We have talked about commodity buying in other blogs and how purchasing air charter as if you were buying pencils is a terrible strategy. It rewards operators that offer cheap air charter and bad service to keep offering just that, and penalizes air charter operators that have larger fleets, better equipment, better-trained air crews, and the infrastructure in place to adjust when things go sideways due to bad weather, mechanical malfunctions, and other unforeseen events. For many years a significant portion of sports team purchasing staff have been buying air charter based on the single metric of price. What we have seen, as we invariably will continue to see, is that those same teams are often outraged when the air charter operator that they selected on price is struggling to do the flying that they were contracted to do. Yet this keeps occurring both in collegiate and professional sports.
To make matters worse, many organizations are willfully blind to language in agreements of many air carriers that significantly limits the air carrier's liability in the event of a delay or cancellation, somehow thinking that sheer will and insistence that another aircraft must show up is a strategy that will overcome lowest-priced purchasing in the first place. Often, the airline's only responsibility is to refund the money - at 0100am that doesn't fix your air charter transportation problem. After all, the low pricing has to be achieved somehow. The coach yells at the broker, the broker argues with the airline, and everyone pretends that what was purchased (as well as contractually agreed-to in detail) was somehow different than what is being provided; the lowest-cost offer. There is no free lunch. Price and quality are inextricably related, as is the case with virtually all products and services.
Like it Wasn't Hard Enough Already...!
Add the pandemic's effects on aviation to the cycle of bad purchasing protocols that continue to reward substandard air charter brokers and air charter operators, and the pricing pressures will be more acute than ever. It's enough to drive your air charter broker insane!
Like virtually all businesses, air carriers are suffering the financial fallout from the pandemic, and a number of regional airlines have unfortunately already gone out of business. Airlines are extremely capital intensive businesses. The financial pressures will be greater than ever for those airlines that do survive. The best air charter airlines from a quality standpoint are going to be forced to compete on price in a spiraling race to the bottom. Continuing to reward the bad actors with contracts based on price alone, as many sports team travel buyers have done year-after-year, will make it even harder for the operators that everyone wants to thrive and stay in business for years to come.
But the Price - It's Just too Good to Pass up!
We see this all the time; we'll talk with buyers that just can't seem to part with the price-is-the-only-metric mentality. Often the team staff gets it, but purchasing ties their hands. We talk about carrier ABC's fleet depth, reputation, on-time reliability, and aircraft - they love all of it. Yet in the end, they are going with the lowest-priced option that they lament time and time again has let them down.
Not that lower-priced options are always lower quality - not true. But there is no getting around that price and quality more often than not trend upward (and downward) together. Sometimes, as air charter brokers, we end up putting a client on an operator that we know will struggle with meeting the schedule. We have the quality conversation with the client, we put language in the agreement clearly stating that this operator will fly the flight or send the money back - that's it. The siren song of getting it done at a low price is too strong for many purchasers, and hey, it looks great on paper! Invariably we end up on conference calls after a delay or cancellation, with everyone asking "How could this happen?? This is an outrage!!" as if somehow the outcome is surprising. Madness!
Air charter brokers, all of us, can always do a better job trying to educate air charter clients on value. It is difficult, especially in the hyper-competitive market of air charter, to let a good customer go to a lower-priced option that you would rather they not utilize. It then becomes a question of losing a client, or trying to make the best of it - which often means phone calls at unsavory hours of the night trying to piece a team's air charter travel back together. A number of teams will keep switching brokers but make the same poor purchase decisions, as if the air charter broker alone can improve the underlying product. To some extent, it is true that a solid broker can smooth out a lot of issues and improve the overall operation, but often there is nothing the best broker in the world can do when you have an air charter airline that knows that they are always going to fill up on low-cost buyers, regardless of how the flying goes.
Let's STOP Rewarding bad Behavior
Every year it's the same story; The same air carriers stuff their schedules (low pricing requires high volume), knowing that they won't be able to fly all of, or at least nowhere close to on the schedules the clients are expecting. The next business day, they'll answer some nasty emails and (hopefully) send some money back, which is never enough to cover the subservice. It is not a coincidence that the subservice cost is often very close to what a team would have paid for an operator that has the infrastructure, financial strength, and fleet in place to do it right in the first place. Air charter brokers need to focus more than ever on placing business with the quality operators. That means helping clients to make better purchasing decisions. Team travel buyers need to stop buying air charter like pencils, assuming that they can just beat up the air carrier and broker, or threaten to not use them, etc. to get fixed what needs fixing. Not only does this approach hurt teams in the long run, it hurts the entire industry.
Team staff - talk to your buyers! Let's work together to keep the best vendors flying and stop rewarding the cynical schedule stuffing and resultant cancellations and delays that are just business as usual. Even the best operators have delays and cancellations. There is a distinct difference between those events unexpectedly occurring versus when they are a byproduct of a bad business model. Smarter purchasing means more flying for the solid operators that we want to be around for years to come.