From piloting Blackhawk helicopters as an Army captain to flying Cessna aircraft and helming Textron Aviation, a passion for flight has been the through line in CEO Ron Draper’s career.
The private aviation industry weathered 9/11 and the Great Recession. Then COVID-19 threw it another curve. But private air travel has not only bounced back, it’s soared to new heights. Is the sky the limit for this industry? STRATEGY asked Textron Aviation CEO Ron Draper what the future holds.
In his 23 years in the business, Ron Draper has seen private aviation soar and plummet. Hit hard by the 2008 downturn, the industry was finally recovering; 2019 was “a pretty solid year,” Draper recalled. Then COVID-19 hit. Air travel shut down, and private aviation firms went into survival mode.
But summer 2020 saw a major shift. Leisure travelers weary of lockdown but leery of crowded commercial flights turned to private charters for their getaways. Corporate clients realized that small and midsize jets offered a cost-effective, efficient alternative for their business travelers. Charter companies started gobbling up used aircraft; then new inventory began to sell, too. Demand has steadily accelerated ever since, he said.
“Today, you can fly from your downtown building to the airport on a helicopter to avoid all the traffic. You don’t usually do it because it costs so much; instead, you jump in the SUV. How do we replace helicopters with electric machines that reduce the traffic congestion and the pollution of large urban areas? It’s a challenging business model.”
“The safety, productivity and time savings of private aviation sells itself right now,” Draper noted—and it’s finding a ready market in the growing upper middle class. “Of all the people who can afford to operate, fly, rent or buy one of our products, only about 10% do. The other 90% still fly commercially,” Draper explained.
Although he estimates 20% of those people are now moving to private aviation, that still leaves a huge untapped market. While North America dominates, demand for private aviation is on the rise in South America, Europe and Asia, too.
Winning the Talent Wars
In this industry, supply chain issues are less a dearth of widgets and more a shortage of skilled workers. Mounting demand has heated up the talent wars. How to win? Draper believes that the “pay and benefits are important, but they only go so far. It’s culture that makes people want to stay.”
Creating a meaningful corporate culture requires inspiring your people with passion for your product. “When people fall in love with aviation, it makes them better engineers, better salespeople, and better employees,” said Draper, who was bitten by the aviation bug as an Army captain piloting UH-60 Blackhawk helicopters. “When you get in the air, there’s this freedom, this passion of being at the controls and going where you want to go.” To give employees that same experience, aviation companies could pay for them to take flying lessons and provide planes they can rent and fly.
Draper is a strong believer that if you can’t find the highly skilled employees you need, you should cultivate your own. For example, aviation companies can train lower-skilled employees and work with local trade schools, colleges and universities to generate a pipeline of machinists, electricians and avionics specialists.
Charting a New Course
Goldman Sachs recently reported that over 30% of private jet buyers are first-time customers. These new customers are helping to chart a new course for private aviation.
“Somebody who’s already owned an airplane knows how the process works and the features they like,” the aviation veteran points out. “[New customers] say, ‘Why are you doing it that way? Why not do it this way?’ They see with a different set of eyes, which can bring lots of innovation.”
The innovations underway in private aviation are many. To reduce emissions and ease climate concerns, sustainable aviation fuels (SAF) to reduce emissions, and urban air mobility, which promises to ease urban congestion and pollution via short-haul passenger aircraft. Will these be helicopters or fixed-wing planes, piloted or autonomous, hybrid or electric? How will unpiloted drones evolve to meet surging demand for logistics and home delivery solutions?
“SAF fuel is more expensive and less available than regular jet fuel, but that’s changing. SAF fuel is the biggest lever this industry has to reduce its carbon emissions in the near term, and its impact can be substantial. We just need to get more operators and customers to adopt it and we need more availability.”
“There’s a lot of money chasing these products, and not all the companies will succeed,” noted Draper. As for his forecast for M&A activity in private aviation? It is too soon to tell whether rising demand will lift all boats or drive consolidation. Either way, he’s bullish. Business travel by commercial air remains in a tailspin, with corporate ticket sales still well below 2019 levels, according to industry association Airlines for America. That spells opportunity for private air travel.
Draper’s prediction is that as we get past the pandemic and it gets easier to travel, the demand for private aviation is only going to increase. “It’s an exciting time.”
