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Private air travel takes off in Canadasaʴý but can it stay aloft?

Airport delays and chaos pushing more wealthy people to fly privately
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Chris Nowrouzi, CEO and Co-Owner of FlyGTA, is photographed at Buttonville Airport in Markham, Ontario on Saturday June 25, 2022. THE CANADIAN PRESS/Chris Young

Three years ago, Chris Nowrouzisaʴýs private charter airline served mainly ultra-wealthy leisure travellers and the upper echelons of the corporate world.

Now, 27 months into a global pandemic that closed borders and battered airlines, his Toronto-based FlyGTA caters to a broader swath of families and groups wary of the health risks and airport hassle of commercial air travel saʴý and who have cash to spare.

saʴýAfter the pandemic definitely we saw an increase of numbers all across the board,saʴý said Nowrouzi, the companysaʴýs CEO and co-owner. saʴýAnd the major increase that wesaʴýve seen is families.saʴý

Aiming to more than double its seven-plane fleet over the next few years, FlyGTA is now rolling out service to 20-plus destinations with scheduled charter flights saʴý nearly half in Florida or the Caribbean. Customers can sign up as a group and jet off to West Palm Beach from Toronto for about $25,000 one-way, taxes and fees included saʴý or $3,125 per person in a group of eight, the maximum capacity. That compares to Air Canada fares that currently range from $1,260 to $3,620 for the same trip in a business-class seat in July.

Amid scenes of daily frustration at Canadian airports, FlyGTA is part of a swelling sector of fleet operators and producers that hope to transform a COVID-19-era trend toward mile-high comfort into a long-term upswing for private flight.

While carriers have struggled since March 2020, use of business jets rose by 23 per cent in the United States and 53 per cent in Europe last quarter compared with a year earlier, according to the U.S. Federal Aviation Administration and Eurocontrol. Those leaps build on large increases in 2021.

Flight delays and cancellations, wariness of potential COVID exposure and surging wealth among the ultra-rich saʴý the worldsaʴýs 2,755 billionaires saw their combined wealth rise by US$5 trillion since March 2021, a January report from Oxfam International says saʴý have helped drive demand for private aircraft.

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The taste for luxury has seen buyers snap up used business jets as well, leaving the total number for sale at 3.1 per cent of the worldwide fleet as of late February, its lowest level in more than 25 years, according to market data firm Jetnet IQ saʴý and making new products a likelier option, which bodes well for private plane makers like Bombardier Inc.

The Montreal-based company increased its backlog of business aircraft orders by 11 per cent to US$13.5 billion in its first quarter. The saʴýstrong bookingssaʴý reflect saʴýcontinued strengthening in the private jet market coming out of the pandemic with activity levels now exceeding 2019,saʴý ATB Capital Markets analyst Chris Murray said in a note to clients last month.

Meanwhile airlines captured just 80 per cent of premium travel last year, down from 90 per cent before the pandemic, according to Alton Aviation Consultancy managing director Umang Gupta, indicating private travel now accounts for a larger slice of the market.

saʴýItsaʴýs a very niche market. But the niche seems to be creeping down the income scales, where you have a lot more options today,saʴý said John Gradek, head of McGill Universitysaʴýs aviation management program.

saʴýIf yousaʴýre booking a seat from Toronto to Vancouver on Air Canada on business class, and itsaʴýs $3,000 or $4,000, you get six or seven of your buddies together to fly and itsaʴýs cheaper to fly on a private jet than it is on a commercial airliner.saʴý

The growing array of purchase options includes charter, saʴýjet cardsaʴý loyalty-style programs, full ownership and saʴýfractional ownership.saʴý

Charter flights involve hiring a plane and crew for a custom trip. Jet card programs, which function like a premium charter membership, see customers pay in advance for the privilege of a fixed hourly rate and guaranteed availability, with dozens of companies serving North America.

Full ownership refers to an outright plane purchase by a corporation or individual. And fractional ownership means buying a share of a plane under a multi-year deal that covers costs like crew wages and maintenance, on top of an hourly rate for time on board.

Companies such as Calgary-based AirSprint, Mississauga, Ont.-based Jet-Share and HondaJetsaʴýs newly formed Jet It Canada all sell fractional ownership.

In 2020, the relatively affordable fractional and charter flights made up an unprecedented majority of private flight hours in North America, overtaking full ownership, according to an Argus International business aviation report.

Meanwhile, total business jet flight activity surged past 2020 levels by 41 per cent last year and topped pre-pandemic levels by 7.2 per cent.

As well as accessibility, health concerns remain top of mind for many amid the pandemic. saʴýWe are hearing that some (corporate) boards are asking their directors to fly private for health reasons,saʴý said Helane Becker, an analyst for banking firm Cowen.

Then theresaʴýs the pure convenience and saʴý alluring decadence saʴý of private flight.

saʴýThere is no wait time to get on the aircraft,saʴý said Nowrouzi. saʴýYour passports are checked and you get right on the aircraft and you depart.

saʴýOn your arrival, customs agents come out to the aircraft,saʴý he added, building a case for the revival of air travelsaʴýs bygone glamour.

saʴýBack in the saʴý70s, when commercial flying was new, people would fly for the experience and the destination. But somewhere along the way the experience kind of went away.saʴý

Even the old-fashioned route of buying a jet outright is more feasible for corporations, leasing companies and the odd individual, with the list price for new HondaJet and Cessna jets starting between US$3 million and US$4 million.

saʴýThose airplanes will fly Montreal-Miami nonstop,saʴý Gradek said.

A couple of clouds mark the horizon.

One is the price of jet fuel, which is poised to remain high this year in lockstep with oil costs.

saʴýAnd then theresaʴýs the Greta Thunberg factorsaʴý saʴý a growing awareness of aviationsaʴýs carbon footprint and the attendant saʴýflygskam,saʴý Swedish for flight shame, which pressures would-be flyers to think twice about heading skyward saʴý Gradek said.

But with the pandemic and airport chaos raging, going private may seem all the easier to rationalize, said former Air Canada chief operating officer Duncan Dee.

saʴýFor folks that can afford it saʴý high net worth individuals and corporate clients saʴý that becomes an alternative that is much more justifiable.saʴý

Companies in this story: (TSX:BBD.B)

Christopher Reynolds, The Canadian Press

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