Air Charter Sees More Demand as Commercial Airlines Face Continued Setbacks

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Volcanic Activity in Iceland Increases Flight Activity for Air Charter

...after having suffered for 2 years due the global economic crisis of 2008, a decrease in price and increase in availability are resulting in steady growth for the air charter industry.

Air Partner, a global leader in private aviation, recently reported that shares rose 7% in the last weeks due to an increase in air charter and freight traffic. The volcanic ash disabled commercial routes while air charter was able to reroute flights, use smaller airports, and resolve freight and passenger deliveries with greater ease.

The Icelandic catastrophe, which led to mounting organizational difficulties in rescheduling flight routes, demonstrated that commercial aviation is unprepared to deal with unexpected airspace complications. Air charter, however continues to emerge as a preferred conveyance during difficult times and is able to provide logistical solutions for complex scenarios.

When vital cargo and passenger transportation routes were threatened for six plus days, Air Partner was able to step in and provide logistical solutions as well as alternative routes for these affected companies. Transporting consumer goods from Asia to North America, vital auto cargo throughout Europe, and a bevy of passenger “catch up flights” between Asia, North America and Europe are just a few examples of how Air Partner was able to help out when commercial airlines were still stuck in aviation chaos.

Just days after the clamor surrounding Iceland’s volcano began to settle, Iceland’s president and the country’s seismic specialists reported that another Icelandic volcano, Katla, just 12 miles away from Eyjafjallajokull, is expected to erupt sometime in the near future. Katla is ten times larger than Eyjafjallajokull and historical data has proven that the two usually erupt in tandem.

This isn’t the only recent setback commercial aviation has faced. The industry has taken numerous hits in the past two years. Increases in oil prices, a global recession and the more recent volcanic episode amounting to $1.7bn in losses have posed serious threats to the aviation sector’s ability to turn a profit. Now with the impending United and Continental mega-merger, passengers could face increased fares, decreased flight routes, and more fees.

The problems for commercial aviation are only expected to get worse. With passenger traffic expected to increase, this could leave air charter in a favorable position as a strong option. Reuters has reported that large airline carriers are anticipating an increase in travel for 2010, and The U.S. General Accounting Office has reported that airline consolidation, resulting from merger talks will lead to a decrease in competition, and an increase in travel disruptions because of labor issues and flight cancellations.

The recent merger isn’t the only factor leading to reduced flight routes. Bloomberg reports that passengers should expect to see further reduced flight routes as airlines try to dodge the tarmac fines resulting from the newly implemented “3 hour tarmac rule” in which airlines will be fined $27,000 per passenger if an airplane sits on the tarmac for longer than three hours. In order to avoid the fine, it’s reported that some airlines may just cut problematic flight routes all together.

In addition to increased summer travel, Renaissance Capital, a global research investment firm, is reporting a 40% increase for IPO’s in 2010, and as the economy gets back on track, business travel will only continue to rise. Taking into account the current chaos that surrounds commercial aviation, an increase in leisure and business travel could leave some travelers searching for other options.

As the volcano has shown us, commercial aviation is ill-equipped to deal with serious crisis situations, and air charter is in a position to successfully pick up the pieces. In 2009 business jet sales fell 50%, and for 2010 GAMA (General Aviation Manufacturers Associated) has reported that business jet management was down 38%. Keeping in mind that jet sales have continued to diminish, this leads to a surplus of jets in the market, potentially resulting in a decrease in price and an increase in availability for charter planes.

Air Partner’s president, Phil Mathews feels that “after having suffered for 2 years due the global economic crisis of 2008, a decrease in price and increase in availability are resulting in steady growth for the air charter industry.” While commercial aviation continues to hemorrhage profits, private aviation is steadily regaining a strong foothold. More passengers seem to be looking to go private -- Air Partner has reported a 35% increase in client growth for the last year, leaving air charter in an ideal position to satisfy this growing demand.

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Arielle Der Hagopian
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