- 27 Jul 2022
- René Armas Maes
- Jet Charter
If you need to enter into an ad hoc aircraft charter agreement, are the price and terms the provider quotes inflexible? René Armas Maes highlights several areas to consider when negotiating.Back to Articles
Let’s assume that your flight department is experiencing high demand for the company airplane. One day, a team of highly productive salespeople are unable to fly out to meet with a major client and secure a multi-million-dollar contract because the company jet is already taking a team of mechanics to an overseas client to fix a problem with the product abroad.
Instead of consigning the team of salespeople to hours of wasted time in airport terminals, working around the schedules and the hub-and-spoke system of the airlines, and risking losing the deal altogether due to inefficiency, it makes far better sense to charter an aircraft to accommodate the trip.
Having done your homework, asking all the Key Questions to Find the Best Jet Charter Provider, you receive a quote that makes your eyes water. Do you simply ‘suck it up’, or reject the charter quote at face value? Or is there some middle ground to be found?
The reality is that in a highly competitive charter marketplace, providers are likely to be willing to negotiate. But how should you initiate that process? And what if it isn’t negotiable?
Type of Flying Agreement
A charter flight can be contracted for a single flight, several legs, or multiple hours (a block hour deal is typically for up to 25 hours per year) and may be for a specific aircraft type or multiple aircraft types.
Naturally, a block hour deal opens the door wider to rate negotiations. The charter provider will be more motivated to negotiate better terms and conditions, or waive certain fees, based on the size, conditions, and value of the agreement.
Nevertheless, recurrent single flight customers (ad hoc users) should be able to negotiate better terms too. If you have used the charter operator before, you will begin to build credibility with them. The provider will be keen to retain your future business, thereby softening to discussions over price or fee waivers.
Deposit Guarantees and Remedies
In the case a large payment being made to the charter provider (usually for a block hour deal), a part of the negotiation should focus on protecting your money in the event of the charter provider losing its charter certificate, becoming insolvent, entering voluntary liquidation, or failure to deliver the standard of service agreed in the contract.
If this issue remains unanswered in the contract, at the very least the charter provider or broker should be obliged to find an alternative provider to operate the flights you have paid for.
Importantly, the costs of the replacement provider’s flights should also be covered by the original charter provider if they exceed the original cost charged to you. Additional charges arising from securing an alternative flight in such circumstances can easily be passed on to the uninitiated customer, with the contract agreement protecting the charter provider – so look out for this before signing the contract.
And be sure to negotiate satisfactory remedies on any flight not rendered, or services paid for but not delivered.
Onboard Wi-Fi and Entertainment
While it is assumed that onboard Wi-Fi and entertainment is an unspoken requirement for charter aircraft to offer, leaving this off the negotiation table may lead to disappointment.
If Wi-Fi or entertainment are needed on the journey, say so, and negotiate what it will cost. Assumptions regarding connectivity could lead to the frustration of finding none is
available, or worse, receiving a robust extra charge for the in-flight movie you streamed on your phone.
Establishing what you need, and how much it will cost, protects both you and the charter operator.
If you are a frequent flyer, there is often an opportunity to lower this Wi-Fi fee by 50% or more. Ask the charter provider whether they have a frequent flyer program and what the perks are. If none exists, request to review your travel history and expenditure with the provider and negotiate certain additional benefits for your loyalty.
Ultimately, the more flexible you can be, the more you’ll be able to negotiate costs. If, for example, a short, 20-minute fuel stop en route is acceptable, a smaller aircraft that accommodates the necessary passenger load, luggage requirement, and offers the necessary onboard amenities may cost less to charter than a larger aircraft capable of flying the journey non-stop.
Moreover, those who are flexible over departure dates and times may also be in a stronger position to negotiate a lower hourly rate – but you’ll need to understand the peak times and dates for the charter provider to avoid incurring higher costs.
Schedule flexibility also allows charter customers to take advantage of empty legs (in which an aircraft is not carrying passengers while it repositions from one location to another) and other potential cost saving, such as shared flights. Such flights are usually heavily discounted (by up to 60% in some cases).
Other Areas for Negotiation
Review, understand and negotiate additional charges such as catering costs, ground transportation costs, de-icing costs, fuel surcharges, crew expenses, airspace navigation fees, weather service fees, daily minimums, cancellation fees (both for you and the charter provider, including mechanical and weather-related events), administration fees, international fees and other incidental costs and expenses applicable to your flight.
Again, your chance of successfully negotiating these additional costs down will increase with your perceived loyalty as a customer. Carefully review and amend ‘force majeure’ and ‘matters beyond [the charter provider’s] reasonable control’ clauses, limiting the chance for extra fees to be unexpectedly added to your bill. As an example, look out for double de-icing charges where the aircraft needs to be repositioned to pick you up.
Ultimately, working through the contract with a fine-tooth comb, rank and prioritize areas for negotiation based on what brings the most value to your mission.
Remember, the charter provider wants your business even in today’s heavy-demand environment. But first, find those items that are of value to you and focus on your travel requirements and typical mission profile as you proceed to negotiate the items that matter the most.
The charter provider’s focus will be on building a happy, long-lasting business relationship, rather than short-term victories. As with any fruitful relationship, there needs to be give and take from both parties!
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