““[Bill Gates] has been historically one of my best supporters…One of my favorite e-mails he ever sent me…I proposed this crazy project. And he sent back this two-line response: ‘This has got to be the craziest thing you’ve ever suggested. Please proceed.’” ”
Fixed pricing gains favor
As the recession drags on, charter operators are facing continued declines in business. The good news for passengers is that a growing number of these operators are launching fixed-price flights and other programs aimed at bringing back customers. The deals that can be had confirm it's a classic buyer's market.
In early March San Carlos, Calif.-based XOJet introduced fixed-price, one-way coast-to-coast flights aboard its fleet of Citation Xs with fares starting at $19,000 and including ground transportation, standard catering and unlimited worldwide phone calls. The price is all-inclusive, so customers don't have to pay repositioning costs or fuel surcharges. The fare applies to more than 4,000 airport pairs between the New York, Boston, Philadelphia and Washington, D.C. metro areas and the Los Angeles, Las Vegas, San Francisco and San Diego metro areas.
In December XOJet also announced the Fleet Exchange Membership program, which the company claims can save customers up to 25 percent of their travel costs. The program offers "guaranteed access on a brand-new fleet, without putting a lot of money up front and without having to buy an asset," said John Magner, XOJet's executive vice president of commercial operations.
In addition, XOJet recently added a Market Price Assurance plan for participants in the Fleet Exchange Membership program. According to the company, the deal guarantees the lowest possible price for each trip. "In some cases, it could be charter pricing," said the company. "In others, it could be member pricing. If charter pricing is lower for a particular trip, the customer can use program hours to 'pay' for the trip."
Customers pay a fee to join the Fleet Exchange Membership program and a monthly operating charge (with the amounts dependent on the aircraft model, length of commitment and other factors), but there are no peak days or ferry fees. Total costs are 10 to 40 percent less than with jet card and fractional programs, Magner claimed. In addition, customers can purchase flight time in five-hour increments, with a minimum of 50 hours. "You don't have to jump to 100 hours if you only need 65," Magner said. Also, customers don't lose hours, which can be rolled over to the following year.
Sentient Jet, too, has announced new options. As part of its Membership Plus Program, the company has introduced fixed hourly rates for the Hawker 400XP, Citation Excel and Citation X. (For roundtrips on these models, those rates are $4,135, $5,465 and $7,465, respectively.) Customers can also save up to 25 percent on the hourly rates through the company's Network Pricing program.
"It's a tough market, the toughest the industry has ever faced," said Sentient CEO Steven Hankin. "With Network Pricing, the published hourly rates are the maximum a member will pay. If we can do better, we'll pass that [savings] along." Hankin added that the new benefit "aligns our interests with customers a lot more and recognizes the economics of [fixed-price] hours."
The Membership Plus Program, which guarantees access to aircraft, requires a nonrefundable $150,000 fee for two years of participation. "This fits a vast majority of fliers out there," Hankin said, adding that it might prove to be a better option for those considering fractional programs, which are "capital-intensive [and] increasingly costly."
Boston-based charter broker Regent Jet, meanwhile, is offering a $10,000 fixed-price fare between the New York and Philadelphia metro areas and South Florida. The cost is approximately $5,000 less than an average East Coast flight, according to Regent CEO Justin Sullivan.
"We determined that between Columbus Day and Easter, more than 30 percent of occupied private jet flights go between the Northeast and Florida," Sullivan said. "By offering a flight to new customers at the bundled rate, we are making travel along the busy East Coast corridor simpler and more cost-effective." The flights are on Hawker 400XPs, and the price doesn't include taxes, Sullivan said.
Burlington, Vt.-based Heritage Flight has also launched fixed rates. Customers in the Boston area can book flights from Bedford, Mass., on one of Heritage's King Air C90Bs for $1,295 per hour to many cities in the Northeast. The company doesn't have a base in Bedford but is launching this program to gain market share in the Boston area, according to Eric John, head of business development.