Thanks so much for the insightful post. It’s good to hear it from the horse’s mouth – so to speak. Let me tell you that such an experience is more the norm than the exception.
I have been at the table during owner negotiations and heard the old line, “you need to go how far? With how many people? Yes, X aircraft can do that, all day, everyday, with full pax, full fuel, 99% Boeing winds, from ASE at ISA +20. We’ll go ahead and put that in the contract.” Sure you will….
The “comparable aircraft” clause always cracks me up. Especially when it comes to the larger cabin aircraft. You need an aircraft equal to or better than to your Citation Ultra. No problem, they are a dime a dozen and they can always give you a bigger aircraft to appease you. BUT, when you get to the large aircraft classes such as the Falcon 900/200, Challenger and G’s you have a challenge on your hands. So and so’s G450 is unavailable so what do you do? Get them a GIV from Jet Aviation or TAG. Nope, not going to happen unless you are a “special circumstance customer”, after all that’s an expensive aircraft from an expensive company and we can’t get a break n the price. So the company calls the charter broker/company who they have a deal with to find a large cabin aircraft. They have nothing nearby that size. So what does the owner hear on the phone? “We’ve tried everyone in the area and the best we can do is a (insert inferior aircraft here).” You know why? Because that’s the best price they can get on an aircraft for the least amount of effort. Period. What do most owners do? They complain and eventually take the plane and go on their merry way. Very few owners take it upon themselves to verify that there are indeed no aircraft available in the area. Why should they? After all, aren’t they paying a premium to a fractional company to be the aviation experts?
If you are a lucky customer, you may only have this happen to you a few times a year. But it’s going to happen.
Pretty soon the company has made so many promises that they can’t keep that the people in scheduling, customer support, etc. get a barrage of (rightfully) upset customers on the other end of the phone. AND, due to the fact that there are so many people involved in one particular flight (dispatch, customer support, wx planning, reservation, FBO personnel and on and on) that it’s easy to just blame the pilots. The pilots forgot the catering, the pilots didn’t check on transportation, etc.
In my experience in the fracs it’s interesting that it’s never anybody’s fault when something goes wrong. Very rarely do you get someone on the phone to say “hey, I dropped the ball and I am very sorry….” Usually you get the runaround. It’s like trying to get a hold of a real person at your credit card company. The only people you see face-to-face that can help you are the pilots, so they usually get the brunt of the cleanup work.
The best-case scenario is that some concession is made for the owner as more of a temporary bandaid. Worst case, as was already mentioned, is things come down to litigation – and that gets ugly fast.
The fractional world looks great on paper. It’s an easy sell, usually, but a nightmare to manage. Remember, profits in fractional come from sales. Period. In order to make money a fractional operator has to continue to sell, sell, sell. There is no margin in management fees, no matter what the surcharges are. Operations sucks the cash flow out of an operator at an alarming rate. Anyone who says different has their information wrong, or worked as an accountant for Enron.
The higher-ups at these companies know the financials, and if sales are made, things will keep rolling. Current customers are lame-ducks as far as profit. The money has been made, and the contract signed. Next please. This is a sad fact of a capitalistic society. Add to that the always profitable aviation industry (smile) and you have a cut-throat business. The biggest incentive that the upper-level management has to insure day-to-day operations run smoothly is to minimize losses. This leads to a trend. As sales begin to dip, more attention is paid to the operations side. As sales pick up, less attention is given. If it aint broke don’t fix it.
During Netjets negotiations the crews threw a wrench into that theory when they started to increase the daily operating costs. Although sales were still strong, operations became more expensive for a number of reasons that have already been discussed on this board. In this specific instance Netjets size was its biggest downfall. The company had to step in the form of a decent contract, that got operations back to its normal costs – and on we go. A contract that, in reality, cost the company MUCH LESS than a continued slow down would have.
The crews, and employees in general, are underpaid – plain and simple. This is NOT the airline business. Companies aren’t selling tickets. They are selling aircraft – dang expensive aircraft – and premium services to some of the wealthiest people in the country. Pilots aren’t flying from LGA to HOU twice a day for 15 days a month. They don’t get to close the door and not interact with the people in the back. They do much, much more than fly the airplane. And as already stated are the only ones that the customer really sees after the contract is signed.
They should be kept happy…and I think more companies are going to find that out the hard way….
Oops, did I say that?
