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Bombardier Inc. T.BBD.A

Alternate Symbol(s):  BDRPF | T.BBD.PR.B | BDRXF | T.BBD.PR.C | T.BBD.PR.D | BOMBF | BDRAF | T.BBD.B | BDRBF

Bombardier Inc. is a Canada-based manufacturer of business aircraft with a global network of service centers. The Company is focused on designing, manufacturing and servicing business jets. The Company has a worldwide fleet of more than 5,000 aircraft in service with a variety of multinational corporations, charter and fractional ownership providers, governments and private individuals. It operates aerostructure, assembly and completion facilities in Canada, the United States and Mexico. Its robust customer support network services the Learjet, Challenger and Global families of aircraft, and includes facilities in strategic locations in the United States and Canada, as well as in the United Kingdom, Germany, France, Switzerland, Austria, the United Arab Emirates, Singapore, China and Australia. The Company's jets include Challenger 350, Challenger 3500, Challenger 650, Global 5500, Global 6500, Global 7500 and Global 8000.


TSX:BBD.A - Post by User

Post by vonSachsenanhalon Oct 02, 2021 11:39am
5202 Views
Post# 33957480

Huge demand to fly private - NYT

Huge demand to fly private - NYT

WEALTH MATTERS

Private Jet Market Grapples With Surge in Get-Me-Away Demand

Waits for charter flights are longer, and costs higher, as many more of the rich seek to avoid crowded planes and airports.

 
 

Even people who can normally afford to charter a private jet at a moment’s notice are being forced to be patient and, often, pay more.

It’s all because of the pandemic.

Early on, few people were flying at all — or really had anywhere to go. Since then, demand for high-end travel, in particular, has increased exponentially, as more of the wealthy opt to avoid airport lines and crowded commercial flights. But so many are flocking to private jets, there are not enough planes and pilots to serve them.

That has been coupled with the same supply chain problems that have plagued many other parts of the economy. Want a replacement tire for a jet and someone to swap it out? What could once be done in a few hours may now take a week or more, one jet company said.

As a result, providers that used to be able to quickly send out a jet to members have been changing their terms. XO, for instance, now requires 72 hours’ notice, up from 24. Ascension has gone to 24 hours from 10.

 

And NetJets, the second-largest air carrier in the world by number of planes, has stopped selling new jet cards — the equivalent of prepaid Starbucks cards, loaded with jet hours to whisk the wealthy anywhere they want to go.

“Record private travel is beyond the capacity of the system,” said Doug Gollan, founder of Private Jet Card Comparisons, which monitors the industry. “Some of this is beyond the control of the operators, like parts shortages or fueling delays — not because they forgot to order fuel but because there’s a shortage of truck drivers.”

And that, Mr. Gollan said, is coming at a time of record demand for private jet travel around the country and, in some instances, the world. “If you’re in New York, it’s not an issue to go to Palm Beach,” he said. “But these are national programs. If you’re living in Idaho and want to go to Oklahoma, they have to get a plane in there, and these jet providers can’t source the planes profitably in 12 hours or 24 hours anymore.”

He pointed out that most jet card programs, bound by contracts that go on for dozens of pages, require people to pay $200,000 or more upfront, so few fliers are pleased by the delays.

Let’s be clear: Flying private is still an incredible luxury that only some people can enjoy. But they are flooding the system.

 

Before Covid-19, there were about 100,000 regular private jet fliers in the United States, out of some 1.5 million people who could afford to charter a plane, according to a 2020 report from the consulting firm McKinsey & Company. After last year’s shutdown, the report found, many more of the people who could afford to fly private did.

“Some sizable portion of that group has been unlocked,” said Pat Gallagher, president of sales, marketing and service at NetJets. “But the demographics aren’t any different than our existing customers. No one is stretching to fly privately. It’s people who didn’t think they needed to fly privately before.”

The motivations for people with great wealth to switch from first-class commercial flights are not surprising. Convenience is one. Walking out to your plane is easier, safer and less stressful than dealing with airport lines. And there are no fights over wearing a mask on a private jet.

“We have 85 jets, and if I had double or triple that number, I wouldn’t have enough because of the demand,” said Jim Segrave, owner and chairman of flyExclusive.

“Everyone is concerned about how we will deliver through the holidays,” Mr. Segrave said. “Come Thanksgiving, there aren’t going to be any planes available. You may not be able to find a plane unless you’ve already booked one, or it will be outrageously expensive.”

The industry was not prepared for this increase in demand. Short of buying your own jet, which can cost $60 million or more for a new, top-of-the-line model, there are several common options: Charter a plane when needed, buy a jet card with prepaid hours on it, or buy a fraction of a jet. Each is under strain right now.

 

The charter market works like a beach rental. You go through a broker who sources the planes for you. Prices depend on where you're going and when.

 
 
Image
Credit...An Rong Xu for The New York Times

What’s causing problems are jet cancellations. “Most of these jet cards, if the operator cancels it because of a mechanical issue, they guarantee you a replacement aircraft at no cost,” Mr. Gollan said. But if the jet operator cancels because it doesn’t have a jet, he said, “your broker could say, ‘Sorry we lost this plane, but we have three new quotes.’ Instead of paying $18,000 to go up to New York, you could pay $28,000.”

Your choice at that point? Get a refund and fly commercial or pay the extra and go.

“Jet operators have been inundated with requests,” said Gregg Brunson-Pitts, founder and president of Advanced Aviation, a boutique jet broker. “We have had to be creative.”

Since the lockdown was loosened last year, charter prices are up 15 percent, but customers are not balking, Mr. Brunson-Pitts said. Yet in the rush to fly private, he said, would-be fliers needed to ensure that their broker is working with reputable jet owners who properly maintain the planes and train the pilots.

Jet cards are supposed to provide more of a guarantee. Fliers have already paid hundreds of thousands of dollars for the hours and want the plane when they want it, usually on relatively short notice.

But those, too, have been in high demand. Even higher prices didn’t cool interest.

“After a couple of price increases that didn’t slow down sales to a pace that we were comfortable with, we halted jet card sales altogether and went to a wait list,” Mr. Gallagher of NetJets said. “We could have tested that price elasticity further, but I didn’t want the perception of a money grab in a hot market. We saw how the demand was building in the summer.”

Kenny Dichter, chairman and chief executive of Wheels Up, another provider, said he didn’t see the jet card market cooling. “People are putting money down for travel into 2022,” he said. “The demand we’re seeing now is the result of the stubbornness of this Covid crisis.”

 

Even those who own fractions of a plane are under pressure because of delays in the production of new jets and the training of pilots and crew to fly them. NetJets has 100 planes on order now.

And given the jet card demand, some of those fractionally owned jets are being used to service the jet card holders, said Peder von Harten, vice president of sales and marketing at Nicholas Air, which operates 35 jets.

“It stinks for the consumer,” he said. “That $1.4 million you spent upfront for that fraction is now going to have a residual value or $800,000. Or the company really used it more than you wanted to and that value is $500,000.”

Throwing another wrench into private jet travel are countries’ different Covid rules. “If you want to fly from Hong Kong to Dubai, you have to take into account different government restrictions,” said Ian Moore, chief commercial officer of VistaJet, which runs an international fleet. “It’s very complex in normal times. Covid has made it triply difficult.”

Plane maintenance, too, has been affected. Since the planes are being flown more, they’re being serviced more often. But there aren’t always enough parts or people to do the work because of how Covid has disrupted the global supply chain.

“If you needed to get a replacement wheel to Cairo, you used to be able to get it in a couple of hours,” Mr. Moore said. “Now it takes seven to 10 days. So servicing that customer has become a lot more difficult.”

Even small delays can be a problem, Mr. Segrave of flyExclusive said. “It’s not that we can’t get the service,” he said. “It’s ‘We can get to you, but it’s going to be three to four days.’ Three to four days on an aircraft that flies 100 hours a month is an eternity.”


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