The new boss of Starbucks, Brian Niccol, is set to commute almost 1,000 miles from his home in Newport Beach, California, to the coffee chain’s headquarters in Seattle on a corporate jet. Niccol is not alone in this trend. Private flight numbers have bounced back sharply during the pandemic, surging 20% above 2019 levels in 2021 and continuing to climb since.
According to Daniel Riefer, a partner at the consultancy McKinsey, “COVID has given the whole sector a boost. Many people tried private jets during that time and felt the return on investment was better than they thought, and it’s not as expensive as they feared. That created a sort of stickiness.” The U.S. remains the dominant market, accounting for at least 50% of all these exclusive flights.
However, with operators on a post-pandemic high, private jet companies such as the Warren Buffett-owned NetJets and Todd Boehly-backed Flexjet now sense an opportunity to replicate the success of America in Europe. Kenn Ricci, chairman of Flexjet, which operates a fleet of just over 300 aircraft, believes there is potential for growth in Europe. Ricci, who flew in the U.S. military in the 1970s before becoming Bill Clinton’s long-standing private pilot from 1992, is passionate about the business he’s in.
Despite the enthusiasm, headwinds abound in Europe. Oliver Tebbit, an aviation partner at the law firm Watson Farley & Williams, notes that “U.S. corporations and high-net-worth individuals are definitely not subject to pressures in the same way that we are in Europe.” Private jet use in the U.S. is predominantly associated with economically productive activity, while in Europe, there are environmental pressures and cultural resistance.
Flexjet has pioneered fractional ownership, where customers buy a share in an aircraft, typically an eighth or a sixteenth, costing between €1.6 million and €5 million. Customers commit to a five-year term, paying at least €22,600 (£19,000) a month to ensure aircraft availability, plus an additional charge per flight. Larger rival NetJets has rolled out its own version of this model, while Vista, ranked third among private jet operators, is pushing shared charters, where individuals can book an empty seat on a flight.
Despite the positive trends for private jet flights, new figures reveal that departures from Europe are down 1% so far in 2024 compared with a year ago. Ricci, however, remains optimistic, pointing out the importance of linking up with wealthy entrepreneurs from oil-rich nations in the Middle East.
As the private jet industry continues to evolve, it remains to be seen whether Europe will embrace this mode of travel as enthusiastically as the U.S. has, given the cultural and environmental differences between the two markets.
Post Disclaimer
The following content has been published by Stockmark.IT. All information utilised in the creation of this communication has been gathered from publicly available sources that we consider reliable. Nevertheless, we cannot guarantee the accuracy or completeness of this communication.
This communication is intended solely for informational purposes and should not be construed as an offer, recommendation, solicitation, inducement, or invitation by or on behalf of the Company or any affiliates to engage in any investment activities. The opinions and views expressed by the authors are their own and do not necessarily reflect those of the Company, its affiliates, or any other third party.
The services and products mentioned in this communication may not be suitable for all recipients, by continuing to read this website and its content you agree to the terms of this disclaimer.