Etihad Airways expects its charter flights segment to boost business and help it adapt to market conditions if Covid-19 flare-ups around the world stifle a recovery in demand for scheduled services this year.
With reduced scheduled flights and severe constraints on air cargo capacity globally last year, more customers considered charter jets to transport people and goods – a trend that is likely to continue in 2021, Etihad Airways' executives said.
"The main thing in our mind is to make sure that we're well-positioned to adapt to whatever the market conditions are and that whilst demand for scheduled service remains lower than historical levels, we expect to see very robust demand for chartered and special flights and we will be well positioned to take advantage of that," Alex Featherstone, vice president of network planning and alliances at Etihad Airways, told The National. "We're very keen to make sure this kind of flying builds strongly and that it is a significant contributor to our bottom-line."
However, this depends on the extent of recovery in scheduled flights in 2021 and beyond, which may "keep a lid" on demand for private charters, he said.
In January, private flights globally made up 18 per cent of total air traffic and were down by only 9 per cent compared to the same month last year, according to consulting company WingX Advance. The drop is less steep compared with scheduled airlines' operations, where passenger traffic fell 50 per cent for the first month of the year as the pandemic battered air travel demand.
The UAE, home of Abu Dhabi-based Etihad Airways, has seen 75 per cent increase in business jet movements in January. Large jets flew 38 per cent of all activity, with the Challenger 600 jet movements on par with January last year, the Global Express aircraft flying 30 per cent less and the Embraer Legacy 50 per cent more active than last year, WingX said in a February 3 report.
Etihad's charter unit offers leisure and business travellers options for passenger, cargo-only and combined freight and passenger flights. These are operated with jets ranging from Airbus A320 narrowbodies to Boeing 777s for long-haul journeys.
"We saw in 2020 that with limited scheduled service, there were customers looking for different options that translated into chartered customised flights, and we think that will be the case in 2021 as well," Mr Featherstone said.
Etihad Airways received about 100 inquiries for charter services in the last month through a dedicated webpage, which it set up in December. Many of these firmed up into flight operations or contracts for future flights, he said, declining to share specific figures.
Inquiries came from private individuals and groups seeking to charter flights to leisure destinations.
"We've flown multiple missions from the UAE to the Maldives," Mr Featherstone said. "We also got inquiries from sporting teams and from corporates looking to move a certain number of people."
While prices depend on customer requirements and additional requests, a roundtrip from the UAE to Maldives on an A320 charter flight could cost approximately $90,000 to $100,000, Etihad said.
Asked how Etihad positions itself in the market with other established and specialised private jet operators, Mr Featherstone said the airline is focused on scheduled flights but is seeking to boost chartered services to maximise its fleet utilisation.
"The key difference for us is that this is not our core business but it is an important and developing add-on on to our core business," Mr Featherstone said. "Because our core business is scheduled flying, we have a number of different aircraft types available to deploy which may be different from some of the aircraft types that these private jet operators have at their disposal."
The charter services will also help the airline re-deploy some of the jets that were idled by the Covid-19 pandemic.
"Because we don't have these aircraft just sitting there for charter operations, we have the luxury of having availability from our scheduled passenger fleet so we can use aircraft that are currently not operating or take gaps in the schedule and allocate them out, which in some cases means we can be more cost effective than traditional operators."
On the cargo side, reduced freighter capacity and congestion in shipping lanes are driving demand for air cargo services, including on charter flights, Martin Drew, senior vice president of sales and cargo at Etihad Aviation Group, said.
"It's a bit of a perfect storm leading to huge constraints in terms of capacity that means the only option is to start chartering aircraft because there is not enough scheduled capacity," Mr Drew said.
Global private jet travel thrived during the Covid-19 pandemic as it allowed well-heeled travellers to avoid commercial flights and minimised the risk of contact in crowded airports.
However, the stricter travel regulations imposed by governments in response to the new virus mutations have dented demand for private jet travel in January, according to WingX Advance.
"Evidently demand is being suppressed by travel restrictions, with the relatively unfettered US market seeing most resilient demand, and Florida continuing to see record activity," the report said. "The last few months’ busy pre-owned business jet transactions market suggests that once lockdowns are lifted more widely, there could be pent-up demand from lots of new aircraft owners."