guests to feel that they are staying at a boutique hotel where everyone knows their name.”

It is looking to build a series of small management companies – with no more than 25 aircraft – with local management. Gama Aviation believes that it can get economies of scale in back-office functions like finance, trip planning, maintenance and purchasing. Khalek adds another simile: “It is like a Michelin Star restaurant – you want a unique maitre d’ but the kitchen needs to be producing a consistently strong product.”

Khalek never hid his frustrations with running a public company (including to the Wheels Up team before they floated). He is clearly excited about the freedom the business now has. “We have all been weighed down with regulatory issues, things like Brexit, Covid, supply chain issues and others,” he says. “We need to shake ourselves out of this and go back to why people go into this industry. People do it because they love it and they are passionate about it. We need to remember how enjoyable this industry is.”

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Qatar Executive has just taken delivery of the first two of nine G700s – A7-CHA and A7-CHB – which it unveiled at an event in Doha this week. As the worldwide exclusive commercial operator, Qatar Executive will be the first carrier to offer the aircraft to charter customers. Expressions of interest are growing fast and the new G700 fleet will be ready to begin commercial operations within the next fortnight, according to Badr Mohammed Al-Meer, group CEO, Qatar Airways. 

“Today we welcome the industry’s highest performance, ultra-long-range business jet to the Qatar Executive fleet,” said Al-Meer. “We are proud to enhance our existing fleet of 15 Gulfstream G650ER aircraft to include the pinnacle of business aviation excellence and look forward to seeing our guests on board soon.”

The G700 is fitted with Rolls-Royce Pearl 700 engines, bringing with it greater efficiency and more range than its predecessors. It’s originally quoted range of 7,500nm was upgraded to 7,750nm in September 2023. It is the fastest Gulfstream business jet ever produced with a top speed of Mach 0.935. The aircraft also boasts a balanced field length take-off distance of 5,995ft (1,827m) and a landing distance of 3,150 ft (960m) at sea level. 

‘Aircraft delivered using SAF’

The G700 is sustainable aviation fuel (SAF) ready. In fact the first G700 was delivered to Qatar Executive from Gulfstream’s HQ in Georgia, US fuelled by a SAF blend. “From our vantage point, sustainable aviation fuel is one of the key points that will help us achieve industry sustainability goals,” Mark Burns, president of Gulfstream told CJI. “We are offering all new customers of the G700 the chance to have their aircraft delivered using SAF, just as we fly it as part of our test programme.”

Inside, the G700 features the industry’s lowest cabin pressure altitude making flights at 41,000ft feel like 2,840ft. The cabin itself is split across four individual living areas including a private rear stateroom with a permanent fixed bed – all naturally lit via 20 trademark oval windows. Also, an ionising system for cabin air and 100% fresh air replenishment every three minutes provide the highest air quality ever in a business jet, according to Gulfstream. 

“Qatar Executive has been a valued Gulfstream customer for nearly 10 years,” said Burns. “We are honoured to have them as our international partner for the launch and first deliveries of the all-new G700. We look forward to growing their fleet in the months ahead.”

The G700 joins Qatar Executive’s fleet which includes 15 Gulfstream G650ERs, two Bombardier Global 5000s and an ACJ CRT. Keen to emphasise the growth outlook of Qatar Executive, the new aircraft are an addition not a replacement, according to Al-Meer. In addition to A7-CHA and A7-CHB, two further aircraft are in the final stages of acceptance and expected to arrive in Qatar in the coming weeks. Once all nine deliveries have been completed, Qatar Executive’s Gulfstream fleet will comprise 24 aircraft.

Fifa World Cup

Numerous airlines have tried before – including Delta and Lufthansa – to establish an executive division. Most have failed. But 15 years on from launching at the Paris Air Show in 2009, Qatar Executive says it is going from strength to strength. After seeing huge increases in traffic as a result of the 2022 Fifa World Cup, the subsidiary reported a 49% year-on-year increase in commercial revenue growth in 2023. 

“I want to be as humble as possible,” said Al-Meer. “But especially when it comes to high-level customers we understand this better than other businesses because we have been working with high-level customers for a very long time. We understand their needs. 

“We also have a base of very loyal returning customers, who often travel with the same cabin crew and who in turn understand their needs and requirements,” he added.

One of Qatar’s G700s (A7-CHB) will be on display at next week’s European Business Aviation Convention & Exhibition (EBACE2024) in Geneva. It will be the only Gulfstream aircraft exhibited at the show this year after the OEM decided to pull out.

“Every two to three years we assess the most effective use of our marketing,” explained Burns. “We have decided on a strategy that includes more personal shows in regions like here in the Gulf, the wider Middle East and Asia.”

The G700 was due to be delivered in 2023, but delays with the FAA certification programme saw deliveries pushed out to this year. However, good things come to those who wait. Doha’s main airport Hamad International was six years overdue when it opened in 2014. Now, the third busiest airport in the Middle East, it just took the tile for World’s Best Airport 2024 at the World Airport Awards.

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He traces its origins to how new owners shaped the business jet market during the onset of Covid. The storm’s outcome may leave some struggling to recoup the value of their initial investment.

“At the onset of Covid, many factors collided to create the perfect opportunity for first-time buyers to enter the market,” Foster tells CJI. “Now, these same factors are creating a perfect storm, which potentially could prove disastrous to these same owners.”

Business aviation caught fire over the last two quarters of 2020, driven by the desire to travel but not via public transportation. Charter and fractional providers enjoyed this early burst. “The fractional segment sold right through their lift capacity but were contractually bound to still provide lift – so they turned to the charter market for supplemental lift,” explains Foster. “Now the charter market held a captive client (fractional) over a barrel. So, with unprecedented high demand, hourly prices sky-rocketed to two-or-three times pre-pandemic levels.”

Consequently, by the end of 2020, fractionals were largely sold-out and charter prices reached the “point of insanity” – again fuelled by both fractional contractual need and demand, he explains.

‘Point of insanity’

That prompted non-owners to turn to whole aircraft ownership. For many, this seemed the perfect opportunity. Market conditions created from the onset of Covid included “free” capital from government stimulus programmes, significant gains in equity markets and a desire to travel to new vacation homes and remote work destinations – but not via the airlines.

Further incentive was supplied by bonus depreciation and historically low interest rates. “Finally, there was the promise (or lie) from some management/charter companies they can fly enough charter to ‘make the plane pay for itself’,” Foster says.  All combined, the “perfect storm” was formed and first-time buyers raced to the market to purchase an aircraft.

Before the pandemic, the average market supply generally hovered around 10-12% of fleet, or roughly 2,500-3,000 aircraft available at any time. By mid-2022, market supply settled in at 3-4%, with some modern models seeing available supply at less than 1% – perhaps even just one unit available. Predictably, with low supply, prices surged – prompting many legacy models to move upwards of two to three times their pre-pandemic values.

“But the worst part (for these buyers) is the transaction pace changed to unimaginably short time frames,” says Foster. “Aircraft were transacted in a matter of days with little or no due diligence on the aircraft, its valuation, nor parties involved and a lot of bad behaviours by brokers/middlemen.”

The perfect storm

This year that perfect opportunity looks like heading towards the perfect storm, according to Foster. Here’s how the storm is building: while overall supply sits at only 6% or about half the pre-pandemic level, total supply is already two to three times the level in mid-2022.

Charter demand is also down significantly. “The promise (made by some) has now become a lie. Owners are not able to create significant returns by chartering and many are realising that fixed and variable costs are much higher than originally budgeted or sold to them, exacerbated by significantly higher crew salaries, supply chain issues, etc. Finally, with rising supply, slowing pace, and far less demand, prices are falling.”

Legacy aircraft hold the greatest exposure due first, to the rapid rise in values that are already retreating quickly. The second reason is the “almost complete lack of sophistication” of buyers and limited or no due diligence completed at the time of purchase. “These owners will face significant exposure when they elect to sell, and the buyer demands a typical pre-purchase inspection.”

What might happen

But it gets worse (in terms of what might happen). “A large majority of these first-time buyers financed 90-100% of their purchase and also took 100% bonus depreciation,” Foster, from OGARAJETS tells us. “For easy math, let’s say the principal reduction on a $5,000,000 at 18 months is $500,000 or $4,500,000 balance – but the aircraft is only worth $3,500,000 today – less than 30% [of its previous value].

“Plus, the seller will have to stand behind the airworthiness and corrective actions arising from the buyer inspection. So, perhaps the seller nets $3,200,000, which requires them to write a check at closing for $1,300,000.”

Then, worse again. Many first-time buyers depreciated the aircraft to $0 in year one which offset other gains in the purchase year. “Now they must recapture this loss as ordinary income. The simple math is $3,5000,000 at 40% or a $1,400,000 tax bill.”

All of this raises the uncomfortable question: how many of these owners can afford to sell their perfect opportunity aircraft? Also, delaying the sale only exacerbates the challenge. Prices will continue to fall on these legacy platforms, while maintenance will continue to accrue. “Potentially, this is not a pretty picture,” says Foster.

But what do you think? Is the outlook sunnier? Or are the storm clouds gathering for new entrant aircraft sales? Please let us know.

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This week, when George Mattson (who has now been CEO for five months) announced the company’s first-quarter results, there was none of this excitement.

Sales were down 44% and it posted another loss, but this is not a surprise. The company is still restructuring. Mattson stressed that everything was in line with the plan.

“Wheels Up was great at the offensive, but its defence was weak,” says one member of its founding team looking back. “It was becoming the Amazon of business aviation but the warehouses and delivery team could not keep up.”

Much of the past year has been about building this defence. In an analyst call, Mattson and Todd Smith, Wheels Up’s chief financial officer, stressed how they are focusing on operations and turning around the company. They said that they have added more than 250 years of operational experience to its Atlanta Member Operation Center (we don’t know how many people this is). It had on-time performance of 87% and a flight completion rate of 98%. It is also cutting its fleet and cutting costs.

At $197m, sales for the first quarter were down 44% compared with last year. But half of this came from the sale of its aircraft management business to Airshare and lower aircraft sales (the company’s aircraft sales team have also since left). Charter – mainly run through Air Partner – was up 20%.

The number of active members fell by 25% to 9,155. Some of these were members in the centre of the US that Wheels Up no longer wants to serve with its King Air fleet (but it is very happy to arrange charter for them). Active users fell to 10,218, a 23% YoY drop from 13,336 users in the same quarter last year.

The results also show how long it can take to change a membership company. Wheels Up stopped selling its guaranteed nationwide programme in June 2023. So it still has customers on this programme – although it is now less than 20% of its peak.

Wheels Up is saying that it is on track to produce positive adjusted EBITDA by the end of the year. It had an adjusted EBITDA loss of $49m in the quarter; similar to the same quarter last year. 

The biggest change in the past 12 months is that it has added $490m in new investment – particularly the cash and support that has come from Delta Air Lines. At a members’ event at the Masters golf tournament, Ed Bastian, Delta’s CEO, stressed that the airline is committed to Wheels Up.

Mattson and Smith still have a way to go to get Wheels Up to profit. The company had a net loss of $487m for 2023 financial year, down from $555m in 2022. It got through $6,765m of cash last year. But they have a plan and will quietly keep working on it.

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Scott’s advice was fresh in my mind, as I listened to Ed Bolen, president and CEO, NBAA explain the growing menace facing aviation. “Business aviation is under full-scale attack,” he told the conference’s 230 delegates. “There is an effort to disparage our industry, which is not consistent with data and our strategy and we see it in a lot of ways. Nor is the problem confined to Europe, it also occurs in the US.”

Evidence is not hard to find. Top of mind were three new US policy initiatives that could significantly damage business aviation. The unholy trinity includes: the Internal Revenue Service (IRS) plans to step up its audits of business jets owners, a plan for longer depreciation periods on aircraft purchases and a planned five-fold increase in fuel tax over five years.

“On February 21st, the IRS said it would do a lot more audits of people who own an airplane,” said Bolen. “The IRS is saying we think there is a lot of non-compliance on personal use.”

Fuel tax and depreciation are also being targeted. “There is a proposed five times increase in [fuel] tax with no real justification. Plus, there is also a proposal for longer depreciation schedules at a time when most policy-makers think shorter depreciation is good for jobs and good our economy,” he added.

Such legislative attacks are not restricted to the US. Earlier this week, Brazilian Congress moved to approve new tax legislation, which could penalise business aviation, according to Felipe Bonsenso, partner with the country’s law firm Bonsenso Advogados.

If enacted, the ‘Imposto Seletivo’ or Selective Tax would apply to aircraft that are considered harmful to the environment and health. The rate of tax increase is apparently still under discussion.

An attack of a more visceral kind took place this week when protestors stormed onto Hanscom Field Airport, near Boston, Massachusetts. Extinction Rebellion protesters climbed a perimeter fence to disrupt airfield operations forcing the temporary closure of the airport. The raid was staged in protest to Massachusetts Port Authority’s plan to build more hangars for business jets on the airport.

The latest protest follows similar action by the group and others targeting private aviation at other airports in North America and Europe – including, notoriously, at last year’s EBACE event at Geneva Airport.

So, what to do when under attack? The NBAA’s strategy is the opposite of the one recommended by my Tucson taxi driver. Instead of backing quietly away from the threat, the NBAA’s policy is to counter it with reasoned argument, backed by hard data seasoned with practical examples of how business aviation is benefiting lives and businesses worldwide.

Business aviation has a wealth of data to back its case and the global industry should find a unified voice to put that case to policy-makers, protestors and the public worldwide, according to the NBAA. Bolen put it like this: “The facts, the truth and the reality are on our side. We really are an important engine for the economy, a vital link in the transportation system, developing remote economies and businesses to grow by staying in contact with the global economy.”

Combating the many threats facing global business aviation demanded a truly co-ordinated industry response. The association aimed to focus that response with its Climbing.Fast campaign launched at the NBAA-BACE in Las Vegas last October. In addition to promoting the industry’s business and community benefits, the campaign aims to highlight the sector’s mission to achieve net zero carbon emissions, including the use of sustainable aviation fuel (SAF) and its leadership on sustainability targets.

The campaign, and the industry it seeks to defend, faces tough battles to win over business aviation’s increasingly vocal critics: That’s even with the campaign’s army of acronym-based ambassadors including NAFA; the reason for my visit to the Tucson Mountains.

*Meanwhile, please do not rely solely on my taxi driver’s advice if you encounter a western diamondback rattlesnake or any other type of venomous reptile this weekend. Always seek professional guidance. (Scott’s contact details can be provided on request).

Note of complaint: NBAA argues against IRS plans to step up audits of business jets owners and plans for longer depreciation periods and higher fuel tax.

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Not silver but sustainable business aviation dominated the two-day event at the resort amid the tall saguaro cacti. Prickly topics under discussion included the health of the US economy, particularly the impact of high interest rates, the disillusion of some first-time buyers and business aviation under attack.

But there was more gain than pain when it came to the upbeat assessment of the US economy from Gus Faucher, chief economist, PNC Financial Services Group. Without minimising the impact of high interest rates, which could (but not necessarily will) pitch the US economy into recession, Faucher highlighted positive factors likely to lead to steady growth this year and into 2025.

“The US economy is in very good shape right now,” he said. “The economy is 8% larger than it was before the pandemic. Some 22m jobs were lost due to the pandemic but those have been regained and another 8-9m jobs added to where we were before the pandemic.” Strong labour markets underpin consumer spending power, which was driving broad-based economic growth across the US, he added.

Returning rates to 2%

But there are reasons for pessimism. The “inverted yield curve” – meaning short-term interest rates were higher than long-term interest rates – was often associated with recessions. Faucher estimated the likelihood of a US recession at about 35%. However, he felt confident that the Federal Reserve would be successful in returning rates to its goal of 2% from their current level of just over 5%.

“There is likely to be slower growth this year but still growth,” he summarised. “Spending will continue to support growth in 2024, with the Fed cutting rates later this year for technical reasons [partly to cool wage growth] starting in July and in 2025. That will support growth this year and into 2025.”

Interest rates are affecting the decision to buy aircraft but not in the obvious way of affecting decision-making, said Shawn Dinning, senior partner, Dallas Jet International. “I don’t see a situation where a prospective buyer or borrower is looking at rates and saying, ‘I can’t afford this deal’. We are not seeing a delay in decisions to buy. About 70% of our business lately has been cash.”

But interest rates are affecting the core business of his clients – principals and corporations. “We do a lot of multi-family-type real estate companies and two years ago they were printing money, now they went from a nice positive cash flow position to bleeding hundreds of thousands if not millions of dollars because of interest rates,” said Dinning. In some cases, owners need the liquidity on the airplane. “They have to prioritise, so the airplane gets the axe,” he added.

On a more positive note, he said: “Demand continues to surprise me in a good way and it’s keeping up with this increase in inventory in a pretty good way.”

‘More transactions in Q1’

Wayne Starling, executive director of International Aircraft Dealers Association (IADA) agreed. “There were more transactions in the first quarter of this year than there were in the first quarter of last year,” he said, based on his association’s latest report.

But Johnny Foster, president and CEO, OGARAJETS reported growing frustration and disappointment among first-time buyers. Before the pandemic, almost every year consistently, first-time buyers accounted for about 5% of the purchases of aircraft. But that figure rose to 38% of buyers between 2020 and 2022, he said.

They came into the market, often buying legacy aircraft with the promise of bonus depreciation and excessive demand for charter. “Now we are hearing and seeing these first-time buyers are disenfranchised with the model because their aircraft is not flying 600 or 1,000 hours a year [through charter]. It’s flying 100 hours a year,” he said. “And their pilots’ salaries have tripled over the past three years, and they are now being told they have to have three pilots instead of two pilots.”

These frustrations were compounded by their first main maintenance event, which “has caught many by surprise”. The legacy aircraft that cost only $2m or $3m to buy could be facing inspection costs of half a million dollars, said Foster.

‘Full-scale attack’

From disappointment to hostility. Business aviation is under “full-scale attack” and not just in Europe, warned Ed Bolen, president and CEO, National Business Aviation Association. “There is an effort to find ways to disparage our industry which is not consistent with data and our strategy. We see it in a lot of ways,” he said. Examples include the February 21st announcement by the Internal Revenue Service (IRS) that it intended to step up its aircraft owner audits.

Other examples cited were the five-fold increase in fuel tax over five years and the plan for longer depreciation periods. Combating these and other threats would rely on a coordinated industry response and lobbying policy-maker, he said. Not least via the NBAA’s Climbing.Fast campaign.

Speaking to CJI after his presentation, Bolen set out his goals for the end of the decade. “By 2030, we will be ready to answer the SAF Challenge of 3bn gallons produced in the US,” he said. “We would like to see operators continue to look for ways to operate even more sustainably.” That means looking at good quality offset programmes and book-and-claim options. “And we are working hard to introduce advanced air mobility and hybrid solutions and the effectiveness of our air traffic integration.”

Despite challenges facing business aviation – not least high interest rates, supply chain difficulties and the shortage of pilots, airframe and powerplant technicians – the industry can look forward to a bright future as wealth generation and transfer continue to fuel demand, according to speakers.

Stephen Friedrich, chief commercial officer, Embraer summed up the reasons for optimism: “Over the next 20 years, we are going to see a $73trn wealth transfer from Boomers to Generation X and Millennials – and that is only just beginning. This is in addition to [aircraft] purchases by corporate flight departments and private individuals.”

Back in the 19th century the silver boom soon turned to bust, with fire consuming the mining town of Quijotoa in 1889. Attendees at the NAFA conference heard strong reasons to believe in a much more sustainable (and profitable) future for business aviation.

Prickly saguero cacti surrounded the conference venue. Inside, delegates discussed thorny topics such as the impact of high interest rates.

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