Charter prices take a dive

NBAA Convention News » 2002
June 30, 2008, 6:37 AM

Jet air charter costs for business travelers declined markedly over the past year, according to a survey conducted by CharterAuction.com of Quincy, Mass., which claims to be the air charter industry’s only wholesale auction provider. For the year ending this past July, data collected on nearly 22,000 bids of varying aircraft types showed an overall drop of 8.7 percent in pricing trends over that period. Nathan McKelvey, company president and founder, said the study indicated large jets experienced the greatest pricing decrease at 15 percent, while small and medium types declined at 6.7 and 9.7 percent, respectively.

He observed, “The drops in pricing are even more remarkable when one considers the demand for charter services has risen more than 20 percent over the past year. Post 9/11, many charter operators reported increases in fleet utilization, which theoretically would reduce supply and increase pricing.”

McKelvey attributed this situation to a combination of new Web technology and increased operator efficiency. “Previously, when requested to fly a customer one-way, operators would charge a ferry leg to bring the aircraft back to home base. Over the past year, we have watched operators use our Web auction system to offer one-way prices without ferry-leg prices. For example, an operator with an aircraft based in Van Nuys, Calif., can locate a one-way trip to New York using CharterAuction.com’s auction board, then locate another trip out of the New York area heading back west.”

He cited the experience of Arrow Jet Express as an example. David Geise, president and CEO of Arrow, stated his firm’s business has increased by 40 percent. By using the CharterAuction service in conjunction with technology that allows receiving bids worldwide throughout each day, he reported, “We now have the ability to locate trips wherever our aircraft may be to keep them more productive [and] keep our pricing down.”

CharterAuction said its operations are based on the use of “exclusive” Internet technology “to make private jet charter travel service affordable.”

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