Moving Forward In Aviation After A Tailspin Year

By Jason Zilberbrand

January 29, 2021 Educational

2020 impacted the aviation industry like never before.

With the travel bans related to the COVID-19 pandemic, the commercial airline industry came to a halt.

As the new year came with an unusually silent ring due to the ongoing pandemic, it’s the perfect time to reflect on what to expect with the 2021 aviation industry. To help you, we’ve put together a guide on the 2020 aviation industry and what to expect in 2021.

Moving Forward In Aviation After A Tailspin Year

Starting in March 2020, companies sent employees to work from home. Essential workers struggled with new everyday expectations. Retail chains and boutiques alike scrambled to sell entirely online. Countless restaurants and bars made their final calls before shutting down.

The list goes on.

But one thing we can all agree on is that we never saw the real impacts of COVID-19 coming. Nearly 100,000 businesses in the U.S. will never open their doors again. In conjunction with the Presidential election and concern for vaccination production, 2020 was quite the year.

Despite the many setbacks, the aviation industry continues on. Here is how the industry is moving forward after a tailspin of a year.

2020: A Tailspin For The Aviation Industry

As COVID-19 became an increasingly more threatening concern worldwide, airlines suffered greatly. Travel in some places came to a complete halt. "Revenue passenger kilometers (RPKs) fell by more than 94% year-on-year in April," according to International Air Transport Association’s (IATA) Air Passenger Market Analysis.

While the commercial industry is no stranger to earth-shattering events, including 9/11, no one could prepare for COVID-19. Airlines parked their aircraft, canceled flights, and shuffled payroll.

Surprisingly, the entire industry didn’t follow suit.

In fact, general aviation piston aircraft witnessed a strengthening in values and market activity. This is due to an uptick in interest levels from first-time buyers and business owners.

2020 Aviation Industry Market Recap

According to Forbes, "The private jet and charter company reported a 117% increase in customer acquisition for June [2020]." There is an opportunity in taking time to help first-time buyers – providing them with clear and transparent advice so they can contribute to the growth of the aviation industry.

Lenders, insurance companies, and lawyers have been watching activity levels climb steadily as more people try to maintain travel without utilizing airlines. Commercial flights may be facing a downward pattern. But private flights are soon to be in demand for those who still need to travel and don't want to risk the hassle of going through a commercial airline.

A Third Game Plan

Where we face obstacles, we immediately react to recover. We can expect that returning to pre-COVID life will essentially be a third game plan, and it makes sense. Expect a third of our population to immediately assume normal activity levels upon the vaccine's release. Followed by another third who will resume regular activity within a 6-9-month period. The last third will never resume normal activities.

Moving forward, many businesses that were the economy's backbone will be challenged. This includes hospitality, food services, fitness, and retail. Many new companies will open and will benefit from numerous lessons learned from the COVID-19 pandemic. Many of these businesses will create new potential aircraft owners – several of which will be brand new to aviation.

The Next 12 Months: What We Can Look Forward To In The 2021 Aviation Industry

The pandemic continues to leave the public with uncertainty in regards to travel, but an increase in interest in private flying could mean a few things.

Business Jet Activity

Business jet activity is fickle. It’s certainly more active with lower-priced pre-owned aircraft. New aircraft orders are off by 40-50% from this time last year.

But what is interesting is the attention older classic jets are gaining. With low purchase prices and the proper approach to maintenance, we are confident that the classic business jet will continue attracting buyers.

Market Activity Levels

Activity levels are high in the sub $4M market. Numerous buyers and many brokers are verbalizing frustration in finding a suitable aircraft. This is the exact opposite of what the manufacturers wanted to hear.

And now, the pre-owned market has the upper hand in enticing buyers.

The tax incentives, bonus depreciation, the CARES Act, and the Net Loss Carry Forward are also providing their fair share of stimulus to the transaction levels.

Although it will be interesting to watch how economic data in Q1 and vaccination progress will determine how much of a recovery we will truly see, it is safe to say 2021 will see a bit of recovery for new aircraft deliveries. Of course, much of the industry’s recovery will lie with the inauguration of President Biden – specifically how successful he will be in rolling back pre-Trump taxes and raising them.

What To Expect From The Future Of VREF

While we've seen a fluctuation of change over the last year, we remain optimistic about our voice in the aviation world. We look forward to what's ahead and introduce you to our variety of services.

Known for its ability to produce real-time aircraft valuations, we are updating VREF Online to better serve you – including the release of our new market data. This data provides our subscribers with a daily updated list of all aircraft for sale and how many are currently in operation. We will also be rolling the old layout into the new software and adding even more customization tools.

In addition to VREF Online updates, we have also started Beta Testing for VREF Vault – our blockchain encrypted CRM, logbook, and aircraft record database. We highly encourage customers to take advantage of this fantastic tool, free of charge. If you are interested in Beta Testing, email info@vref.com to gain access.

While we are all different people today than at the start of 2020, we anticipate better days ahead by growing and learning together.

After more than 30 years in business, we are inspired to continue educating long-time lovers of aviation and newcomers with honest and accurate information provided through our menu of services. Contact us today for your aircraft appraisal and valuation needs.