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July 2020

The State of Private Aviation Today

An Interview with President of Sales, Marketing and Service, Patrick Gallagher
Corporate Jet Investor recently featured our very own Patrick Gallagher in their CJI Global event. For this virtual event, Corporate Jet Investor, an online publisher and international aviation event organizer, brought together over 850 leaders in business aviation from across the globe for 12 hours of thought leadership, marketing intelligence, interactive panel discussions, and more.

Patrick participated in a Q&A session with Alasdair Whyte, co-founder of Corporate Jet Investor, speaking about how NetJets is faring through COVID-19. Click to watch the virtual interview or read a summary of their conversation below.

Q: How has this pandemic affected private aviation in general, and NetJets specifically?

A: While private aviation might’ve seemed like a luxury before, it’s seeming like a necessity to some. The commercial airline schedules have been decimated, there’s fear of flying commercial for a host of health concerns, etc. 

We saw a much more dramatic dip in our demand—and demand for the entire industry—starting in mid-March. Demand bottomed out in April but has been steadily increasing since then. And currently, we are seeing a resurgence. The personal and leisure side of our business is nearly back to pre-COVID levels and new interest in private aviation is up like nothing I have ever seen. 

Starting in early March, interest in NetJets increased significantly. As usual travel plans became compromised, people began trying to find other options. And since that big uptick in March, interest has not subsided. As we see markets open, we’re converting those new prospects into Owners. May was our largest month for new Owner relationships since December 2007. 

Q: What is happening with business travel?

A: Business flight activity is more “out and back” than it used to be—meaning same day. This indicates that travelers may not want to spend the night in a hotel just yet. With the restrictions on restaurants and other public spaces, they just want to have their meeting and come back. 

Q: And you’re definitely seeing people moving from airlines to private?

A: Yeah, no question. The uptick in new customer acquisition that I mentioned before is driven almost entirely by those who are new to private aviation. In recent years, there’s been a massive increase in wealth. The amount of new, ultra-high wealth individuals has been outpacing the increase of private flight activity. So, there were a lot of people sitting on the sidelines who had the means to fly private but viewed it as a luxury they didn’t need. And now, they are looking at it as a very necessary part of doing business. 

Q: Do you think the industry can hold onto those people?

A: Once you get a taste of flying private, it is difficult to go back. And the airlines have said it could take up to three years to rebuild their schedules, so we will have a long time to get our arms around these customers. Hopefully it’s something they’re not willing to give up, but only time will tell. 

Q: So times like this, are you pleased to have Berkshire as a shareholder?

A: We are always pleased to have Berkshire as our parent organization and times like this are no different. I think it’s very comforting to know that you have access to capital at enviable rates, like we do through Berkshire, but it is more comforting to know that we don’t need it. Our balance sheet, our business model makes it so there is no longer a reliance on Berkshire Hathaway. 

Q: What message would you give to the industry about getting through the next six months or year?

A: For us, we have learned a lot about really engaging with our Owner relationships. Even when our Owners weren’t flying, our Owner Services Team was reaching out proactively to check in on them. And the engagement level we’ve had with those audiences is higher than we’ve ever seen. I was sending out frequent communications to our Owners, partners, and prospects. Whether it was an article about how we are cleaning the airplanes, notifications about our COVID-19 precautions, or information on new product offerings, people were engaging like never before. I think this is a great time for all of us to build up relationships and as much personal equity as we can with our customers—even if they’re not ready to fly. Because at some point, the demand will come back and we will be ready. 

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