Charter Pricing
There is a wide disparity in charter pricing. When shopping for a charter flight, one can find several hundreds or even several thousands of dollars difference for the same type of aircraft operated between the same city pairs, but flown by different companies. Most of the time, if something costs more, you would expect better quality and service. This is not always the case with charters.
Pricing Ingredients
There are two factors that determine how an aircraft is priced. First, there are the direct operating costs. This includes, fuel, maintenance and pilot costs. These costs are the same for each hour the aircraft is flown. The second are the administrative costs. These include office and hangar space, utilities, computers and aircraft support equipment, staffing, insurance, and mortgage or lease payments. These costs are both fixed and variable and are added to the aircraft’s direct operating costs by prorating the hours an aircraft is flown each month. Thus, if an aircraft is utilized more, the operator can charge less and still make the same profit. Other factors that can lead to lower pricing are; owning versus leasing the aircraft, small versus large office facilities operating out of less expensive airports, etc.
Air Denver’s locating system interfaces with all of the various charter companies pricing structures. With this information, we can invariably find the best aircraft for the mission and at the lowest price. Many times we can bring an aircraft in from a smaller, less expensive airport and beat the pricing of operators that are located at the larger metropolitan airports.
"ALL IN" Pricing
When pricing charters, remember to get an “all in” price. Many operators will quote the customer a net aircraft price or estimated price. Upon the completion of the trip they will add in stand-by time, holding pattern or diversion times, parking and ramp charges, landing fees, fuel surcharges, segment fees and a 7.5 percent federal excise tax. Air Denver always quotes "all in" prices.
Hourly Cost Deceiving
Some charter companies simply provide hourly costs of aircraft but these can be misleading. The speed which the aircraft flies can make a difference in total price. An example of this is comparing a Cessna Citation and a Lear Jet. The Citation will always have a much lower hourly cost, but if flies slower than the Lear. So, the Lear will almost always have a lower total cost for the trip. Air Denver will provide the best choice for the trip.
Jet Versus Turbo Prop
Another aspect which Air Denver routinely reviews is whether a trip necessarily needs to be made by jet. In our data base, we have high speed turbo prop aircraft which can complete a trip in nearly the same time as a jet but at two thirds the cost. Air Denver offers this choice to our customers in almost all instances.
Hourly Minimums
Many charter operators charge a two hour minimum for every flight, and for when the aircraft is not in use, such as when the airplane remains parked away from its base on multiple day trips. To reduce the cost of the charter for it’s customers, Air Denver looks for operators that do not have this type of pricing structure, and then gives the savings back to the customer in the form of a lower overall price.
One Way Pricing
Quite often, when someone charters an aircraft, they only need it one way. More often than not, they pay for the round trip as the aircraft must return home after the drop off. However, this also allows the operator to sell the unused portion at a reduced cost. Since you have already paid for the return trip, any additional sale of the empty leg is total profit for the operator. Usually, one ways are priced at the normal hourly charge, but the customer only pays for the time used plus any re-positioning costs incurred in picking them up at an airport other than where the aircraft is located. However, if it is within a few days of departure, and the operator has not sold the empty leg, the operator may significantly discount the flight.
Air Denver normally has over two hundred “one ways” at any given time from which to select. Please see our One Way List shown on this web site.
Air Denver's Compensation
Air Denver charges the charter operators a ten percent referral fee for bringing new customers to the charter company. Since we are a referral service, you actually pay the charter company, not Air Denver. There are no upfront costs, fees or memberships, and you pay after the flight is completed. If you decide not to use the aircraft presented by Air Denver, there is no cost.
Moreover, because of our long standing relationships with many charter operators, our lower negotiated price for an aircraft usually offsets all or part of the referral fee the operator pays Air Denver. So, you pay about the same or very slightly more for an aircraft as if you had gone directly to the operator. We would like to think the services provided to you are worth the fair pricing offered.
By contrast, some charter brokers may add any amount to the actual cost of the aircraft and the customer pays the broker. Many times, we have seen brokers double the cost of an aircraft. This is especially true if the customer is new to charter or is not familiar with airplane types.
The Department of Transportation has actually recognized Air Denver for the way we handle charters, and is now enacting new legislation similar to Air Denver’s pricing policies which all brokers may have to follow in the future. Providing a fair and reasonable product always brings repeat customers and this is how Air Denver has prospered for more than 25 years.
