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CHARTER A G550 FOR $3-990

How can this broker deliver on such a promise?

AvBuyer   |   1st June 2011
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The price in the headline is the rate cited on a new charter broker’s website. It happens to be about half of what the regular per-hour rate is for a G550. Given that- according to Conklin & de Decker- the variable operating cost per-hour at today’s fuel prices is about $4-000- how can this broker deliver on such a promise?

The simple answer is that they can’t - and therein lies the problem with business jet charter brokering. There is nothing to stop them from advertising that rate- and leading the end-user into thinking that business jets cost far less to charter than they really do.

According to ARGUS- there are about 840 Part 135 charter companies operating 4-700+ multiengine turbine aircraft. That’s a fair-sized number of operators chasing a tightly-defined market. All but a handful are regionally-based companies- with limited sales and marketing budgets and personnel – often the sales force is comprised of off-duty pilots or dispatchers. To reach beyond their local market- base- they depend upon informal interchanging and subcontracting with charter operators based elsewhere – and upon charter brokers.

Business jet charter brokers serve as a de facto extension of the operators’ sales and marketing force. Brokers are not tasked with selling on behalf of any one fleet- but rather can seek the best aircraft at the best price on behalf of their worldwide client-base. Most operators depend on broker trips to fill empty-leg backhauls- or to fly an extra revenue trip on an aircraft sitting for several days away from home-base.

In today’s market- an operator’s profitability can depend on converting empty legs to revenue trips- or on picking up an extra trip when stationed away from home. But there isn’t an owner in the world who would accept a GV charter for just direct operating costs.

So how can our broker in question advertise this rate on its website and via email blasts? Because unlike commercial airline ticket sales- business jet charter brokering is unregulated - and that leaves charter buyers exposed and vulnerable to know-nothing boiler-room operations that advertise GVs at $3-990!

This same operation’s aviation expertise is dubious at best – its rate for a GII is higher than that for a G450 or G550. A Challenger 600 lists for more than a Challenger 605. The turboprops King Air C90/100/200 and Pilatus PC-12 are shown as Light Jets- and the King Air 350 as a Mid Size Jet. The pricing is absurd – unless the company in question is buying from the lowest- most desperate tier of charter operators.

While the DOT very carefully regulates commercial airline ticket sales- there is minimal regulation or oversight specific to business jet charter brokers. To date the DOT has provided little in the way of regulation comparable to that which governs travel agents and airline ticket brokers.

Yes- DOT 14 CFR 399.80 makes it illegal to engage “in unfair and deceptive practices” in reference to air transportation. And yes- Congress’ HR 5900 “Airline safety and Federal Aviation Administration Extension Act of 2010” refers specifically to the unfair and deceptive practice of brokering- Internet sales of air transportation. But none of this stops rogue companies entering the fray.

Nor could it stop my 20 year-old nephew from setting up a website- “Max’s Jet Charter and Skate Boards.” He can advertise- buy from the lowest cost operator and resell trips at whatever price the market will bear – as long as he never claims to actually operate the aircraft he books for his clients- nor acts as an “indirect air carrier.”

NATA has been working diligently with Dayton Lehman- Principal Deputy Assistant General Counsel at DOT to deal with this issue. A Notice of Proposed Rule Making is in process – and has been for more than two years. In the meantime- good brokers are impugned- and charter clients and prospects are misled by impossibly low bait-and-switch advertising.The business jet charter industry needs the charter broker – it is a symbiotic relationship.

There are many excellent charter brokers providing first-rate service to their clients. But some simply sour new clients as well as sully the reputation of the broker industry- creating situations like the 2005 illegally-brokered Challenger charter accident at Teterboro. It’s not just about economics – it’s about safety and industry integrity. Be careful out there!

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