If you look back at history, the world was pieced together with trade and business travel. Somewhere there is an opportunity and if you think to the founding of the USA, Columbus has searching for a quicker trade route to South east Asia to bring back spices at less expense and sell at high margins. Columbus’s other trips lead to more lucrative trade bringing back gold and silver from Mexico and Peru and allowing Spain to become the wealthiest countries in the world. We will look at travel today, we look to the skies and aircraft travel.
If you are fortunate to be a frequent flier in executive class, you are the gold the airline industry is looking for. The airlines make more money from the trips of business class and there is competition if people want to go to a destination faster – private jets. In the world of COVID, private jets offer a level of safety that commercial airlines do not and the price is not that different if the reason for flying can make more money.
In an article by Allison Lampert of Reuters, flights catering to business people are beginning to show an uptick, but commercial airlines catering to business and leisure travel is down. According to FlightAware data, in late July business travel is down 20%, but commercial airlines are down 48%.
In the world of private jets, companies such as PrivateFly, according to Adam Twidell, CEO, his service for charter flights is relative to last year is 80% to customers flying to Europe and 100% in the US, with many from new passengers. New customers typically make up 60% of the company’s bookings compared with a 25% annual.
Berkshire Hathaway owns NetJets and Patrick Gallagher a marketing executive said business travel is down, but personal travel is up. At the moment, they are using existing fleets to meet demand.
Business jet makers are in a wait and see mode, General Dynamics’s Gulfstream, Textron and Bombardier have cut jobs and forecasters expect deliveries to be down 30%.
Linking to dividend paying stocks, while you can Zoom, there is nothing like meeting the other person particularly when there is a problem in the future to fix. Relationships help solve problems has been the case in the past and will be in the future. Business travel gives a reasonable indication of what is happening in the economy. Commercial or passenger travel is more dependent of holidays and prices to travel. Hopefully, the economy will open up and more people will be travelling which in turns help the economy as people spend money in a different location. Where do you want to go?
There are more questions than answers, till the next time – to raising questions.