For the smaller corporate charter departments. Are you looking at doing One Way Trip Quotes, or are you sticking with round trip to reposition back to base?

I raise this question due to the recent article in November's AIN issue about the health of the charter industry. As mentioned in this article XOJET ( I think) has started coast to coast charters in a new Citation X at 19,000 one way. I've ran similar quotes with my department using a Hawker and can't get near that number. How can they make a profit, let alone break even with that low of a price?

 

I know next to nothing about the specifics of the charter and fractional world, but some ideas come to mind:

- It's a repositioning flight that needed to be done anyways, so they're trying to recoup some of their costs

- There's another one way charter that they have going back the other direction

Like I said, I'm no expert, but just some possible reasons.

 

Segrave floats their fleet too. Not sure how they pay for overnights.

 

Floating the fleet does help. But other problems do arise. But what I'm trying to get at is the low quotes some of these organizations are able to give out. How are they covering aircraft finances, direct operating costs, fuel, crew fee's, and airport fees. Also you have to factor in some small amount for repositions. That being not all trips go out of the same airfield the aircraft are located at. I've ran the numbers for the aircraft I operate and can only go down 25% before we run into red ink. Some of the companies are running 50% below our rates. Any other idea's on how their able to offer such low prices and still cover expenses?

 

The cheapest way possible.

-mini

 

The only successful way to do this is if you have a lot of business and good dispatching available to you all over the country. It's definately a risk doing the one-way only. I know at times the freight guys were able to do this because there was always a good chance of picking up some work going back the other direction, but even that isn't really much of an option anymore.

 

We will quote one way (usually during our quieter periods, ie., winter) to popular destinations which typically includes Florida and certain parts of the Caribbean. We don't float our own fleet per say, but we do try to sell the one way back. Usually we can sell it with aggressive marketing, but if not then we are forced to swallow the cost to reposition the aircraft back to cover the next charter or an owner trip, whichever it may be.

 

My company quote our props round trip, jets depends on where they're going. If it's somewhere that's likely to get a back haul they may quote it one way.

 

Some charter companies don't care about loosing money for their owners as long as they are making money for the charter department. Depending on the contract that the charter companies have with their aircraft owners 85/15 split, fixed payback cost per hour, or some variance of the two. The real problem is that a few operators are doing these trips at a loosing rate for the aircraft owner and it ruins it for everyone else. It is dragging down our industry into a norm that may be unrecoverable. If the industry would just stand up and have some backbone against these so called "brokers" (and I use that term lightly since there is no certification for brokering flight) we would see a recovery. The brokers are praying on the current economic downturn (which dosen't effect people that fly on these aircraft) to make more money off the trip. They are still charging the same rates to the end user and pitting charter company against charter company to accomplish the trip for cheeper. So if a broker sells a trip for 25,000 two years ago they would take 10 percent and find an aircraft to do the trip for 22,500. Now they can find charter companies willing to accomplish the same trip for 19,000 or even less. End result these bokers who have nothing to loose (no certificate, no employees just a labtop and a little blackbook) make more money and charter companies, who have everything to loose make less money. WE ARE ARE OWN WORSE ENEMY!!

 

You hit the nail right on the head. Brokers have nothing to lose and pocket a lot of cash for the little work they actually do (basically shopping for the best bargain). It's amazing how many calls I get for quotes for the exact same trip -- essentially different brokers shopping for the best price. There are certainly some great brokers out there that don't operate this way, but the majority do. Unfortunately retail clients often find the process difficult and time consuming to set up a trip unless they travel exclusively with one operator, so the concept of brokering trips is certainly convenient for those people.