Double-Digit Growth in Business Aviation Facing Hangar Shortage
Private charter (on-demand) and business air travel have fully recovered from pandemic lows and attained their highest levels ever in 2021, according to WINGX, a leading business aviation tracking service. The trend continues in 2022 with four consecutive months of double-digit growth in bizav departures in the U.S., indicating solid customer interest in post-covid travel. In addition, a recent JetNet iQ forecast calls for deliveries of new business jets and turboprops to increase by about 6% to 1,100 aircraft in 2022.
While those numbers demonstrate strong activity in the business and on-demand segments, two factors are emerging as potential obstacles to continued growth: Economic headwinds appear to be building as inflation and supply chain issues continue, and a growing shortage of hangars to shelter aircraft is negatively impacting operators at many airports. The latter was evident as early as 2018, and with the surge in private and business aviation during and post-covid, hangar space is becoming ever more scarce and expensive. By some estimates, hangar values have increased by 30-50% since before the pandemic. And the hangar shortage is being felt nationwide, from Paine Field (PAE) in Seattle to Miami Opa Locka Airport (OPF) in Florida.
One issue is that the acceleration of business and charter growth has outpaced the development of hangars, which typically face a long process of approval, permitting, and construction. To be sure, developers are building hangars, just not at the pace to meet current demand. Fixed Base Operators (FBOs) such as Million Air, Sheltair, and others rapidly build hangars. In addition, private sector developers such as Sky Harbour, CloudNine Hangars, and others are building at numerous locations across the country and offering private and/or luxury aircraft basing, offices, kitchens, and a complete range of aircraft ground services.
Katrin Gist, leader of aviation properties for commercial real estate firm CBRE, has noted another issue hindering hangar development: some airports simply have no more land on which to build. A majority of private and business aircraft want or need to be based at certain airports, typically near larger cities which are the most crowded. The cost of hangars at the most crowded airports has been climbing for several years and no end is in sight. For some, the cost of parking an aircraft at a secondary or tertiary airport and either chartering a helicopter into the city center or driving can be less expensive than parking at the desired airport. In any case, some in the industry say the urgency to build hangars may represent a major shift in which private sector developers are poised to make the most impact in the longer term.