Private jet firms are soaring in popularity after big COVID-19 bailouts.Were they a ‘handout to the wealthy’? The recent boom has some calling on companies to return their bailout funds.
By Lucien Bruggeman December 23, 2021, 10:07 AM • 11
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CEOs and executives from the nation’s largest airlines are expected to face a grilling from politicians on Capitol Hill about how they spent a $54 million bailout during the pandemic.STOCK PHOTO/Getty Images Lingering health concerns about commercial air travel during the COVID-19 pandemic have fueled a boom in private jet travel, a trend that has led to fresh scrutiny of the industry’s taxpayer bailout — which some critics are calling a “handout to the wealthy.”
The multi-trillion-dollar federal rescue for businesses clobbered by the coronavirus included billions for airlines grounded by travel restrictions and safety concerns — and, according to one report, more than half a billion dollars for boutique aviation firms that deliver private jet travel to the super-rich.
“This was the rest of us paying to subsidize the luxury consumption of the very richest people in the country,” Dean Baker, cofounder of the progressive think tank Center for Economic and Policy Research, told ABC News.
During the summer of 2020, at the time of the first of three bailout programs set aside for aviation, industry experts said that private jet operators — just like the commercial airlines — would be confronting substantial drops in revenue.Executives at private aviation firms said they needed the government’s help to save the jobs of their employees.
MORE: ‘Unprecedented’ fraud penetrated rollout of COVID-19 small business loans, watchdog warns But at the same time, many of those same executives said publicly that they saw signs of a coming boom, fueled by concerns about the pandemic.
That forecast is now coming to pass, making the once-niche industry an overnight sensation thanks to those who can afford to shell out up to $20,000 for a flight across the country.Industry analysts say private aviation has now exceeded pre-pandemic levels of popularity.
“Private aviation has bounced back faster than many industries, including the airlines,” said Travis Kuhn, vice president of market intelligence at the aviation consulting firm ARGUS International.”At this point in time, private air travel is about 15% larger today than it was two years ago — and it is almost all directly attributed to the pandemic.”
Furthermore, Kuhn said that after flocking to private aviation “for the perceived health advantages” of avoiding crowded airports and commercial planes, wealthy Americans “have since discovered the time-saving and productivity advantages” — a sign that the increased interest in private aviation may be here to stay.
In 2020, private aviation firms collected a total of up to $643 million in government funds from the Payroll Support Program, the Paycheck Protection Program, and the Economic Injury Disaster Loan program for small businesses, according to an analysis from Accountable.US, a government watchdog group.Subsequent iterations of the Payroll Support Program released even more funds to the private jet industry.
The overwhelming majority of funds delivered to private aviation firms came as grants that do not need to be repaid, as long as beneficiaries refrained from “conducting involuntary furloughs or terminations of employees” through September of 2021.
But some critics are calling on the firms that rebounded quickly to voluntarily return some of the money.
STOCK PHOTO/Getty Images “These days, it seems many private jet companies are celebrating even greater fortune and opportunity regardless of government aid received,” said Kyle Herrig, the president of Accountable.US.
“It’s time to pay taxpayers back.”
Among the biggest bailout recipients was OneSky Flight, an Ohio-based business aviation portfolio of brands like FlexJet, Sentient Jet, and PrivateFly, which received $81 million from a pot of money set aside in the Coronavirus Aid, Relief, and Economic Security (CARES) Act to help airlines.In a 2021 extension of the program, FlexJet, Sentient Jet and PrivateFly collected more than $50 million more in grants.
Executives at the OneSky companies have described the business as catering to a high-net-worth clientele, largely comprised of corporate clients and wealthy fliers.The companies’ social media feeds are peppered with endorsements from celebrity customers like astronaut Buzz Aldrin and golfer Bubba Watson, and references to their sponsorship of thoroughbred horse racing and an annual snow polo tournament in Aspen.
When OneSky reached out to the federal government for bailout dollars, company executives emphasized the needs of their pilots and flight controllers.
Directional Aviation, OneSky’s parent company, did not respond this week to a request for comment from ABC News.
MORE: American, United cancel 27,000 furloughs after stimulus package passes Dan Hubbard, a spokesperson for the National Business Aviation Association, an industry trade group, told ABC News that “these businesses requested federal aid for the same reason countless other small businesses did: to keep employees on the job.”
“This crisis-moment investment worked — as it has in a host of industries — supporting employees and paving the way for their companies’ gradual recovery,” Hubbard said.”To have denied aviation businesses the same kind of lifeline offered to all other kinds of enterprises would have struck a blow to an entire segment of America’s aviation workforce.”
But critics have pushed back on that premise, arguing that private jet operators could have afforded to support their employees for a short stretch if they anticipated that business would rebound — which many industry executives said publicly at the time.
“It’s true that it does support jobs, but it would also support jobs if we agreed to pick up 25% of the tab for [Amazon CEO] Jeff Bezos’ personal servants,” Baker said of the bailouts.”There are much better ways to create jobs than subsidizing the very rich.
If these people value having their private jets, then they will pay what it costs to keep the industry in business.”
STOCK PHOTO/Getty Images Steve Ellis, vice president of Taxpayers for Common Sense, said the success of these firms so soon after accepting government support undermines the spirit of the programs.
“These programs are not designed, nor should they be, to make anyone better off, or even whole.They are a bridge to when our economy is on better footing,” said Ellis, who characterized the bailout as a “handout to the wealthy.”
“The private aviation industry benefited from increased interest during the pandemic …so they got taxpayer cash, and business soared,” he said.
Despite the criticism, some industry experts believe the stimulus of private aviation was warranted.Industry market experts have confirmed that private jet operators, just like the well-known commercial airlines, faced significant revenue drops at the height of the pandemic from mid-March through May of 2020.
Doug Gollan, the editor of Private Jet Card Comparisons, a blog covering the world of private aviation, said the success of the industry now is a reflection of how successful the CARES Act was in getting these businesses back on their feet.
“The money was meant to help companies navigate through the crisis,” Gollan said.”So, for the CARES Act, private aviation was the poster child of what a success story should look like.”
MORE: How the coronavirus pandemic might change the car business for good But questions about whether federal support should have more carefully targeted industries that would struggle returning to pre-pandemic levels stem in part from statements made by the private jet operators themselves, who’ve been publicly touting their success as the country emerges from the pandemic.
Kenn Ricci, the CEO of OneSky Flight’s parent company, recently told Bloomberg Media that business is now so good that he plans to expand his fleet by 40% over the next year.
And the recent success of private aviation has led the demand for new aircraft to drastically outpace supply, Bloomberg reported.
“It’s a once-in-a-lifetime grab,” Ricci said.
Lawmakers have previously taken aim at aviation firms that boasted of strong financial returns after accepting funds under the Payroll Support Program.In Oct.
2020, Rep.Jim Clyburn, the chairman of the House Select Subcommittee on the Coronavirus Pandemic, urged four cargo carriers to return hundreds of millions of dollars in government funds.
MORE: US airline uses AI to guide planes, eliminates plastic to reduce carbon footprint “It is troubling that Kalitta Air is receiving over $161 million in taxpayer funds intended to cover the wages and benefits of its workers, while simultaneously experiencing increased demand for its services,” Clyburn wrote to one of the companies.
“Failing to return the funds to the Treasury would be inconsistent with Congress’ clear intent.”
When contacted this week by ABC News, the committee did not provide an update on the companies’ response.A committee spokesperson also declined to comment on whether the committee would be requesting that private aviation firms return pandemic relief money.
In the meantime, the juxtaposition of executives promoting their success after accepting government funds isn’t lost on some industry leaders.Patrick Gallagher, the president of NetJets, one of Ricci’s biggest competitors, has said that he is “hopeful, as a taxpayer, that some of those CARES Act funds get paid back.”
“We see our competitors touting their recent success and returning to pre-pandemic levels,” Gallagher said.”I’m glad that those funds were available to keep people employed, but many of these companies today are outdoing bolt-on acquisitions and spinning off new ventures.”
“Personally,” Gallagher said, “I am hopeful they are also paying back the tens of millions of dollars that they took to make payroll just a few months ago.”.