The demand for private jet flights has decreased by 15% in two years due to the Covid-19 pandemic.

• In the first half of 2022, private jet flights experienced a 15% decline compared to their peak.
• High-end travel is facing declining demand and a changing competitive environment in the industry.
• Some smaller charter operators may have to make difficult choices as their fleets remain idle and demand decreases, according to industry experts.

The original article was published in CNBC's Inside Wealth newsletter with Robert Frank, providing a weekly guide for high-net-worth investors and consumers. To receive future editions, subscribe and have them delivered directly to your email inbox.

The demand for private jet flights decreased by 15% in the first half of 2022 compared to their peak, resulting in a competitive landscape for high-end travel.

Although the private jet industry experienced a brief increase in demand during the Summer Olympics, with 713 private jet flights to Paris in the last week of July, the industry is still experiencing a decline in travel this season. Private jet charter flights decreased to 610,000 in the first half of the year, compared to 645,000 last year and 716,000 in 2022, according to data from Argus International.

The decline in private aviation over the past two years is a reflection of the ongoing correction in this industry, as the increase in new jet card members and charter fliers who began traveling privately for the first time during the Covid pandemic has slowed down. Even wealthy travelers are showing signs of spending fatigue.

"Rob Wiesenthal, CEO of an air charter and helicopter company, stated that although many people believed they would never return to commercial flights after their first private flight experience, many have gone back and continue to do so."

Despite the aberrational spike in 2021 and 2022, the industry has been growing steadily since 2019. However, the boom times of the post-Covid era have led to a surge in IPOs, startups, and demand for jets and pilots. Many experts now predict that this expansion will result in a shakeout.

In 2021, Wheels Up went public through a SPAC, but its stock price dropped more than 90% before it was rescued with an investment and partnership. Despite never making a quarterly profit, Wheels Up reported a second-quarter net loss of $97 million and a 29% year-over-year decline in members.

George Mattson, CEO of the company, stated that Wheels Up is making significant advancements and has solidified its position as a leader in providing integrated global aviation solutions that seamlessly blend private and commercial travel ecosystems.

Jet It, a prominent U.S. private jet operator, ceased operations last year after halting the use of its Phenom 300s, Gulfstream G150s, and HondaJets. Despite ongoing speculation about its financial difficulties, VistaJet founder and Chairman Thomas Flohr assured CNBC in May that all financial records were accessible to its investors and creditors.

Some smaller charter operators may have to make difficult choices as their fleets remain idle and demand decreases, according to industry experts.

According to Doug Gollan, founder and editor of Private Jet Card Comparisons, the smaller operators with three, four, or five jets are the ones experiencing the most harm.

Private aviation experienced recent challenges and brief success due to Covid. In 2020, private jets became an alternative to airports and airlines, offering a safer and more convenient way to fly. Wealthy travelers who had previously avoided private jets due to cost and energy consumption, could now justify flying privately while isolating at 40,000 feet.

Jay Duckson, founder and president of consulting firm Central Business Jets, stated that there was a section of the population who could afford private flights but were hesitant due to the optics. However, with the onset of Covid, there was a surge in demand for private flights.

The surge in liquidity from government spending, stimulus, low interest rates, and a thriving stock market led to an unprecedented increase in wealth to cover the rising costs of private flying. As a result, companies quickly purchased planes, hired pilots, and recruited new members. Prior to 2019, only a few months had seen private jet charters surpass 100,000. However, in 2021, every month exceeded 100,000, with July 2021 reaching a record 300,000 flights.

Due to high demand, private jet operators struggled to keep up with the increasing number of passengers who were willing to pay six figures for flights. As a result, delays and cancellations became common, and shortages of pilots and parts further exacerbated the issue.

In 2023, demand for private flights began to decline as more planes and pilots became available. Some affluent travelers felt they could no longer justify flying privately due to Covid, while others found the rising costs of private flying to be unacceptable.

According to Private Jet Card Comparisons' Gollan, prices have increased by approximately 20% since 2019. Many individuals are stating that they spent around $300,000 to $350,000 on flights last year and are unwilling to spend $400,000 to $450,000 this year, even if they have the financial means. They have a mental budget they do not wish to exceed.

Private jet fliers are increasingly switching between airlines and private flights for city-to-city trips, according to a survey by Gollan.

As demand decreases, the number of unsold planes is increasing and prices are dropping. According to a report from Jefferies, the number of used business jets for sale rose by 17% in July compared to the same month last year. Prices also fell by 7%, the report stated. Despite strong orders for new jets, wait times have decreased significantly for many models, from as much as three or four years to about two years, according to jet brokers.

The decline in demand is viewed positively by many industry executives, as it leads to a more balanced industry equilibrium, with profitable routes, accessible planes, and satisfied customers.

Travis Kuhn, senior vice president of software at Argus, stated that the industry is moving towards a more sustainable long-term path. He added, "It's not a bad thing that it's cooled down a bit."

Gollan stated that although some occasional fliers may have left private aviation, the "heavy users" are still flying. According to his survey, 95% of those who began flying privately during Covid are still doing so, with 77% in a membership, jet card, or fractional program.

Fractional ownership of flights has increased by 12% in the first half of 2024, with NetJets, owned by Berkshire Hathaway, benefiting from the shift in demand.

Kuhn stated that some of the new fliers evaluated the market and found the fractional model appealing, which involves a predetermined number of hours and a larger fleet.

NBCUniversal, the parent company of CNBC, owns NBC Sports and NBC Olympics. NBC Olympics holds the U.S. broadcast rights to all Summer and Winter Games through 2032.