The News
Private jet operators are bucking the slowdown reported by US commercial airlines in recent weeks, bolstering industry executives’ hopes that the premium end of the aviation market may remain more resilient, at least in the short term.
“We haven’t seen the weakness that others have reported. It’s possible that we’re insulated from it. It’s possible that we could see it in a later phase if the erosion of consumer confidence continues,” George Mattson, CEO of on-demand aviation company Wheels Up, told Semafor.
Delta Air Lines, which sold its private jets business to Wheels Up and is now its largest shareholder, was one of four US carriers to lower its guidance for the quarter. Weakening consumer and business confidence, coupled with lower US government spending on travel as the Trump administration cuts agencies’ budgets, have knocked the S&P 500 passenger airlines index by 20% in the past month.
The top end of the market has been more robust, however, with United CEO Scott Kirby telling an investor conference that “international, long haul, Hawaii, [and] premium all remain really strong.”
In a sign of confidence, Vista Global, the private aviation group behind the VistaJet and XO brands, this week secured a $600 million equity injection from a group of investors led by RRJ Capital. Embraer’s stock also hit a record after it announced the largest order in its 30-year history last month, to supply Flexjet with up to 212 jets under a deal worth up to $7 billion at current list prices.
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Andrew’s view
Travel spending typically tracks broader economic activity closely, but executives in aviation and beyond report a much more buoyant mood among the wealthiest customers compared to the caution reported by most consumers. Moody’s Analytics reported last month that the most affluent 10% of US households now account for almost half of consumer spending, a record since at least 1989. Increasingly, they are holding up the world’s largest economy.
Private aviation also spiked during the COVID-19 pandemic, which disrupted commercial flights and left some wealthier passengers wary of taking larger, more crowded aircraft. Business jet use has stabilised at a higher level than before 2020, according to Federal Aviation Administration data.
“The new normal is higher than we were in 2019,” Mattson said, “because once you fly private for the first time, you may not stay only flying private, but you’re not going to forget, either.”
That has not translated into commercial success for every operator. Wheels Up required a $500 million rescue from Delta and other investors in 2023, and continued posting losses in 2024.
Mattson said he and his team were in the middle of a “multiyear transformation plan.” With his thinly traded stock down 60% in the past year, any deterioration in confidence among jet-setters will make that turnaround far harder.
Room for Disagreement
The recession brought on by COVID-19 had “a very bizarre, positive impact on private aviation,” Mattson notes. Should the US economy weaken significantly, private jet customers have many options for trading down, as they have in other downturns. Wheels Up is “trying to set ourselves up for that” eventuality by keeping ample capital on its balance sheet, Mattson said, but he predicted that the industry would be “pretty resilient” in the event of a mild downturn.
Wheels Up is counting in part on a plan to offer its services through Delta, whose 45,000 corporate customers greatly outnumber Wheels Up’s 5,000 members. “No airline has ever been able to integrate commercial with a private opportunity” previously, Delta CEO Ed Bastian said last December. “In the next couple of years, I think you’re going to see that asset grow meaningfully.”
Notable
- Four Seasons, the hotel chain, last month began advertising a private jet tour of properties including the resorts in Maui, Taormina and Koh Samui where HBO filmed its class satire The White Lotus. The cost of the 20-day wellness-themed trip starts at $188,000.
- Air France has spent more than €1 billion on upgrades designed to attract more of the commercial aviation industry’s wealthiest passengers. Some who normally fly private are buying up all four “La Première” suites on its flights between Paris and New York flights. “It’s crazy what people are willing to spend,” says Air France-KLM CEO Ben Smith.