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Charter Volume (Jul 7, 2022)

2021 is the new 2007

In mid June we were reporting volumes that we just slightly lower than we had seen in 2021. Two weeks later it is clear that we are now trending below last year's numbers for the air charter market. For the month of June our air charter data showed 6% fewer hours than June of last year and the trend is toward a further reduction.

It is important to note however, that this same cohort of aircraft flew 132,106 hours in June 2019. That means that the charter market is still tracking 11% above pre-pandemic volume. While volume has softened, we are seeing evidence of just how resilient the new charter market is. I don't know too many people who would have predicted as much as 500 hours/day more charter flying in 2022 vs 2019 when they were back in 2019.

While charter is holding up well against all of the headwinds we're facing, Part 91 flying is still breaking new records. June of 2022 came in almost 14% above 2021 hours. While there are some signs of softening in Part 91 flying, we have a long way to go before we're back to normal (if we want to consider 2019 normal).

I do expect that we will continue to see volume soften as we get deeper into the summer months, but unlike prior downturns, we are starting from a very different position with very different market influences. At this point, the correction we are seeing feels more like a return to sanity than a real downturn and it is showing us that our industry is more insulated from macro-economic factors than ever before.

The IATA fuel report shows that wholesale jet fuel has dropped to $159.5 per barrel vs $176.6 when we last reported on fuel pricing.

Through June 10th

Through July 1st

Both of the above charts were pulled from IATA's website:

The AirNav national average is up to $6.96 from $6.84 in the middle of June. We know this lags due to the length of time that it takes for FBO's to move their inventory. Signals seem to be that the price is reaching a plateau. With overall demand showing some softness, we should expect that to start to show itself in the overall price in the weeks ahead.

If there is a trend in airport specific demand patterns, I would call it "back to business." We are seeing strong YoY numbers at the business airports closest to major metro areas. Here is Teterboro, where June volume was up 27% YoY.

Here is Chicago Midway where non-airline volume for June 2022 is showing a 23% increase over 2021:

To round things out, here is the data for Boston Logan, where the non-airline volume is up almost 25% YoY.

I was talking to someone about the market over the past week and they remarked that "2021 is the new 2007." I think that is spot on. We hit a unique peak in volume in 2021 that is not going to be repeated in 2022. That said, I do not believe that 2022 will be the new 2008. Sure, we're going to come down from last year's peak, but we have a lot of room to go, just to be back at 2019 volume levels.

There is a trend away from the second home cities that were so popular in the pandemic. It feels like Florida in particular has become less popular this summer, but now more than ever, we need to look at the data with perspective.

For those who wish to join the call to see the breakdown by size class, the top 50 O/D pairs, and 50+ other airports, join the call at 3pm and I will walk through the complete deck.

Best Regards,