Opinion: Victor’s Clive Jackson on empty legs and online charter competition
How time has flown since the last post! My team and I are now safely back from EBACE and enthused, post conference talk, about what lies ahead for Victor. In Geneva this week, the coffee was good and the conversation with our various partners and industry peers even better. The Geneva atmosphere was largely positive.
I left Switzerland, of course, with a real, reaffirmed sense that 2016 will see consolidation across the industry accelerate – across the FBO, operator and broker sectors. There are several new ‘so called’ digital players entering the market – some are throwing a ton of money at it, and most are simply too far behind the curve, or don’t have a sustainable model or concrete idea about how they are going build a sustainable customer base.
The operators, however, are open for business. Victor’s call at EBACE was for streamlined, frictionless integration with operators, and for consistency of pricing. Many of the people we have been speaking with are receptive to our particular business approach because for the last four years we have delivered a doubling of booking revenues every year. This is now starting to have a significant influence, not just because of the monetary value, but because we really have delivered on our promise every single year we launched in August 2011.
I remain unconvinced that paying hefty annual subscriptions for ‘all you can eat’ (but rarely flexible) shuttle seats on just a few routes is the answer, and if it really was then Stelios or Michael O’Leary would be doing it via six seater aircraft.
I also feel that the locking out of ‘empty leg’ flights with certain operators who have sold them under an option contract to just one re-seller doesn’t seem sustainable. To pay just 10% of the published empty leg price for the privilege of having 48 hours of exclusivity prompts several crucial thoughts. Firstly, brokers will likely be encouraged to negotiate down on every empty leg they come across; secondly, the money being paid out can’t last forever (many operators know this but are happy to keep taking the cash); thirdly, when will the cash get ‘rebated to the aircraft owner’? Because these owners will surely want their cut of the spoils of their plane when it’s being used, and if they find themselves cut out of the loop then I suspect the management company won’t be long for this world.
I suspect that charterers traveling in a $10m aircraft will end up creating a major backlash with the actual aircraft owner if all he or she ends up getting paid is just 10% of the empty leg value – which would average $795 for the entire aircraft; an aircraft that could be flying with a full complement of passengers, all enjoying its precious facilities.
In actual fact, I have heard rumblings from a number of the established and upstanding charter brokers that they are not happy about being frozen out of the empty leg market with certain operators. These empty legs rarely sell but the brokers are supposedly unhappy where certain operators can potentially generate a lot of full fare business for themselves.
What is surprising is the constant flow of newcomers to our sector all claiming that they can crack the market. Having newcomers is not a bad thing – we are barely out of shorts ourselves. And I applaud the continued innovation and willingness to push boundaries. However, I am genuinely dismayed by the lack of common business sense from those players willing to give their services away for free, or those who are continually pivoting, when they haven’t yet worked out a sustainable commercial model. Interestingly, so I’ve heard, one such ‘distributor’ believes that the size of the addressable charter market is close to $90bn in transaction value – oh, how I wish!
Anyway, Victor remains focused on Victor. Conference attendees responded well to our recent integration with tech-driven flight management system ARINCDirect FOS. In plain English, this means an even quicker, clearer exchange of booking and pricing info between FOS-aligned operators (many of them in the US), Victor and its members. Booking a private jet will become even more seamless.
Peers responded positively, too, to the various conference headlines heralding our continued growth of the market with ‘first-time fliers’. And I was flattered, and fortunate, to be included by trade magazine Aviation Week as one of its Top 10 Leaders of European Business Aviation – this accolade also reflects the amazing work of my team to create a private jet offering with a real difference.
Aviation Week made keen note of the fact that in a charter market where claims of stellar performance are rife and difficult to verify, Victor’s own independently-assessed data (as per the Sunday Times Tech Track 100) was truly ‘refreshing’. Further proof, I’ll add, that the industry is crying out for greater trust and transparency.
So, yes, I returned to London yesterday with my team all wearing their distinctive silver ‘V’ lapel badges (check our Twitter and Instagram pages for more!!) feeling very optimistic about the rest of the year and beyond. I am hoping and willing to state that by EBACE 2017 Victor will be on track to overtake a brand that I have always admired, Air Partner Plc, in pure charter sales. Not an easy task, but one I feel we are capable of achieving.
Clive Jackson, CEO & founder of Victor