Private jet companies scored a pile of federal aid meant for airlines and small businesses, boosting the industry as other sectors collapsed
- The charter companies, aircraft management firms, and ground operations and maintenance companies that comprise the private jet industry have recovered more thoroughly and swiftly than commercial airlines.
- Some of these companies accessed funds from two or even three buckets of federal aid.
- The industry is made up of about 1,900 companies and employs about 1.2 million people. Yet out of the $2 trillion CARES act, it scooped up a disproportionate $666 million.
- Thirty-six private jet companies have received $7,538,300 in Economic Injury Disaster Loans from the Small Business Administration and at least 95 private jet firms got Paycheck Protection Program loans, totaling between $64.3 million and $149.9 million.
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The impact of an ongoing pandemic best fought by a population of shut-ins has devastated the travel industry: Airlines are hunkering down for a years-long recovery. Planemakers have slashed production plans. Cruise companies are all but shuttered, and hotels are doing everything they can to attract guests.
One pocket of the travel business, though, has handled the turbulence surprisingly well: the private jet industry.
The charter companies, fractional ownership organizations, aircraft management firms, and ground operations and maintenance companies that cater to elite air travelers have been hit less severely, and have recovered more thoroughly and swiftly, than commercial airlines.
That's partly because private aviation was able to successfully market itself as a safer way to travel, essentially allowing well-heeled access to vacation homes and quarantine hideaways without the risks associated with commercial air travel.
But during the spring months when the pain was real, when even the rich and famous stayed terrestrial, the industry enjoyed unusually helpful government largesse. By virtue of their hybrid nature — they're both airlines and small businesses — some of these companies accessed funds from two or even three buckets of federal aid.
And while more than 100,000 small businesses failed for a lack of aid and major airlines are already begging for a fresh round of relief. The private aviation industry is made up of about 1,900 companies — including everything from charter services with dozens of jets to sightseeing operations with just a single propeller plane — which employs about 1.2 million people, yet out of the $2 trillion CARES act, it scooped up a disproportionate $666 million.
"The Trump administration's priorities are hurting those who need help the most and helping the already wealthy and well-connected," said Kyle Herrig, president of Accountable.US, a watchdog group that produced a report on how private jet operators have received federal aid. "They have abandoned struggling small businesses and slashed aid for workers while allowing the booming private jet industry — including many Trump donors — to triple-dip in taxpayer money."
CARES Act funding hasn't done enough to support small businesses — or, some would argue, major airlines.
When Congress passed the CARES Act in late March, it included $58 billion for airlines, half under a Payroll Support Program (PSP) and half as low-interest operational loans. A separate bit of the law made small businesses eligible for fully forgivable loans of up to $10 million through the Paycheck Protection Program (PPP), as well as facilitated loans of up to $2 million through the Economic Injury Disaster Loan (EIDL) program.
Even though airlines like American have received as much as $5.8 billion in PSP aid, it has not been enough to cover their entire payroll, leading airlines to encourage workers to take unpaid leaves and early retirements, according to Sara Nelson, president of the Association of Flight Attendants. Now, as restrictions on furloughs and layoffs expire, airlines are preparing to layoff tens of thousands of workers.
"Did the Payroll Support Program save jobs and keep people on payroll? Yes. So on balance, the program worked," Nelson told Business Insider. "I don't mean to say it worked perfectly, but it saved jobs."
"It was never funded to cover more than six months," Nelson added. "At the time, everyone hoped we'd be in a different place by now. We're not, so there needs to be an extension. A lot can change in six more months."
Meanwhile, the two programs set up to help small businesses were quickly overwhelmed by applications, and exhausted their funds within two weeks. By May 11, about 100,000 small businesses had collapsed, according to a study by researchers at University of Illinois, Harvard Business School, Harvard University and the University of Chicago.
A bunch of companies that were considered 'airlines' also landed small business grants and loans.
Although the Payroll Support Program seems written with large passenger airlines and cargo operators in mind, some 320 smaller carriers and private aviation firms have received about $935 million of the total $25 billion allocated, according to Treasury numbers. (The vast majority went to the 15 biggest commercial airlines.)
Some of those were companies like Beryl Air, an Alaskan sightseeing company which operates a single float plane and received just $2,149 in PSP funds. More than half were private jet charter companies, which together received $508,645,759 in payroll support. That makes sense: Many of these companies employ just a few dozen people and, despite their wealthy clientele, operate on thin margins.
But that's not all they got. Because many smaller private jet companies also fit the standard definition of a small business, they were eligible to receive funds under the programs meant for places like restaurants and hardware stores.
Thirty-six private jet companies have received $7,538,300 in Economic Injury Disaster Loans from the Small Business Administration. At least 95 private jet firms got Paycheck Protection Program loans, totaling between $64.3 million and $149.9 million (loan recipients were approved for minimum and maximum loan amounts; the Small Business Administration has not disclosed specific amounts.) Each of those companies also received grants through the airline-focused Payroll Support Program, according to data compiled by Accountable.US.
Between these three programs, 170 private jet firms received about $666 million, according to Accountable.US. Those firms also benefited from federal excise and fuel tax waivers as part of the relief bill.
Delaware-based Dumont Aviation Group, for example, received nearly $2 million in PSP grants, up to $5 million in forgivable PPP loans, and $500,000 in EIDL loans, for a total of nearly $7.5 million. (Dumont did not respond to a request for comment.)
"Only the Trump administration would find three separate ways to bail out high flying private jet companies while 25% of Americans face food insecurity and unemployment tops 10%," said Kyle Herrig, the Accountable.US president.
"This is an industry that can charge clients $25,000 or more for a single flight – this government aid should've gone to support truly small businesses and the communities they serve."
The reality is more complicated for small private aviation firms.
Scorn on the private jet industry is easy to understand, especially as small businesses collapse, unemployment assistance slows, and record numbers of Americans remain jobless. Before the CARES Act was passed, Dean Baker, senior economist at the Center for Economic Policy, told CNBC, "Putting up public money to support an industry that serves the rich would be hard to justify. It's absurd."
But private aviation connotes more than extravagance.
While the rich and famous make up some of the industry's clientele — especially for leisure travel — a large share of private aviation business comes from more restrained businesses using it to access hard-to-reach or far-flung sites.
Classic examples include a regional manager for an automaker visiting several car dealerships across a few states, or manufacturing plants spread out across a region. Of the nearly 5,000 public airports in the US, only about 500 serve commercial flights. Where a work trip could take a week flying between commercial airports, renting cars, and driving out to destinations, it could only take a day or two using a chartered plane.
Nearly 2,000 private aircraft operators are certified by the FAA to charter flights, ranging from major charter operations like Jet Linx and fractional owner companies like NetJets, to helicopter couriers and sightseeing companies, to outfits with a single propeller plane taxiing passengers between remote rural areas and airports frequented by small regional airlines. The private aviation industry creates 1.2 million jobs and generates $77 billion in income, according to industry lobbyists.
The majority of these companies have just a few dozen employees, most of them specialized and certified as pilots, flight attendants, maintenance technicians, dispatchers, and the like. Although passengers pay a lot for flights, private aviation firms often operate with relatively slim margins thanks to fixed capital and operational expenses.
And the pandemic didn't leave them be.
"In April we did see a 75 percent drop in business," Nick Tarascio, CEO of New York-based Ventura Air Services — one of the companies that received funds through all three available programs — said in an email to Business Insider. "This was not for us alone, this was the experience across the private aviation sector."
As business slowed in April and initial PPP funds were delayed, Ventura furloughed 10 of its 45 employees. Once PPP and PSP funding came in, Tarascio said, the company rehired all of them.
Meg Bianco, president of an Ohio-based company that also received funds through all three programs, said that her 165-employee company likely would have collapsed without the emergency funding. (Bianco spoke with Business Insider on the condition that her company's name not be printed in the context of discussing business troubles.) The company's maintenance, repair, and operational services work dropped by 40%. Business for its ground operations unit plunged as much as 90%.
"We would have had to shut down our ground operations division without the help," Bianco said of the Payroll Support Program and SBA loans. "Margins were so slim, we wouldn't have had a choice."
The outlook for private aviation is growing even stronger. Commercial airlines and small businesses, however, are preparing for a difficult few years.
Six months into the pandemic's seizure of the United States, the outlook for the commercial aviation sector remains bleak. Analysts don't expect demand to fully recover until 2024. Small businesses overall — and especially restaurants — face a similarly grim situation. According to McKinsey, it will likely take at least five years for affected sectors to recover from the pandemic. Between 1.4 million and 2.1 million US small businesses could close permanently.
The private jet business, however, is approaching cruising altitude. Through membership programs, package sales, fractional ownership, and other schemes, demand for private aviation is continuing to grow as the wealthy find ways to travel while limiting their exposure to COVID-19.
By the end of June, traffic for private jet operators was up to 78% of the previous year's numbers, while commercial airlines were closer to 25%, according to the New York Times. Over the July 4 weekend, private jet demand actually increased 5% over 2019 levels.
For the private jet industry, a heavy helping of federal aid worked exactly as intended. Companies facing downturns were able to survive the immediate and devastating impact of the pandemic, and now find themselves strongly positioned as their unique industry sees a boom in demand.
"Many who once thought of ownership as a luxury, now see jet ownership as a necessity for protecting health and getting to places that they need to get to safely and efficiently," said Tarascio, the Ventura Air CEO.
He predicts strong growth ahead, and is in the process of acquiring three more planes.
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