Both supply and demand have always been natural drivers of global markets and unsurprisingly, private jet insurance is no exception.
Admittingly, as much as the current global pandemic took everyone by surprise, so too did the recent explosion in the demand for private air travel. As a family owned business, we develop the annual budget together and it’s driven by over 40 years of family experience in the aviation insurance industry.
Typically, we get it pretty close, but we couldn’t have imagined the rate at which we are sourcing or modifying policies for private jet insurance as the pandemic drags on.
If the current trends continue, private jet travel is going to carve out a larger piece of the air travel pie and it looks like a good deal of it will stick around long after COVID-19 is gone.
It is true that every crisis has its economic winners and losers, but I just would not have predicted that the private jet insurance market would have been one of the big winners.
If I can borrow a few minutes of your time, I’d like to share with you what I am seeing here on the ground as more and more private planes take to the skies.
Private Air Travel is Looking More Attractive
Prior to COVID-19, it is estimated that only about 10% of those who could actually afford private air travel were doing so. The bottom line seems to be that first-class or even the ease of regular air travel was good enough for wealthy passengers.
They buy their exclusive Sky Club memberships, load up on a few drinks before the flight and board early as they settle into their comfortable luxury seats.
COVID-19 has made even luxury air travel seem like a risky venture as airlines sell every seat and unruly passengers throughout the plane complain about the mask mandates.
The opportunity was not lost on the private air travel industry as they have been marketing aggressively to crowds that could easily afford to pay twice as much for a private flight.
Keep in mind, this doesn’t mean purchasing your own plane or travelling like royalty. Chartering a basic six-seat jet that will simply get you there without the risk of a crowded airport is enough to classify as private air travel.
By and large, people are choosing this option and that demand is driving more plane owners into the game. In many cases, we actually saw private air travel offered at a discount during the height of the shutdowns.
The Need to Pay Jet Insurance Premiums Helps with Lowering Costs
Now, I know that subheading sounds a little counter-intuitive, but jet insurance is actually a contributing factor to keeping the cost of private air travel low during this pandemic. That’s because jet insurance is a fixed cost. Whether the plane is in the sky or on the ground, pilots and fleet owners still have to make those premiums and meet other fixed costs.
So when air travel dropped off during the initial shutdown, private airlines were offering steep discounts to remain in the sky and, at a minimum, meet those fixed costs. In addition, we strongly encourage plane owners not to reduce or eliminate coverage, even if the plane is no longer flying.
This is important because those who travel privately are not wanting to go back to regular air travel now that the economy is opening back up. They tasted the good life and private air travel has gained new customers as a result.
While it is almost certain that this increased demand will place a strain on existing resources of private air travel and drive up costs eventually, that hasn’t happened yet. In the meantime, private jet insurance seems to be one of the unlikely winners throughout it all as pilots strive to ensure they have the proper coverage for the increased demand.
Get a Quote for Private Jet Insurance
It’s a fascinating world we live in these days, but what remains constant is BWI’s dedication to ensure that all of our insureds have the proper coverage for the best rates. If you’ve found yourself a new entrant into the private jet travel industry or are simply looking to adjust your coverage to meet the new market demands, please give us a call.
It might be a bold new world we live in today, but BWI has been here for 40 years throughout all the changes and we plan to be here another 40 more. Our family serving yours during this time would be our honor.
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