It appears that the Coronavirus outbreak is not bad news for one industry – business jets. The FT reports that “Demand for private jets has surged since the outbreak of the deadly coronavirus as companies and individuals seek alternative ways to fly out of Hong Kong.” The New York Times notes: “As the coronavirus outbreak rattles the global economy and disrupts supply chains, international companies across nearly every industry are confronting a stark reality: Business will not go on as usual.”
Other sources are pointing to the impact of the virus on travel by noting a rise in business jet use. Wionews notes: “Singapore-based MyJet Asia said it has seen an increase of 80 percent -90 percent in the last month.” Add Reuters to this list: “While we are receiving an uptick in inquiries, it has not amounted to more flights,” said Patrick Gallagher, president sales and marketing for NetJets.” Our inquiry to NetJets was met with this response: “At this time, we will have to politely decline on commenting on this topic.”
Reuters also reports that VistaJet and NetJets said they have suspended their China operations. There is a fear that they cannot find crews to do these missions, and if they did, these crew might be sent into an immediate quarantine that would constrain their chance to work. Other companies such as HiFly and Kalitta have operated flights to get people out of China. These flights have been government-funded.
Kalitta’s return flight from China was sent to March Air Force base. Crews do not interact with the passengers and any food on-board is via self-service. Upon arrival, these aircraft have to be disinfected. Passengers go straight into quarantine.
China, as a world supply chain center, is crucial to just about every business. A pause in China’s production quickly trickles through to markets worldwide. China is essentially closed for business from outside the country. The risk to crews and passengers is real. The W.H.O. says it is not pandemic – yet. Here is a live update on infections and deaths.
The stock markets are only now catching up on the downstream impact to supply chains and the global economy. Is this an overreaction? One UK-based analyst has this to say: “Check out any Chartist, and they will be telling you the runes, pentograms, and discarded chicken livers used to make their market prognostications all scream the same thing: Sell Stocks, Buy Treasuries, Sell Corporate Bonds, Sell Oil and Buy Gold. Generally, they are unconvinced on a positive market outcome.
Could the Covid19 virus crisis have come at a worse time? There is never a convenient time for the end of the world.
This crisis comes at the top of massive bubbles in stocks and bonds, fuelled by 10-years of accommodative monetary experimentation – just at a time when the global monetary authorities are increasingly understanding the urgent need undo the unintended negative consequences, end QE, to normalise interest rates and take the pressure out of asset bubbles. It doesn’t help the dollar is going stratospheric – a natural safe-haven shift, helped by Japan’s massive 6.7% slide in annualised GDP on the back of another VAT hike. That looks increasingly ill-considered as Chinese spenders stay home and fail to sustain Japan’s retail sector. There are a lot of painful wake up and feel the pain moments coming.”
The conclusion is that business jet travel will likely increase where flights can operate, but the Chinese market is essentially closed. Business jet activity between key markets like the US, Europe, and Asia will likely rise.