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Charter Volume (Apr 21, 2022)

Demand is Resilient

The synopsis is that we are not seeing any sign of a drop in air charter volume despite widespread increases in fuel surcharges and a stock market that has been volatile. Historically the stock market and the charter market tie closely to each other, with the charter market lagging the stock market.

The national average posted retail price of jet fuel continues to trend at about $1 more than pricing in early February. Busier airports are seeing larger increases due to faster consumption, therefore pricing that catches up to the market rates more quickly.

We have seen wide swings in the prices at terminals across the country. Joe Martinsek with Everest shared that "last week, the straight average was a $0.40 increase with NY at $2.14. This week, the straight average is down $0.34 and NY decrease $1.85. Huge roller coaster."

Anecdotally, I was at one airport last week (arguably one that has a history of high prices) where the posted retail price was $14.99/gallon. Yikes!

Overall, I'm hearing most companies are going with a surcharge of about $1/gallon (round it to $200/hour for a light jet) and they're keeping a close eye on the fluctuations in market price. I've heard of cases of companies charging $1,000 or more in fuel surcharges, but those seem to be the exception versus the rule. Based on the data I can see, I surcharge of that magnitude would be above the increase in the market, unless that fee was for a heavy jet trip out of a very expensive origin.

I previously said that I expected year over year volumes to settle into single digit territory as the 2021 hours flown began to catch up to where we're at in 2022. In the first half of April, we're doing better than I expected with hours up 11.8% MTD compared with 2021 and with data that tells me that this trend is continuing.

The Part 91 market is similarly continuing its strong performance with volumes that are over 30% higher than the same period last year.

I don't regularly show the data on specific aircraft types, so to change it up, here is the trend for the Cessna Citation CJ3, which is showing a YoY increase in hours flown of 25.8% :

This is compared with Light Jets as as class, which are only up 11% MTD (not that 11% isn't good)!

So there you have it - industry performance remains strong in spite of fuel related price increases.

Thank you to everyone who stopped by to say hi in San Diego, it was great to see you!

Best regards,