The aviation market reacts to the coronavirus

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Aircraft manufacturers sent factory workers home from Wichita, Kansas, to Seattle, imposing immediate leave. Airlines have canceled flights and parked a large percentage of their fleets, and some runways at major airports have turned into jet parking lots.

Job boards for corporate pilots, where there had been many more jobs available than pilots looking for work, saw this imbalance reverse overnight. Suddenly there were a lot more pilots looking for jobs than there were positions available.

The aviation industry’s response to the spread of the coronavirus in the United States in March was swift and dramatic. The market for sellers of general aviation aircraft suddenly came to a halt and this slowdown looked different from the previous ones.

“What we are seeing now is unprecedented,” said Jason Zilberbrand, president of VREF, an aircraft review company. “The closest thing was September 11, but then, within 18 months, things were mostly back to normal. No one knows how our current situation will develop. “

Zilberbrand said he expects an economic disruption and the cancellation of many high profile aviation events in the spring and summer of 2020 to slow sales of GA aircraft in the second quarter, and possibly the -of the.

“If you don’t already have a deal in the hopper, you’re probably not in a rush to get things done,” he said.

Zilberbrand said he has yet to see fiery sales among sellers of GA piston planes, where ratings of some models, especially single-engine trainers, have exploded over the past two years. But he expects the rate of increase to slow.

“They have had a phenomenal performance in the single engine market,” he said. “It won’t stop as long as the demand for training continues to be so strong.”

Business jet owners in certain industries are likely to be hit hard by the downturn, particularly restaurant chains and oil and gas companies. Companies that operate their own planes and fly under FAR Part 91 reduced their flights by an average of 70% to 80% in the weeks following the arrival of the pandemic in the United States. A few aircraft charter companies have seen a small bump in international “repatriation flights” bringing stranded Americans home, but most have seen a cataclysmic decline in demand.

“This segment (Part 135) is in a very fragile situation,” Zilberbrand said. “Those who have their own equipment are likely to find themselves in a particularly difficult situation.”

One aspect of the current situation that differs from the Great Recession, which bottomed out in early 2009, is that banks appear less eager to repossess assets this time around.

“We all learned a lot from 2008 and 2009,” he said.

The bigger question for the aviation community – and the rest of the world – is how long the virus-induced slowdown will last.

A protracted disruption has the potential to break international aviation supply chains, push aircraft and engine manufacturers (and the suppliers that support them) into bankruptcy, and create parts shortages that animate the planes. A long downturn could also disrupt aircraft maintenance and avionics companies, which had experienced a commercial boom thanks to ADS-B installations.

Aircraft manufacturers could also face increased competition from the used market if the price of used aircraft drops. The price differential between a new aircraft and a used aircraft would simply be too large for buyers to justify it, even though the newer aircraft offer better efficiency and lower hourly operating costs.

Falling oil prices help aviation consumers by reducing fuel prices.

Zilberbrand says VREF anticipates a relatively quick return to the status quo, or at least something akin to the status quo.

“At the end of the day, we all hate change and we don’t adapt well to it,” he said. “People have enjoyed their previous life and want to go back to visit friends and family and go on an adventure.

“The skies haven’t fallen, and we don’t see that having a major long-term effect on the aircraft market or the economy in general.”

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