Conditions Favorable For Private Aviation Consolidation, Some Experts Say
Market conditions today are favorable for consolidation in the business aviation industry, especially with charter operators, some experts say.
The environment presents a “new and interesting” opportunity for buyers and seller and offers owners, operators and charter companies in the business aviation industry the occasion to sell, merge or raise capital from a private fund, Brooks Crankshaw, managing director of investment bank Balmoral Advisors, said in a recent video.
Private aviation has become a popular alternative to the airlines, he said.
“All of these strategies take advantage of favorable market conditions,” Crankshaw said. “Financial buyers, including private equity funds or family offices, should consider investing in this market. With ongoing consolidation, the market presents opportunities to deploy capital in a buy-and-build strategy, which takes advantage of the opportunities offered to existing aviation companies.”
So far in 2020, several private aviation companies have completed transactions. For example, Jet Edge International acquired JetSelect Aviation, Delta Private Jets merged with Wheels Up, Wheels Up acquired Gama Aviation Signature and Volatus Aerospace acquired Partner Jet, among others, Crankshaw noted.
Rolland Vincent, president and consultant with Rolland Vincent Associates in Plano, Texas, expects consolidation in the market.
“We’ve been calling for consolidation, especially in charter, forever,” Vincent said. At the airport, for example, it’s easy to see consolidation in the rental car industry with fewer offerings.
“There’s no reason charter shouldn’t be the same,” he said. “I think one day we’ll have a very few large global brands in charter.”
There are also “massive opportunities” for consolidation with suppliers and parts manufacturers, who want to “de-risk” their businesses, Vincent said. For example, Boeing supplier Spirit AeroSystems recently closed a deal to purchase Bombardier’s Belfast operations.
“Money is cheap; financing is very affordable,” Vincent said.
During the COVID-19 pandemic, private aviation has rebounded to about 85% of 2019 levels, spurred by leisure flyers, while commercial and cargo flights remain down. Before the pandemic, only 10% who could afford to do so flew privately. Now, as many as 50% of private aircraft clients are first-time flyers, Crankshaw said.
But the private aviation market is fragmented, with 59% of business aircraft operated by companies with fewer than 500 employees and 70% with less than 1,000 employees, Crankshaw said. He cited figures from the National Business Aviation Association (NBAA).
Operators may now be able to overcome barriers for growth, such as in the ability to find qualified pilots or to secure aircraft, he said. Owners may also diversify by expanding their portfolios to include jet cards, maintenance repair or brokerage.