How Rising Demand Is Skyrocketing Private Jet Charter Costs
Founder and CEO of Exquisite Air Charter, Rena Davenport, shares her thoughts on how increases in pricing led by supply and demand are impacting the private jet charter industry.
After a record-breaking year for private jet demand worldwide thanks to the pandemic and the inefficiencies of commercial air travel, the business aviation industry has recently experienced an unprecedented rise in prices behind increased usage and reduced availability. For Rena Davenport, CEO of Exquisite Air Charter, a global private charter provider, some operators are raising prices and lacking consistency throughout the highs and lows of the market.
“The most significant price increases are being seen in one-way and empty-leg pricing. This is most likely due to operators not discounting empty legs because they know that availability is scarce”, says Davenport. She adds, “When there are a lot of available empty legs, operators will sell them for their fair market value or less depending on how eager they are to sell; however, when brokers are negotiating over any available one-way or empty legs, the price increases.”
In fact, currently, most empty legs are priced at 150% - 175% of their value (just under round trip pricing). The previous contrasts with pre-pandemic usage when empty legs were left unfilled, sold at between 75%-100% of their value.
Data shared by Exquisite Air Charter demonstrates that just last week, operators were offering one-ways from Florida to Aspen on a light jet at an all-in, average, hourly rate of $7,800. Prior to the increase in usage since the pandemic, the same itinerary, during the same time of year, would have gone for an all-in, average hourly rate of around $4,700 per hour. “We were diligent in getting our client a good deal and contracted at an all-in hourly rate of approximately $5,500”, shares Davenport.
An additional factor that may be contributing to this increase in the industry is the spare parts that are on back order causing lost revenue associated with an aircraft being out of commission while waiting on parts which then causes the owner or operator to raise their prices to make up lost revenues.
“It is more important than ever to utilize very experienced brokers with strong industry relationships who will work hard for their clients to get them the right deal. We need end users to be patient and work with us to get this done. It also helps if clients are up-front with their budget and goals”, expresses Davenport.
Compromising the end-user relationship
Brokers act as an agent to the end user. Most aircraft owners offer 5% discounts to brokers for bringing the business to them, and a reputable and honest broker will offer pricing to their clients that is only 5% higher than what the aircraft owner's agent offers them. This has the objective to offer the same price that the client would receive if they went direct while the broker does the shopping and safety qualifying work for the end user. As a result, brokers are not making much more money when pricing is incredibly high.
For Rena Davenport, the most important thing is for brokers not to accept this price gouging, while acknowledging that it is more important than ever to develop relationships with reputable operators who remain consistent and fair through the highs and lows of the market.
“When operators ask us what our budget is, we routinely answer that we are shopping around and will contract according to what is in the best interest of our client (price and safety) and, therefore, we request their best offer in order to remain one of the providers we will consider offering to our client. If we do not remain diligent in shopping around and turning down the companies who are blatantly price gouging, then the issue will only get worse”, concludes Davenport.
As recently reported by Exquisite Air Charter, the 2023 private jet demand is set to remain above pre-Covid levels, adding pressure to the entire private charter industry to remain competitive and fully invested in providing the best possible service to their customers, especially during key travel dates like the 4th of July and the start of summer.
For charter brokers worldwide, being able to accommodate sporadic spikes in domestic and international demand without increasing the costs, will be instrumental to building long-lasting and trust-based relationships with their customers while consistently pairing them with the best priced charter options in the industry.
Rena Davenport is the founder and CEO of Exquisite Air Charter. Exquisite Air Charter is a global boutique operation headquartered in Los Angeles that builds long-term relationships and provides very personalized service to every customer. Exquisite Air Charter’s aviation knowledge and expertise facilitates relationships with executives at the most highly regarded operators in the world and those relationships assist in providing top-notch service to clients.
