5 Questions: Private aviation for flyers and investors
- January 1, 2020: Vol. 7, Number 1

5 Questions: Private aviation for flyers and investors

by Michael Fisher

Private jet travel is booming, and not just because it makes a heady status symbol. It also offers a host of advantages and investment opportunities. Skift, a hospitality news service, asserts that private aviation is shaking up traditional luxury markets — adding private aviation services to expenditure like those on second homes and yachts. The research firm Mordor Intelligence reports the market for business jets is anticipated to reach $19.95 billion in 2024. Michael Fisher, COO of the Greensboro, N.C. office for Diversified Trust, has been closely following the private aviation business.


How many private aviation players are there in the United States, and who are the top players?

It depends on how you define private aviation. There are enough providers in the space that a secondary market of “decision support” firms exist to help users sort out the huge number of choices. NetJets is the oldest and largest private aviation company, but others like XOJET and Wheels Up are becoming household names. If you define private aviation under the traditional charter model, you can find those options at most midsize and regional airports in the United States.

Is private aviation an investable opportunity for high-net-worth individuals and families?

We see multiple avenues for investment. Buying shares of public companies like Delta Airlines and Berkshire Hathaway can provide access to ownership of their subsidiaries, Delta Jets and NetJets. Some of the private companies are also actively seeking new investors to fund future growth, and we are seeing a trend of consolidation among them. Another interesting avenue is to invest in a fixed-base operator (FBO), which provides a chance to profit from hanger fees, fuel, maintenance, etc. at airports where the use of private aviation is growing. This approach could allow an investor to benefit from the success of multiple private operators rather than a single one.

What factors should executives take into account when determining if a private aviation service makes sense?

Control, albeit at a cost, is often the most important decision factor. Private aviation simply offers choices that commercial options cannot match. These range from deciding when and where you want to fly, matching the aircraft to the route and passenger load, the ability to adjust for inclement weather and reducing overall travel times. All of these advantages can often come at a cost that is well below traditional outright ownership.

What are the chief advantages of private aviation?

The scenario of a family ski vacation highlights several key advantages. Imagine avoiding TSA checkpoints and oversized luggage in a crowded terminal. Instead, you could have the advantage of parking and unloading your vehicle next to the plane or choosing to land in an airport that is closer to your final destination. Additionally, if weather is a factor, your flight plan can quickly be adjusted. From a business context, it is worth noting the flexibility of scheduling private flights (which in some cases can require just a few hours), as well as the privacy aspect for meetings or negotiations. Lastly, the reduced stress of the private option leaves passengers better prepared to relax or conduct business when they reach their final destinations.

How is private aviation likely to change in the future, based on market forces and technological advances?

We are watching the trend of Uber-like apps that are greatly simplifying the flight selection and booking process. While the traditional card, fractional and hourly operators have moved to include mobile apps, it also signifies growth in a new kind of operator that may not even own an aircraft. This shifts the revenue model from traditional operations to one of transaction fees. If this shift happens in conjunction with increases in subscribers and miles flown, it could favorably impact prices.

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