Bidders Testing Name-your-price System on Empty Leg Market
Empty Leg Market, the web-based service that aims to help charter operators fill empty flights with paying customers, plans to develop a tool to help buyers understand business aircraft charter costs to make the most of the company’s name-your-price feature. A recent analysis of how potential customers are using the bidding feature revealed that 50 percent of potential buyers dropped out at the point where they would have to enter an amount to bid on an empty leg. “We thought that entering credit-card info would be the hold-up,” said founder and director of operations Elliott Schwartz, but few customers balked at that step. “It was incredibly insightful that users didn’t know how much charter costs and how much to bid,” he said.
Based on this research, Schwartz plans to develop a tool to help buyers understand business aircraft charter costs. “There are so many variables,” he explained, including the destination, time, type of aircraft and so on. “Pricing is an issue for the industry in general,” he added. “It is not very transparent.”
Schwartz believes that if more potential buyers understand the actual cost to charter aircraft, then they will be more likely to bid accurately. The result will help operators that need their aircraft to be flying instead of sitting on the ground costing money. “If there is a transient jet sitting in Destin [Fla.] and somebody needs to go to Miami, it’s up to the operator whether to accept the bid, but I’m trying to create that win-win,” he said. “If a guide can be created for helping individuals understand the cost of chartering a private jet, it would be a benefit for everyone in the industry.”
Since it introduced the name-your-price feature in July 2013, “we have fulfilled 10 percent of all bids submitted,” said Schwartz. The largest amount submitted as a bid was for a $35,000 trip, and winning bids generally are priced at 80 to 90 percent of the normal cost. A popular trip for name-your-price bids is Los Angeles to Las Vegas. One bidder submitted a bid on a flight from Italy to Saudi Arabia, although no operators accepted it.
Empty Leg Market has approximately 300 aircraft registered on its system, but not all are available for name-your-price bidding. “If they [the operator] decide to opt in,” he said, “they notify me, then we send them the bids.” While the goal is to respond to bidders instantaneously, similar to the way travel bidding site Priceline works, Empty Leg Market’s bids have a 24-hour turnaround guarantee. After that, the bid expires. “It’s a reasonable first attempt,” Schwartz said, “but it’s ultimately going to be shorter and instantaneous. It takes time and technology.”