COVID-19 has taken a toll on the entire aviation industry. It’s going to take a long time for commercial airlines to properly re-configure policies, procedures and aircraft to accommodate emerging health and safety requirements. Unfortunately, airlines are moving painfully slow toward spending time and resources on modifications that will ensure the safety of crews and passengers in this new normal. However, in the near future, demand for appropriately modified travel arrangements will be strong. But the supply of airlines, business aircraft operators and destinations with the capacity to maintain a safe environment will be slim. Overall, in the short-term, demand will outpace supply.
As the demand for travel ramps up, Magellan Jets is uniquely positioned in the air travel space. We’re able to deliver the clean, safe, crowd-free way to travel to those new business travelers typically used to fly first-class on commercial airlines, or those who flew privately with large fractional providers, who are facing challenges related to COVID-19.
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Companies as large and with as many moving parts as legacy fractional models are certainly at very high risk by a major crisis like we’re facing right now. Not only are they severely impacted by the drastic plunge in private flight activity, but it will be difficult and expensive for them to get back operationally once things are back to some type of “new-normal” as they will need to unravel the tough decisions they’ve been forced to make recently.
Below, Magellan Jets President Anthony Tivnan shares his thoughts on what this means for Magellan Jets, and the current state of the private aviation industry.
Magellan Jets President on Why Business Will Be Stronger
As far as Magellan Jets, we (as an industry) have all been victims of the flight activity decline. Our activity is down about 65% which is slightly better than the industry average. On the flip side, since March 1st, our new client acquisition is up 56% above our goal due to the ability our customers have to work with us on an on-demand charter or a small 25-hour investment. This has really helped us through these difficult times.
In addition to that, our business model in general is very efficient and lean so we were able to pivot and begin costs controls ahead of the major spiral. Luckily, we began running P&L stress tests, cost controlling levels, cross training, and researching markets that recession-proof to start targeting in the beginning of Q4 of 2019, with realization that 2020 or 2021 could see a recession and we wanted to have a plan in place prior to that happening. Of course, we would have never thought we would face a global pandemic of this magnitude, so that presented a handful of challenges that were certainly not part of the plan.
However, it did allow us to focus the bulk of the attention on measures to address COVID-19 for our colleagues and customers as the financial and operational planning had already been mapped out and just needed to be reviewed and executed by our leadership; which they really did a great job. I am very humbled and honored to be working with such great people and continue to be impressed by how much everyone has stood up throughout this ordeal.
Forward thinking, I truly believe our organization is set up extremely well for what I believe will be one of the largest surges in activity, volume and revenues that I’ve experienced in my 19 years in aviation. Our existing client base will no doubt appreciate the Purely Private service they’ve been enjoying, and I think organizations and wealthy individuals that were not previously using business aviation will certainly begin to for the foreseeable future. I don’t believe companies will continue to put their employees back on commercial airlines and understand that they need to get back to business asap to retain existing customers and take advantage of the opportunities that will certainly exist on the other side of this downturn.
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I’m optimistic, even in this time of uncertainty because our model, marketing, content and most important people, are positioned perfectly to begin working with this new wave of customers immediately and easily. It’s certainly an interesting dynamic as there is likely a global recession ahead, as a ripple affect of COVID-19. It will be interesting to see the full impact of these affects on the aviation industry as a whole.
There are obvious actions that must be taken in any business to prepare for a minor downturn or even a dramatic Black Swan event. Proper preparation of an aviation portfolio is subtle, nuanced, and is a required activity, don’t let a sudden downturn clip your wings and sabotage your productivity, act now and be the leader of a company that will turn economic crisis into opportunity with the proper utilization of private aviation air power.
It seems like common sense that if an individual, business, or economic sector is in economic crisis that one would be wise to cut back on big expenses and cancel meetings, events, and experiences that stand out as high-cost / low-return items on the balance sheet. Instead of sitting on a big axe and waiting for a financial crisis, we propose that making moves now can make any organization more agile and profitable during both growth and shrinking economic cycles.
– Anthony Tivnan, President, Magellan Jets