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Flight Activity Is Rising but So Are Charter Rates

Here’s why prices have increased—and where they might be headed next.

Long-time charter customers are seeing higher rates this holiday season, but the good news is that providers and their passengers have made it through the busiest November and Thanksgiving in history, with no major disruptions to Christmas and New Year’s travel anticipated (weather permitting), despite expected record demand.

November flight activity topped 300,000 operations for the first time, and the Sunday after Thanksgiving registered a single-day record of 13,000 private aviation flights, according to business aviation data firm Argus, with charter flights for the month up 40 percent year over year.

“The first two weeks of November are generally fairly slow,” says Jim Segrave, founder of FlyExclusive, a major wholesale and retail charter operator. “But this year we had overwhelming demand even in the first two weeks of the month. I've never seen that happen.”

Even before November, charter rates were up 12 percent in the U.S. over their previous peak in 2019, according to wholesale charter platform operator Avinode. Rates in Europe, where a post-pandemic recovery has yet to take hold, were within 1 or 2 percent of their prior highs, the Swedish firm said.

One cause for the increases: after years of chasing revenue in a saturated market, “aircraft owners are running the show at the moment,” says Argus founder and CEO Joe Moeggenberg. “They’re demanding that management companies pay them substantially more than they were paying before.”

Corey Ruffalo, at charter/management company Priester Aviation, agrees. “Owners want to maximize their revenue during this time,” he says.

Priester’s price increases included a jump in hourly rates on Embraer Phenom 300s from $3,500 to $4,000. Priester is among the providers that have temporarily stopped selling jet cards and memberships altogether to ensure that it can meet the lift demand from current customers. (You haven’t seen many ads this year for jet cards as stocking stuffers, have you?)

Charter rates at FlyExclusive rose some 20 percent in November, with another 10 percent bump likely, Segrave says. Along with increasing rates, charter membership and jet card brokerage Magellan Jets raised initiation fees on its two membership plans from $8,500 to $10,500, and from $14,500 to $16,500, respectively, says founder and president Anthony Tivnan. Members also now pay $5,895 rather than $5,350 per hour for a light jet. 

Meanwhile, no pushback is reported from customers who not long ago could shop by price. Indeed, NetJets, which suspended jet card sales after two price increases, could have jacked up fees further, president Patrick Gallagher reported, but the operator of the world’s largest business aviation fleet “didn’t want the perception of a money grab in a hot market.”

Owners of managed aircraft are not alone in stoking rate increases—after all, some charter providers own their jets outright. Added repositioning costs sparked by overwhelming demand are among other factors. Today’s operations are “stop and drop”: your provider isn’t going to leave a jet sitting on the ramp a few hours for you—other customers are waiting. That means higher one-way pricing is the norm, as round trips are often unavailable. Tivnan at Magellan (whose membership programs remain open) says the lack of one-way rates has driven some customers “who historically preferred charter” to buy memberships, which guarantee round-trip pricing availability. 

Meanwhile, pilot salaries, fuel, and the costs of meeting health protocols and other operational expenses have also climbed—as have the prices of the hardware that operators use to get you to your destination.

“Airplanes that I could buy for $4 million two years ago are $4.5 million today,” says Segrave, whose fleet consists of light and midsize jets that are about 15 years old on average. “That’s another reason charter rates have to go up: the capital required to buy the airplanes is increasing.”

Pilot shortages are also impacting costs. Some operators have been unable to crew all their aircraft this year, leaving them idle at times they would be flying if pilots were available. At membership program provider Wheels Up, which went public this year, founder and CEO Kenny Dichter has labeled the pilot shortage the largest factor in limiting its ability to meet the unprecedented demand for lift. 

None of these factors driving rising charter costs—including demand—are expected to become less significant after the holiday travel crunch. Nor are charter rates likely to drop.

“We’re in a whole new era right now,” says Moeggenberg at Argus. “We’re not forecasting any of the activity to drop off after the first of the year.”

Moreover, despite the demand and orders for new aircraft, production will remain limited at least for the next year, while efforts to add preowned aircraft to the charter fleet haven’t meaningfully impacted supply. The pre-pandemic U.S. charter fleet comprised 6,314 fixed-wing turbines in the first quarter of 2020, according to Argus; in the fourth quarter of this year, 6,435 fixed-wing turbines were available for charter—barely an additional 100 jets to service the post-pandemic surge in charter demand.

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Meanwhile, many operators believe the rising access costs are not only overdue but will benefit charter customers and the industry in the long run, funding improved infrastructure and supporting the wages that will draw desperately needed additional workers. In the short term, with the favorable charter forecast and business aviation’s singular ability to transmute travel risks and hassles into a rejuvenating, uplifting experience, charter customers have much to be thankful for this holiday season.