CJI Global 2020: Smaller operators ‘waiting out’ a ‘broker-initiated’ price slump in charter market
Certain markets cutting charter costs has meant smaller operators like Oklahoma Aviation simply have to wait out the trough until prices return to a pre-Covid level, Sho Kassam, President, Oklahoma Aviation, told CJI Global 2020 delegates.
Acting at the request of some of his owners, he had increased prices conservatively. But he quickly found an absence in demand due, in large part, to the reduction in prices elsewhere in the market.
Kassam said: “I think it’s a waiting game and I don’t like to play that game. There is a lot of this and I think it is driven by brokers, maybe protecting or wanting to boost their margins at the expense of operators. Ours is a set pricing model – if we are available and if you have the need. I don’t like to haggle too much, you don’t go haggle at Tiffany’s store – it is a luxury product. I think that is a collective challenge that we need to take in the industry and address.”
Fellow panelist, Søren Brugge, chief commercial officer, Blackbird Air, said he had not seen the same pattern in Scandinavia. Based in Denmark, Brugge remarked that the broker market had “pulled-the-plug” and this meant Blackbird had to reinvent its business model to attract new markets.
“We did not feel it was responsible to raise our prices and what we have done for some of the big customers is fly at a fixed rate and then after a few months, we look into the files and refund them if we have been good in the purchasing process,” said Brugge. An example would be in the purchase of fuel. If Blackbird bought fuel at a lower price than expected, it would refund the difference.
According to Brugge, Blackbird’s complex pricing model means it is easy for the business to adjust pricing to accommodate during this current climate. This has allowed the company to minimise impact on clients, he said.
Host, Saskia de Jong, director of public success, Avinode Group explained the reasoning behind the panel’s focus. “We often hear of large operators and their opportunities and their challenges but today we wanted to put the spotlight on small and midsize operators which really is the majority of our members, and listen to how they stay competitive within the charter market.”