Understanding Hourly Rates
Understanding ambiguous membership fees
In order to operate a national jet charter program with a fixed hourly rate structure, you must devise an hourly rate that can provide a profitable operation, which accounts for the use of all the members/card holders. For example, customers based in Seattle, WA, Santa Fe, NM, or Birmingham, AL (where there are not as many private fliers) would pay the same rate as someone who lives in the Northeast, Midwest or Florida where there are more private fliers.
In constructing an hourly rate, these private aviation companies have to forecast what a customer might do, not what they actually do. In other words, if you live in an area with heavier traffic, you subsidize the travel of those who live in less populated areas.
Unfortunately, upfront memberships with fixed hourly rate programs are not profitable and the fixed hourly rates associated with them have plenty of gray areas in which to bill you more hours than needed.
How do membership programs do this?
- Membership programs bill you for actual flight time. This may sound like a great idea, but when you are vectored around for weather, or experience headwinds, you are billed for more hours. Occasionally, you may win with an extreme tail wind, but not too often. Another little known secret is that there is NO way to verify accurate billing. Even the FAA flight feeds are inaccurate and operators calculate flight time entirely differently than how customers are billed. The customer books and flies and the cost is debited directly from their account. The customer doesn’t see the actual cost until well after the trip. Most times the person who is responsible for payment of the trip did not fly on the aircraft, so they have no idea if the information is accurate. The result is a seemingly low hourly rate, compensated by a higher flight time.
- Membership programs add fuel surcharges into their billing. Most jet cards or programs discovered the fuel surcharge as a convenient way to add to the cost of a flight. They did this by adding the “fuel surcharge” to the “actual flight time” to increase company profitability. There was no relationship between fuel costs and the surcharge. Over time customers got wise to this because fuel surcharges never went away, even when prices went down. Today, the providers of the Jet Cards now include the fuel surcharges in the hourly rate, and many will fix the prices for the year. However, there are huge disparities between the cost of jet fuel throughout the United States. In an inverse relationship to hourly rates, people who live in areas with low fuel costs subsidize those in areas with high fuel costs.
The Deposit or Pre-Payment
Each card program requires a deposit in order for you to “lock in” the previously discussed “hourly rate”. They need your funds to run their operation. These funds go towards advertising and sales commissions, and the lump sum deposits go a long way towards easing cash flow. It is not free to put your company name on a professional golfer’s hat. The large sum of deposits help to cover up operational losses but sooner or later, the bills come due. These programs are either sold (if there is enough cash on hand to make it attractive to another “investor”) or the company is forced to fold. Many have no choice but to fold and there are no refunds. We are very pleased to tell you that there is a better alternative.
What do we do? How does our service benefit our customers?
- We will never ask you to pay a deposit to access our service. With FlyPrivate, you will pay as you fly for each trip. You may use 25 or 50 hours, or you may go over. Our service allows you to control the use and flow of your capital.
- We quote by the trip, not by the hour. At FlyPrivate, we offer all-inclusive “fixed pricing”, pre-trip. You know what you’re paying for and how much you will be spending before the trip, not after. There are no additional flight charges after the fact. You will also benefit from our round trip pricing, which often makes your trip more cost effective. Most jet cards have done away with round trip pricing and bill at one-way costs all the time.
- At FlyPrivate, we also offer multiple aircraft options on each trip. Choose from Turboprops, VLJs, Light, Midsize, Super Midsize, and Heavy jets. You can use any class of jet anytime, without complicated interchanges or other arrangements having to be made.
- You also benefit from the leverage we employ on behalf of our customers. For 18+ years we have worked with hundreds of FAA safety audited operators and their aircraft. These relationships provide exceptional opportunities for all of our customers.
All flights arranged by Private Business Jets, LLC DBA FlyPrivate are operated by Part 135 Certified Air Carriers. FlyPrivate will act as your agent for the purpose of obtaining charter service.