Aircraft charter companies have seen the most ever business in the last few months as natural disasters and unrest create unusually high demand for the US$3 billion industry.
Unrest in Tunisia, Egypt, Libya and the Ivory Coast as well as earthquakes in New Zealand and Japan have combined to create one of the largest ever periods of demand for private air travel as people are evacuated and relief aid is flown in.
According to Alex Berry, Managing Director of Chapman-Freeborn, which is the world’s largest aircraft broker, natural disasters and political turmoil have dramatically increased demand for small and large aircraft. Chapman-Freeborn arranged 125 evacuation flights over two months this year, in the process ferrying 20 000 passengers and raising annual sales by 60% to US$800 million.
“You can’t shy away from it. When there are a number of disasters in any one year we do an awful lot more business,” Berry told Bloomberg. Air charter companies were also busy during the earthquake in Haiti last year. Chapman-Freeborn organised over 70% of relief trips to the country, Bloomberg reports. Other crisis situations that have created leasing opportunities for the company include the unrest in Egypt and the Deepwater Horizon disaster in the Gulf of Mexico.
Meanwhile, Air Partner Plc and Air Charter Service Group Plc have also recorded tremendous demand. “I can’t recall so many different situations around the world going off at the same time,” Matt Purton, director of commercial jet sales at the England-based Air Charter Service, told Bloomberg. “We did about a year’s worth of business in two weeks.” Between January and mid-March, UK-based Air Partner organised 63 flights and evacuated more than 12 000 people and delivered 300 tons of aid.
Air Charter Service leased four Boeing 747s to evacuate workers from Libya to Malta in March. Each 747 flight cost US$250 000 for a short trip or close to US$1 million for intercontinental flights, according to the company. In addition to evacuations from Libya, Air Charter Service has been transporting refugees from the Ivory Coast on behalf of the United Nations High Commission for Refugees (UNHCR). In Egypt, Air Partner flew more than 3 000 people out the country in six days and in Tunisia repatriated 6 000 Egyptians and 500 Bangladeshis whilst flying 220 tons of humanitarian aid into the country.
In the last two weeks of February, Tripoli was the busiest airport in Africa as people scrambled to get away from the unrest. Unlike the situation in Egypt, most of the people evacuated by private flights were from governments and companies, like BP. In Egypt, most of the people hiring chartered aircraft were private individuals.
According to Avinode Business Intelligence, a regular pattern is emerging in countries hit by unrest, whereby demand for private aircraft increases as airlines are overwhelmed by demand or stop flying to risky destinations.
In Libya in February, British Airways, Deutsche Lufthansa and Emirates all suspended flights within two days of each other, leaving the market wide open to charter companies. A similar situation was recorded in Japan after concerns over radiation leaks from the Fukushima nuclear power plant caused Lufthansa and Alitalia to halt flights to Tokyo. As a result, prices of some air charter services to Japan went up by a quarter due to demand, the Times of India reports.
“It’s been frantic. We had Tunisia and Egypt, then Libya was hugely busy – a mixture of energy and government clients who wanted help with evacuations,” said Tom Frankland, a former British Army officer who is now the director of crisis management firm Northcott Global Solutions.
At one stage Northcott was dealing with ten requests involving 6 000 potential evacuees, according to Smart Investor. Meanwhile, Control Risks said last week it had arranged the transfer of 2 000 Chinese oil workers by air.
“I have to say it has played into our hands,” said Frankland. “We are using it to make the case that our clients should look at purchasing political evacuation insurance to complement their current medical plans.”
Private air charter companies are not just transporting people, but freight as well. For instance, Antonov Airlines specialises in outsized cargo and operates two of the world’s largest, heaviest aircraft. These are the Antonov An-124 and An-225 transport aircraft, which have been heavily utilised during recent disasters.
In February last year the An-225 transported 108 tonnes of construction equipment from Japan to the Dominican Republic for relief efforts in Haiti, according to Antonov. Most recently, the aircraft is carrying the world’s largest concrete pump to Japan to help stabilise the nuclear reactors at the Fukushima plant. The concrete pump is made in the United States and weights 86.2 tons and has a 70 metre boom. The pump should arrive in Japan later this week, after leaving California on Saturday. The cost of the trip will exceed US$1 million. Other pumps, manufactured by Putzmeister, were flown to Fukishima aboard chartered An-124s. Putzmeister pumps were used to seal the reactor at Chernobyl in 1986.
The surge in demand for private air travel is helping the aircraft industry. NetJets, a United States-based operator with divisions in Europe and the Middle East, recently ordered 120 Bombardier business jets for US$6.7 billion. “Growth has resumed. We’re cautiously optimistic but we do not see a sustained underlying trend yet,” said NetJets Europe chief financial officer Luis Pinto in February.
While there have been many crises in recent months that have created a surge in air evacuations, experts predict there will be many more still to come. Ocean Sky, a private jet company with an office in Dubai, said last month that evacuation flights from the Middle East are likely to continue. Neil Backhouse, Dubai office manager for the company, said, “The unrest in some Middle East countries has led to a number of evacuation flights. We can expect that demand to continue if protests escalate or spread to other countries.”
Frankland and his team from Northcott Global Solutions are keeping an eye on the situation in Japan and the implications of potential nuclear fallout. Worsening violence in Bahrain and Syria are also indicators of potential future evacuations.