Chartering an aircraft for meeting or incentive groups can make good sense. And you might be surprised at the price.
Sizing up the landscape of commercial-airline service for 2009 and 2010 can make any meeting manager a little queasy. While fares have slid from mid-2008, when oil prices spiked dramatically, the number of flights and overall seat capacity have taken a nosedive. Suddenly it's a given that you might not find enough seats into a destination at a certain time, forcing attendees to spend hours — or perhaps the night — at a layover destination.
Enter the charter alternative: Amid the commercial airline chaos, charter operators and brokers have sharpened their focus on the corporate meeting and incentive market. The result is twofold: First, the network for gathering information on charter operators has improved; and second, the number and variety of planes available for private use has expanded so much that, when planned properly, using a charter is not prohibitively expensive.
“In today's market, planners shouldn't dismiss the possibility of using charter without at least looking into it,” says Ngarie Duncan, vice president of business development for Fort Lauderdale-based charter broker Air Partner Inc. “It costs nothing to hear the options and get quotes.”
Mix and Match
Ask Jennifer Sloan, manager of business development North America, meetings and events, for Carlson Wagonlit Travel in Toronto. “We've always had to use charter to some degree because of the size of our groups — often 1,500 or more people,” she says. “For Caribbean and South American destinations, we go through a hub like Miami or San Juan, but there are just so many seats available. As a result, we'll get 500 or 600 people onto charters from there, so that we get them into the destination in the timeframe we need.” Sloan has a longstanding relationship with Air Partner Inc., which has access to several dozen planes throughout North America.
“I think it's more necessary today that planners use a hybrid approach of commercial and charter for their air travel, to fill in the gaps for people who don't have easy connections, or get shut out because of limited departures or full planes,” says Laurie Sharp, manager of corporate and field marketing events for San Jose-based Brocade Inc. “You have to be flexible and put together a lot of different travel elements to get the end result you need.”
For incentives, Sloan has flown attendees from their various home regions straight to the destination on smaller charter flights. “The 60- to 80-person aircraft is perfect for an incentive,” she says. “It's a luxurious way to travel.”
Air Partner's Duncan notes that C-level groups of up to 30 people will use Lear and Gulfstream jets, while groups like Sloan's — the 50- to 100-person groups that are the most common for charter flights — will use an Embraer EMB145 or Bombardier CRJ, and sometimes even a 737 or DC-9 so that passengers can have first-class-style space. What's more, she adds, “planes of these sizes can use many more airports than the big commercial jets, so the group can fly to a regional airport that's closer to their hotel. It saves time and also money on airport transfers because they don't have to go far.”
More Affordable Than You Think
The primary hesitation planners have about chartering aircraft is the perceived cost. But the simple per-person cost may not be the most accurate way to gauge the true economics of an event's charter component.
For instance, Gregory Cohen, CEO of New York-based charter broker Halcyon Jets Holdings Inc., says that chartering a 14-seat Gulfstream G-3 from South Florida to Teterboro, N.J., eight miles west of Manhattan, normally costs about $36,000 round-trip; this comes to $2,570 per person (for larger planes, cost per person is lower if all seats are filled).
So chartering “will generally cost you a little more than a business-class ticket,” says Scott Duffy, CEO of Santa Monica, Calif.-based Virgin Charter. However, Duffy adds, “once you realize that your people can work on the plane, have a meeting, or have a great experience with clients or with other incentive winners, the calculation changes. With a charter, travel time is not down time, and you don't have anyone wasting hours or possibly arriving late because of connections. Also, you want your people to be fresh when they get to the destination, and chartering ensures that.”
Carlson's Sloan finds that chartering “can be perfectly economical — plus you won't have to worry about any additional overnights or per diems.” Still, she says, “it does take some thinking and legwork because you can't go with a half-full plane — that's just too expensive. So we have to sit down with our broker and get the right planes for our group sizes.”
As for the reward factor, chartering delivers a big bang for the buck. “The experience is unique — you can do special catering, customize the music, have gift bags placed on board, and even make presentations,” says Kristy Nicholas, spokesperson for Houston-based Express Jet. “The plane is yours to do as you please, and the broker can help with special arrangements.”
Rich Wise can attest to the memorable nature — and the practicality — of a charter flight to a less-traveled destination. Last year, his firm, Wise Incentives in San Diego, arranged a trip for 80 participants that split time between Madrid and Marrakech. “To do that, we really had no choice but to use charter,” he says.
First they flew British Airways from the U.S. to Madrid via London, then the group took a private jet from Madrid to Marrakech. Working through a charter company in Spain, Wise found the flights more expensive than commercial fares, but “logistically it worked so well,” he says. “We were able to create a convenient timeline for the Madrid-to-Marrakech leg. We had our own separate check-in, and I had a passenger manifest to work from with the local officials. And on the flight itself, we brought in great meals and drinks, and we even had headrest covers made with the client's logo on them. The winners were pretty impressed.”
The first-class treatment continued on the ground. “Once we got to Marrakech, we had all the baggage go straight from the plane's cargo hold to the hotel by truck,” he notes. “Then we transferred guests using horse-drawn carriages, and did a city tour on the way to the hotel.” The charter also allowed Wise to keep the group one additional night in Marrakech, rather than conform to the commercial air schedule back to Madrid.
Due Diligence Required
Because charter aircraft are mostly privately owned, brokers are almost always necessary to help find the right planes at the right times. Planners should expect that a broker will be able to quickly answer questions about a specific aircraft's safety record, the operator's insurance coverage, contingency plans for mechanical problems, and other essential details.
“They should provide one person to handle your account from start to finish,” says Wise, “and that person should readily provide insurance details, plus the safety and maintenance record of the plane and the crew, what type of catering each plane provides as its standard, and whether they can conduct the operations from an airport's private terminal or at a commercial gate.”
Carlson's Sloan adds that “a broker should be very knowledgeable about the right size of aircraft for your group, and also know the good and not so good of all the operators they work with. For example, whether the plane's décor is a bit tired, and things like that.
“We also ask about the crew's experience, because the service they provide is going to make the difference for your guests. And of course, we must see the plane's performance and maintenance records over the last two years.” What's more, you will want to see a broker's Dun and Bradstreet number to assess its operation, says Air Partner's Duncan.
With occasional mechanical problems a fact of life in air travel, it's important to have contingency plans, which makes the broker even more important. “The volume a broker does will make a difference — they should have access to more than just a few operators,” Duncan notes. “For instance, they should be able to secure two smaller planes if your larger one has a problem and they can't get another of similar size. Make sure they manage enough inventory to do that.”
For Wise, contingency plans saved his Marrakech trip. “The night before we were going back to Madrid, they had a malfunction on the small jet we were supposed to use,” he remembers. “So they got us an Airbus 320, and everyone could really stretch out. It was an unexpected treat.”
Keep in mind that brokers make their money by marking up the plane operator's price. Planners can ask that brokers disclose the plane operator's price so they can determine how much the broker will receive.
Some Resources and Links to Get You Started:
Air Charter Guide
The definitive resource for air charters, it offers information on all the operators and brokers, details about these companies and their fleets, an “aircraft type search” to locate operators with a specific model of plane, an airport search with information on all airports (runways, distance from city center, etc.), as well as an online tool that allows you to get quotes directly from charter operators. www.aircharterguide.com
Blue Book Charter
Guide to worldwide air charter operators and brokers. www.aircharterbluebook.com
Online platform that lets operators bid directly and openly on a planner's specific needs. There are more than 120 operators and nearly 1,000 aircraft in the system. www.virgincharter.com
Airline Forecast ‘09