Travel agents have a great opportunity to upsell certain clients with private air. // © 2015 iStock
Let’s face it: The rich are different. The privileged set can’t be bothered with long lines, TSA screenings and the general drudgery of airports. For corporate bigwigs, celebrities and the extremely wealthy, travel by private jet is very much a worthwhile expense. But many — perhaps most — travel agents assume that this sort of transportation has nothing to do with them.
That could be a costly mistake. In the view of those involved with the charter flying industry, becoming acquainted with selling charters can be profitable, as well as a great service for very high-end clients.
When it comes to convenience, going by charter is hard to beat. If you book a charter aircraft, there’s no concern about flight schedules. Your clients go and come when they want. There’s no worry about finding the best route to the desired destination either; you generally go point-to-point. And given the relatively high cost of such private transportation, the commission can be well worth the special effort required.
Just ask Sheila Walker, president and CEO of Brentwood, Calif.-based Travelology, which is affiliated with Luxe Travel Management of Irvine, Calif. Walker describes her agency as one that focuses on luxury, high-end leisure. As such, she says she does have clients who request travel by private charter.
Recently, she chartered a Challenger 604 luxury jet for a roundtrip between Hawaii and Bora Bora for four adults. The cost of the trip was $169,000.
As Walker attests, there are many important differences between booking a flight on a commercial airliner or a cruise and booking a private jet. First of all, many experts agree that charter bookings by a travel agent should be made with a broker, not the individual aircraft charter company. The broker has access to thousands of aircraft and can better accommodate the specific needs of the clients — right down to onboard catering or other amenities. If you work directly with a charter company, you will need to have some level of expertise and know the right questions to ask.
Alex Early, president of The Early Air Way, based at Van Nuys Airport in Los Angeles, is a broker with eight years of experience. Some 50 percent of his bookings involve luxury leisure jet charters, but barely 1 percent of those sales come from travel agents, he says.
“I’d like that percentage to be more, and I think it would be higher if agents were more knowledgeable about jet charters,” Early said. “The average travel agent may be quite comfortable selling a wealthy client an extensive cruise involving multiple suites but has almost no idea what to do if that same client wants to travel by private jet.”
Agents who call his brokerage firm often ask only about price.
“That’s not the way to sell a charter,” he said.
According to Early, most agents only know that the client wants a private jet. They don’t take the time to properly qualify the client, which involves asking questions about budget or what type of services he or she likes. For example, a roundtrip flight between Los Angeles and Las Vegas can be booked using a Gulfstream 450 for $20,000, while a Phenom 100 aircraft will be just $4,300. A roundtrip cross-country flight may be booked using an eight-passenger Citation X SuperMid jet for approximately $50,000, or a 13-passenger Gulfstream GIV Heavy Jet for approximately $70,000. From Los Angeles to London, a quick roundtrip using a Gulfstream GIV with a fuel stop will cost approximately $155,000, but a top-of-the-line Gulfstream G650 nonstop will cost approximately $260,000 for the same trip.
“An agent won’t get rich selling one jet charter,” Early said. “But if done right, charters please the discriminating wealthy client, who will come back.”
Early also points out that there are a number of ways that fees or markups are involved with jet charters. For example, his company will arrange the desired plane with an aircraft operator, take care of all related services and present the travel agent with a price that includes a flat 5 percent fee for the company’s services.
As with any charter broker, The Early Air Way doesn’t own or operate its own fleet. Instead, it has access to 4,000 aircraft based all over the world. No matter the source of the aircraft, The Early Air Way ensures that the plane meets all federal requirements for safety and maintenance and that its crews are all experienced and hold the required licenses. The Early Air Way retains two third-party safety auditors to rate the individually owned aircraft.
Important to know, too, is that instead of private flights leaving from the main terminal at an airport such as Los Angeles International Airport or Phoenix Sky Harbor Airport, charter flight passengers check in at a Fixed Base Operator (FBO), which is essentially a small, private terminal. At most FBOs, passengers may drive their car right up to the door of the plane and be airborne within 10 minutes of arrival.
Travel Agent Commissions
The issue of commission paid to an agent for booking a flight with a broker is certainly far different than typical fixed commission.
In the charter industry, agent commissions are often added into the all-in price paid by the client, according to Jordan Goldberg, charter sales director for Victor, another charter air broker with headquarters in London and new offices in New York City and Santa Barbara, Calif. Goldberg says that an agent’s commission is not paid out of the broker’s fees or by the aircraft operator; instead, the amount of commission results from discussions between the broker and the agent, and that is then added to the price presented to the client. Commissions can vary from 1 to 10 percent, depending on a variety of factors.
Contacting an aircraft charter company directly, booking a flight and then marking up the quoted price to the client is also possible, though not recommended for an agent new to booking charters. Since brokers work with many aircraft operators, they are generally able to negotiate the best price — if a travel agent decides to go it alone, he or she would not have the benefit of any wholesale discount pricing. Additionally, this method would require that the agent is familiar with the types of aircraft that the operator has available, among other technical details such as safety ratings.
While booking a client on a jet charter through a broker is the best way to go, it’s still considerably different than booking almost any other travel product, Goldberg cautions.
“Charter is a high-dollar, low-margin business,” Goldberg said. “But even single digits in commission can still mean big money for agents willing to educate themselves a bit.”
Travel agents with the right clientele have nothing to lose by becoming more knowledgable about the basics of the charter jet market. It may not become a large part of an agent’s business, but it’s another upsell opportunity, according to Goldberg.
“Don’t hesitate to suggest travel by chartered aircraft when talking to a high-net-worth client,” Goldberg said. “Perhaps chartering isn’t something they have considered or haven’t considered doing through their travel agent. But bring it into your conversation.”