Should you choose Fixed/Capped hourly rates you can lock in, or Dynamic Pricing, where each flight is priced based on route and the market when you book?
One of the most important decisions you can make is what type of private jet pricing you want – Fixed/Capped hourly rates or Dynamic Pricing.
Let’s look at what each term means and how which you choose can impact your flying.
Fixed/Capped Hourly Rates are typically offered by jet cards, memberships, and fractional provider programs.
So long as you fly within a designated primary service area (i.e., the Continental United States), the most you will pay per hour is your fixed/capped hourly rate.
An exception is peak days when some programs have surcharges.
The same with an extended service area, which could be the Caribbean or Mexico, but could carry a surcharge, and like peak days, longer callouts to book, and different cancelation terms.
Most – but not all programs that offer fixed/capped hourly rates only charge occupied hours.
That’s the time you are in the air in the airplane. In other words, you don’t have to worry about the cost of repositioning the aircraft. That’s already baked into your contracted rate.
They do have add-on costs, typically 12 minutes of taxi time per segment, although some programs don’t charge taxi time.
The difference between fixed hourly rates and capped is that with the latter, you could pay less.
That means if you are flexible to fly on low-demand days, you could get pricing lower than your contracted capped rate.
In terms of pricing, the big benefit of jet cards is those with fixed rates and guaranteed availability – i.e., a 72-hour call-out to book non-peak and a contracted hourly rate – vs. pricing the trip out each time: dynamic pricing either via memberships or on-demand.
The fixed/capped rate cards tend to have better cancelation terms and service recovery policies (replacing your aircraft at no additional cost if there is a mechanical, etc., although this varies).
With fixed/capped rate programs, you can choose the most convenient airports with no premiums (except high-density airports).
It also doesn’t matter where you are flying.
A flight from Fargo, North Dakota, to Destin, Florida, costs the same as a similar-length flight from Teterboro to Palm Beach.
That’s even though the former may mean the provider is paying for three hours of repositioning flights, and the latter may not require any repositioning.
One other benefit of fixed/capped rates is when your plans are apt to change.
Most fixed/capped rate programs allow you to cancel or change without penalty 24-to-96 hours before departure on non-peak days.
That gives you the flexibility to book trips and change them later.
Dynamic Pricing simply means your flights will be priced based on where you are flying and when you are buying.
Pricing quotes need to consider repositioning the airplane before and after your trip.
Are you flying from lower volume markets like our Fargo to Destin example? The quotes you receive will have factored in repositioning.
Dynamic pricing on these low-volume routes can be twice what you would pay in a fixed-rate program.
You want to fly out of Boca Raton, and the aircraft is based in Palm Beach. The cost of the repositioning flight has to be factored in with dynamic pricing.
Dynamic pricing works best when you are going in the opposite direction of everyone else – i.e., heading from Florida to New York on a Thursday during the Winter; when you are flexible with your travel dates, and when you are flying between airports that have a lot of private jet traffic – i.e., Teterboro and Palm Beach.
It also works well if you are flexible to travel within a wide period – which could be a few days or even the next week.
Dynamic pricing is about supply and demand. That includes where that supply is located, the cost of getting it to your departure airport, and where it has to be after dropping you off.
When demand was at record levels, and there were major supply issues, on-demand availability/pricing was under pressure.
Subscribers who were using dynamic pricing, either on-demand or via memberships, were telling me stories about how the cost of their trips doubled and the quality of aircraft went down.
It was also reflected in the increases in jet card fixed/capped rates. Jet card rates increased by 21% last year.
Dynamic pricing can be cost-effective for qualifying roundtrips. That means the provider can use the same aircraft and crew for all of your flights, and you are returning to your start point, even if it is over a few days.
In other words, dynamic pricing values the efficiency of where and when you want to go and how it fits into that operator’s schedule.
While fixed/capped rate programs typically have daily or segment minimums, dynamic pricing doesn’t have them overtly, although operators may have them.
In part, that’s because a lot of maintenance is tied to the number of landings and takeoffs. A lot of short hops mean faster replacement is needed for tires, landing gear, and other parts.
Dynamic pricing takes this into account, as well as taxi time, even if it isn’t listed as a line item.
Also, keep in mind the contract terms for each quote could vary. Even if you have a single broker, they are likely using different providers for the options they send you.
Unless specified, you also have to pay extra charges like deicing and catering, which some fixed/capped programs include.
Are you booking within seven days of departure or less? Do your plans tend to change after you book (It’s going to rain this weekend in Florida, why bother going!)?
Are you flying to/from low-volume airports?
Fixed/Capped rates are going to be better, generally speaking.
You also don’t have to spend time getting quotes and reviewing contract terms for each quote. You do it once when you buy your jet call, and then just book your flights.
That doesn’t mean you can’t call a broker when you are planning a trip and price it against your card. Plenty of flyers use cards and brokers.
Often folks end up booking flights with dynamic programs when they are looking for something particular.
For example, most jet cards and memberships only promise a category of jets, for example, super-midsize jets.
Do you require a stand-up cabin, or do you want a couch in the back instead of club chairs? Dynamic pricing programs enable you to get specific.
It’s the same with aircraft age or if there are some types of jet types you don’t like.
Most dynamic pricing providers enable you to give those specific requests. They then will present you with dynamic pricing quotes based on the availability of just what you are looking for.