Two are brokers; the other is an operator. None are small, but they are not the most prominent players when it comes to selling jet cards.
Nicholas Air is the 12th largest operator based on fractional and charter flight hours. Air Partner is publicly-traded in the U.K. Magellan Jets is a midsize broker. We estimate around $75 million in sales. All have hundreds of customers, not thousands.
Being midsized players is helping during the current crisis, executives say.
Labor and supply issues, combined with record demand, are causing delays and previously unseen service issues in private aviation.
Speaking during Corporate Jet Investor Miami, Nicholas Air president Peder Von Harten told attendees that it has largely avoided supply issues by adding airplanes as it adds members.
“In life, they say all’s well that ends well. In business, it’s really all’s well that starts well. If somebody is on the 100th flight and something goes wrong, they are going to be more understanding,” he said.
Nicholas Air has been aggressively raising rates for new members but has not made any significant changes to its programs. It offers non-peak callouts as low as 10 hours and only 26 peak days.
Von Harten attributes the price increases not to demand but to cost increases. “The price of fuel, the price of parts, the cost of labor has gone up, so as an operator, you have to make sure you are not cutting corners, so naturally pricing has to go up.”
Air Partner imposed over 30 blackout dates over the holidays. It will allow jet card members to use funds to book flights on those dates with dynamic pricing and on-demand rules instead of their regular fixed rates.
As a refundable program, clients can also take their money and look for a better solution – if they think they can find one.
The goal of the early October announcement was to give customers time to make decisions. Air Partner was not confident they would be able to source flights on those dates and recover aircraft in case of mechanicals.
Both Von Harten and Air Partner senior vice president of sales Vincent Kavanagh told the audience personal phone calls to clients – instead of mass emails, have been a key during what has become a challenging operating environment.
“The sooner you get the information to the client, the better…Ninety-nine percent of the time, it’s about how you explain it to the client…I think we as an industry are too reliant on emails when we should be picking the phone up and having a conversation,” said Kavanagh.
Von Harten says by personally calling clients as early as possible; they are often sympathetic if they have the flexibility.
“When we take on a certain amount of new customers, we buy the aircraft to back it up,” he says.
He adds that the company doesn’t necessarily appeal to first-time buyers. Newbies are attracted by media coverage and advertising.
He argues that the largest providers are stressed to serve thousands of members.
Big players, including NetJets, Sentient Jet, and Jet Linx Aviation, have stopped accepting new members. Wheels Up earlier this week said new members who deposit less than $200,000 would have to wait 90 days before they can fly on full charters.
Anthony Tivnan, the president of Magellan Jets, told attendees, “The issues – mechanicals, supply chain issues, are industry issues, and people need to understand why. (Customers) are dealing with the same issues in their businesses…I’ve had people come to us and say we want to sign up for our membership or jet card program. And when we ask them why, they say, ‘XYZ had a five-hour delay.’ So we tell them, if that’s the only reason, maybe you shouldn’t switch, because we don’t want you leaving us next month when we have a delay.”
While Magellan may not be a mega-broker, he says some scale is essential.
“We have 12 people in our sourcing department. Looking at the number of calls they go through on a mechanical, in 2019, it might be three to 10. We’re now seeing 70 or 80 calls.”
Still, he says small brokers who do a good job servicing their clients will do well. “There are always going to be customers who have their guy, who don’t want an institutional solution.”
Phone or email, Tivnan says customers who are paying big dollars get upset when delays happen.
“If you’re trying to explain the delay is related to a global supply chain issue, and they are sitting in an FBO with three kids running around, they’re not going to hear what you are saying.”