19 December 2014

My predictions for 2015

As 2014 draws to close, it’s time to reflect on an eventful year in business aviation – and here at PrivateFly. And to think ahead to what 2015 may bring.

We’ve certainly had a busy year. At PrivateFly we’ve managed to achieve significant growth, despite still-challenging market conditions. The private jet industry in Europe is still in decline year on year, despite some stronger months towards the end of 2014.

At the end of November, WingX analysis showed 2014 flight activity YTD at 0.6% below 2013. Much of this is related to the unrest in Eastern Europe, with Russia seeing a -14% decline.

Our business model has seen real traction this year – with private jet customers increasingly looking to move online, helping the charter segment to perform strongly against private jet fractional ownership (see the recent Financial Times article Online technology challenges fractional model).

It’s been a strong year for us in our French and US operations – and we’re looking forward to making even greater strides forward in those markets in 2015.

Our technology has been evolving rapidly too. This year we’ve worked hard on enhanced integrations with our supply chain – the private jet operators and their aircraft scheduling and quoting software. We can now offer instant real-time pricing on a growing number of aircraft. This gives cost and speed advantages to our clients.

We can also now offer an increasing range of services via our apps, including a search for available empty legs; and functionality for existing customers to make changes to their flight bookings.

So there is much to look forward to in 2015. These are some of the industry developments I am looking out for in the year ahead:

1. Honda Jet is finally certified – and sells well against the Mustang and Phenom 100.

After delays to the 10+ year program, it will be fascinating to finally see how the revolutionary HondaJet performs in the VLJ market. The aircraft offers a spacious cabin for an aircraft of its size and claims to be 30% more fuel efficient than its rivals.

2. In the UK market, Farnborough Airport will have a strong year.

TAG Farnborough Airport is the one of Europe’s most efficient and contemporary business aviation airports. With the UK market performing more strongly than others in Europe, I predict it will break its annual movements records and hit close to 25,000 private jet flights in 2015.

3. A shake up of the mid-size jet market, with two new aircraft coming onto the scene.

Cessna expects FAA certification of the $14.9 million Citation Latitude in mid 2015. And Embraer’s Legacy 500 will be entering the charter market, bridging the gap in their portfolio, between the Phenom 300 and Legacy 600. We’ll be watching carefully to see if these much-anticipated launches dent the popularity of the category leader, the Citation XLS/XLS+ – or other aircraft in the mid-size category, such as the popular Hawker 900.

4. All eyes on Mineta San Jose Airport – which will become the world’s most iconic private jet airport.

Google are investing $82 million in building a new private jet terminal at Mineta San Jose Airport – on the doorstep of their Silicon Valley HQ, known as the Googleplex. This will be a state-of-the-art facility for Google’s executives and others.

This is due to be completed later in 2015 and we’ll see business aviation companies vying to set up their HQs there – as has happened elsewhere. The airport will become a key US centre for business aviation.

5. More speed records set to be smashed as the CitationX+ and the G650ER compete for the fastest private jet accolades.

In 2014, Gulfstream were very active in pursuing several speed records for their G650 (now the G650ER in its extended range variant). These included New York to Mumbai in 13 hours and 49 minutes (a journey of 6,754 nm). Cessna fought back later in the year, setting 4 new speed records with their Citation X+, include a coast-to-coast record from Seattle to Miami in 4 hours and 52 minutes for the 2,375 nm distance.

No doubt we will see further speed records broken in 2015.

6. The price of buying a private jet will decrease.

I predict we’ll see the price of the Eclipse 550, the world’s lowest priced private jet, discounted further to below $2.9 million this year. The entry level VLJ market is becoming a race to the bottom line, with key contenders Cessna’s Mustang and Embraer’s Phenom 100 putting pressure on price at this end of the market.

Trying to lure customers to buy at this entry level is a competitive business. In no small part because the post-recessionary private jet customer is increasingly seeing the benefits of chartering a jet, instead of buying one. 2014 highlighted many high profile corporates selling their fleets and turning to charter and 2015 looks set to see this trend continue.

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