The Year of Coronavirus for Business Aviation

Over the past month, our editorial team has been actively studying the situation related to the COVID-19 outbreak and its impact on the business aviat

Over the past month, our editorial team has been actively studying the situation related to the COVID-19 outbreak and its impact on the business aviation segment. Almost all of our foreign interlocutors are quite pessimistic and expect further escalation of the situation against the backdrop of uncertainty regarding the timeline for vaccine development and the potential arrival of a second wave of the epidemic. Today, we decided to change our approach and invited the head of one of the largest Russian brokerage companies JETVIP, Alexander Osita, who kindly agreed to answer our questions about the situation in the world, Russia, aircraft, and charter flight prices. 

Alexander, recent events in the world, related to the rampant spread of COVID-19, have already had catastrophic consequences for the aviation industry. Unfortunately, we are likely to witness the bankruptcies of major global carriers in the near future. Amid the mass closure of airspace, business aviation is becoming practically the only segment that allows business contacts to continue. JETVIP is one of the largest Russian air brokers, and we would like to understand how difficult it has become to operate under current conditions and whether we have reached the "bottom" in the spread of the epidemic?

Who would have thought that in 2020 one virus could change the course of events across the entire planet so drastically? Overall, 2020 began quite positively for the aviation industry, but due to the spread of the virus and subsequent tightening of isolation measures, it is already clear that the consequences will be sad and irreversible for many companies. In March, in addition to our standard flights, there was a significant spike (about 40%) in requests for the urgent organization of flights for the "evacuation" of passengers from various countries. Some are bringing children home from foreign schools, while others are urgently returning families from abroad, as there is no other way to get back home since regular flights are being suspended, as already announced by Aeroflot, Utair, and others. It is worth noting that by the time this article is published, the information may become outdated, as events are unfolding rapidly, and even aviation industry professionals cannot keep up with all the new restrictions on flights and transport regulations.

What is happening on the planet right now is an absolutely unprecedented situation in world history, and predicting further developments is very difficult. Mass hysteria also plays a significant role, and it is quite challenging to manage. You probably notice that everyone in any family knows about the virus, and all conversations revolve around it.

It is already evident that the virus has spared no business and affected almost all sectors globally. Whether it’s a small coffee shop in Milan or a large oil business in Russia, the USA, Saudi Arabia, stock prices of companies worldwide are significantly dropping, if not collapsing. It cannot be said with certainty that this is solely due to the virus, but it has become a trigger for the "financial bubbles" that have formed in recent years due to the Federal Reserve pumping cheap money into the economy, exacerbated by ongoing armed conflicts in various parts of the world.

Regarding business aviation, I foresee the following scenario. Once everyone disperses to their homes or other places where they can calmly wait out the main wave of the virus and quarantine, there will be a sharp decline in flights. No country is currently completely safe, and there is no point in flying to closed resorts, restaurants, and hotels. Everyone just needs to wait out the next 3-6 months, as there is unfortunately no other option.

In our market, only Aeroflot feels relatively secure, although the number of flights will decrease, direct flights from Sheremetyevo to the capitals of all European countries and back will remain as before. Other airlines are deprived of such an opportunity.

Airlines are often in a difficult financial state and are just trying to climb out of constantly growing debts, and the additional negative stimulus of low passenger loads or the actual cessation of flights will lead some airlines to suspend their operations and go bankrupt unless, I reiterate, they receive support from the government. This applies to the entire aviation industry. Moreover, the coronavirus will trigger a global recession and a surge in defaults across all sectors.

What flights have been in demand over the past week (geography), and what problems is your company facing in terms of organizing flights?

Demand has increased many times over, and most often these are urgent flights with a wide geography. Essentially, people are returning from different countries home to wait out the situation in their homeland or with family.

Industry sources indicate that requests have increased for countries such as England, France, Switzerland, Italy, Austria, the Netherlands, Belgium, and others (in descending order).

The main problem is that flight restrictions to certain countries are being introduced in real-time. Everything is developing very quickly, and today a flight may be possible, but tomorrow borders may be closed.

Another big problem is that many countries are imposing mandatory quarantine isolation for all arrivals, including crew members. For example, after arriving in Moscow, the crew of one operator was required to "self-isolate at home." This means the aircraft cannot operate for the next two weeks unless it has a second crew. Therefore, many operators are already refusing flights to countries with a high level of virus infection. This situation leads to a reduced selection of available aircraft for flights, which in turn results in rising prices.

Are there countries you particularly do not recommend flying to?

We are not an authorized body that can provide such recommendations, so we rely on the guidance of the World Health Organization, Rospotrebnadzor, as well as other official recommendations from various countries.

Currently, Rospotrebnadzor has identified a list of such countries: Italy, France, Germany, Spain, Switzerland, the United Kingdom, Norway, and the USA, as well as the People's Republic of China, the Islamic Republic of Iran, and Korea. This list is constantly changing and needs to be monitored closely.

What types of aircraft are most popular right now? Do passengers need comfort, or are they guided by the principle of "faster and safer"?

Each request for aircraft selection is a separate case. We do not observe changes in the preference for specific types of aircraft. As usual, popular aircraft include Cessna XLS/X, Hawker 750, 850XP, Challenger 300/605/850, Legacy 600/650, and long-range Gulfstream and Global. Some, due to the virus, are simply forced to rent a business jet, and for them, the determining factor is only the price. For others, the level of comfort is the key factor, and such clients are willing to pay more. We always organize flights in the shortest possible time, but urgency does not affect the level of service and comfort for the client. The quality of service and passenger safety is always our top priority when organizing each flight.

How much are business operators increasing flight prices due to force majeure circumstances? Are operators really requiring 100% prepayment and 100% cancellation fees for flights right now?

Each operator chooses their pricing policy and strategy in the current situation. Some operators are forced to stipulate 100% penalties for flight cancellations due to COVID-19 in their contracts, while others offer additional travel cancellation insurance due to COVID-19 at an extra cost. Generally, operators have always required 100% prepayment for flights when working with direct clients, while with reputable brokerage companies, operators often work on a post-payment basis.

How have security measures in airports, especially in Russia, intensified?

Every arriving flight is met by a doctor and nurse with a thermal imager stationed at the airport's sanitary quarantine point. Passengers are required to fill out a special questionnaire for crossing the border. Special attention is given to passengers arriving from countries with high levels of infection; these passengers and crew members must adhere to a "stay-at-home" quarantine or may even be forcibly isolated.

How do passengers react to additional checks?

Most people understand the measures that have been implemented. Everyone realizes that this is necessary to reduce the spread of the virus.

How does your company ensure the safety of its clients?

For our company, client safety is our top priority. We only work with reliable operators. If we talk about flight safety in the context of the coronavirus, we always arrange for the aircraft to be treated with antivirus agents before and after the flight.

Your forecast regarding the normalization of the situation, especially in Europe?

We certainly cannot provide an accurate forecast regarding the coronavirus. The fact is that if serious restrictive measures are not taken now, the spread of the virus will prolong, leading to even more serious consequences for everyone. We all need to accept the situation as it is, approach it with a sober mindset, avoid panic, and just wait it out; otherwise, it could last until the end of the year. The example of China is very telling, where the peak has already passed, and the country is returning to normal life.

This year will undoubtedly be referred to as the "Year of the Coronavirus," and unfortunately, that is already a fact.

From an interview with the industry news publication Bizavnews