Is anyone else being asked to quote one way pricing on jets at ridiculously low prices to compete with XOJet? Their new one way pricing, which covers many coast to coast city pairs, is being advertised at $19K, inclusive of ground transportation, basic catering, and flight phone charges.
Doing the math, if the average coast to coast flight is five hours, and they have to reposition for an average of 30 minutes, that is 5.5 hours of flying. Subtract $1,000 for catering/ground/flight phone, and subtract another $1500 to cover overnight fees while they await their next leg, and they are likely netting about $16,500 for 5.5 hours of flying, which comes out to $3,000 per hour for a Citation X or Challenger 300.
Considering that they just bought these planes, and they own many of them outright, how can they possibly cover the cost of capital, property taxes, crew expenses, overhead, and marketing, and work for such a low hourly rate? Just the variable DOCs have got to be close to $2,000 per hour. This margin doesn't even cover the cost of pilots.
It seems like this is a desperation move that is the end result of a bad business plan that got even worse as the economy turned. Unfortunately, our charter clients now expect us to match these prices. Is anyone else dealing with this? If so, what are you doing to respond?
Doing the math, if the average coast to coast flight is five hours, and they have to reposition for an average of 30 minutes, that is 5.5 hours of flying. Subtract $1,000 for catering/ground/flight phone, and subtract another $1500 to cover overnight fees while they await their next leg, and they are likely netting about $16,500 for 5.5 hours of flying, which comes out to $3,000 per hour for a Citation X or Challenger 300.
Considering that they just bought these planes, and they own many of them outright, how can they possibly cover the cost of capital, property taxes, crew expenses, overhead, and marketing, and work for such a low hourly rate? Just the variable DOCs have got to be close to $2,000 per hour. This margin doesn't even cover the cost of pilots.
It seems like this is a desperation move that is the end result of a bad business plan that got even worse as the economy turned. Unfortunately, our charter clients now expect us to match these prices. Is anyone else dealing with this? If so, what are you doing to respond?