Something Ain't Right in Charter Land
Ok, so we keep hearing from our clients that they are getting pitches for a three-year "consolidation" program that purports to provide tremendous savings from air charter consolidation and volume. One problem - none of the air charter pricing that we have seen is any lower than a team could obtain by using their preferred broker or by getting it from the air carrier directly. So, teams are being asked to lock in with a vendor for three years and in exchange get pricing that they can already get on their own - without a three-year commitment. What's going on? We'll break it down for you in this blog.
MisLEADing Air Charter Pricing
Let's start with some of the pricing that we have seen thus far. The "consolidation" broker compares pricing from three air carriers. Let's call them Air Carrier A, B and C. Carriers A & B are significantly more than Air Carrier C, the airline being offered under the "consolidation program". The price difference may leave one to possibly conclude that there is some real savings to be had. What the pitch omits is that the two higher priced airlines are offering much larger aircraft than Air Carrier C. A & B also have significantly more aircraft in their fleets (hundreds of aircraft versus dozens), are billions of dollars larger in terms of revenue, are offering newer aircraft, more seats, in-flight entertainment, Wi-Fi, longer nonstop range, and thousands of additional pounds of payload capacity.
In many cases Air Carriers A & B are also including stadium screening, athletic beverages, and athletic catering. It is outright dishonest to imply that there is any savings when the products being offered are so vastly different, and in fact are not even the same aircraft. We also noted that Air Carrier C does not have Wi-Fi on any of its aircraft, much less in-flight entertainment, yet the broker is stating in their proposal that it is included on every flight that they will offer via the program. Wait, what? We see a pattern here.
A Number of Airlines Are Not Participating in the Consolidation Scheme
We have confirmed that a number of airlines will not even participate in the program at all. That's right, if you want these airlines, you won't get them through the "consolidation program" and their broker. Yet you can still get pricing via your preferred air charter broker or the carrier directly. Further, we have yet to find an airline to confirm that the pricing offered through the "program" is any different than standard market pricing. Not a single one. A consolidation program needs airlines to reduce their pricing in exchange for volume. That isn't happening. How then does anyone benefit except the broker and the people that have been pushing this type of program? How does your team benefit?
You Want the Truth?
Remember the low pricing of Air Carrier C? By stacking it against completely different aircraft and airlines, it looked really attractive. We already covered why that needed a (much) closer look. The truth is, Air Carrier C pricing is not special. It is simply what the low-cost operator was quoting to anyone who would ask, not some amazing discount exclusively available only if you commit to a three-year program that is not delivering any savings to you, and in fact is reducing your air carrier choices. The comparison ignores the vast differences in airlines and aircraft capabilities. Instead of helping the buyer make an informed choice, it compares apples to oranges. Sound like helpful insight and a good deal? Also, don't forget the real possibility of this program violating public purchase laws while you're at it. The real agenda is to stack as many teams onto the cheapest airlines in the marketplace, and ignore the unique needs of many teams. That does not sound like a recipe for good service to us.
Don't forget the original pitch was that volume will reduce costs. It is not happening in the real world of the air charter market. Each and every airline we spoke with said that their pricing remains available to any and all teams either via their air charter broker or by working directly with the airline. We'll say it again, these airlines are not offering any discounts via the "consolidation program."
If you are perfectly happy with Air Carrier C, you can save money by booking that option. We have lots of customers where pricing is a critical selection driver and Carrier C will do just fine. Our advice to teams is to continue with the same due diligence that you have always used, follow the public purchase regulations, keep working with the brokers and airlines that meet your needs, and keep asking those hard questions. We'll be here to give you the honest answers, just like we have for twenty years.