Aviation Marketing Intelligence

The biggest farce floating around the industry, be it airline, air charter or air taxi, is the moaning and wailing regarding Jet-A. Yes, it is expensive. Yes, it has gone up…. ok, it has gone up A LOT.

I hate to say it, but the Jet-A price increase isn’t the reason people are going out of business, or a reason to lay people off. It is an opportunity for the truly transparent to shine.

Fuel (or any cost you have) is not a reason for customers who need you, value you, etc. to ditch you. If you opt for the car instead of the plane, guess what? You’ll still get clobbered on price. Fuel is a very integral part of our lives. It is even raising the cost of my beloved avocados. But I’ll still buy them and look to cut somewhere else, like the avocados draped across the sushi I spend money on like an idiot.
(Hard times tend to be harder on the idiots.)

But let’s be realistic. Jet fuel is a component of your cost. You isolate it in your cost structure. You raise it. End of story.

In my fairly opaque world of air charter, the fuel surcharge concept has essentially been out of control since the Katrina debacle, if not prior. Charter customers know this game well. “Your quote is $6,458 + fuel surcharge and taxes.” Many of us know that this means you could pay $10K for that trip.

The world of fractional is even more complex. The best mathematicians can’t decipher the contractual methodology used to bill fuel back to their customers. Take a look at a Flight Options, NetJets, Citation Shares or Flexjet contract and tell me if you can predict what you’ll pay for fuel if you know what the supposed cost basis is.

The reality is that no one in the world of private aviation really knows what is going on. The airlines buy the stuff as a commodity, Southwest buys it years in advance at a fixed price and the private jet owner / renter? They have to take someone’s “word” for what they paid for it and then pay more than that per a mark up agreement of some kind, or pay for it marked up, not knowing of any mark up. All they hear is, “Man… fuel is killing us!”

The truly transparent air charter or fractional company is a rare bird.

Too bad too. Since if you just charged what your fuel cost you (yes, your actual cost!) and just broke it out on a separate line, you would have no problem building your business in the most dire times. Why? Private jet people are not terribly price sensitive. That is why they bought a private jet - because they have a financial cushion that mere mortals have a hard time imagining.

So.. bury your profit somewhere, take it out of the fuel. The fuel is tired.

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