Friday, June 6, 2008

Airlines Cutting Capacity is Good for Charter!

This week, United and Continental followed American's lead from last week, and announced plans to retire aircraft from their fleets and cut capacity 16-17%, effectively matching American.

This is good news for those 135 Charter Operators whose marketing solutions are robust enough to capitalize on this opportunity. I'll explain.

Retiring aircraft, as they've all announced, means fewer planes to fly existing routes. So they'll have to drop some flights from schedules. That means some cities that had 4 round trips per day will be cut back to 2 or 3. Which means it will be harder to get a seat; and the schedules will be less convenient.

In some cases, the big carriers will drop cities entirely, as American did two years ago when it dropped Pittsburgh. The regional carriers like American Eagle and Continental Express might step in, like Eagle did in PIT. But then the passengers are on smaller jets, no first class, no room for carry-on bags, still tough to get seats. And fewer round trips per day. And 3-hour flights in those flying cigars.

Hub cities like Dallas, Houston, Cleveland, and Denver will take some of the brunt. But Chicago's going to have the most pain with two carriers having major hubs at ORD.

So what's the good news for charter operators with great marketing solutions? Just this. Many of your customers use both commercial and charter over the course of the year. But they're going to find it much more difficult, on some routes, to get last minute seats at any price, and booking early still may not get them a decent schedule.

The savvy operator is going to put a customer communications plan into place to educate their current customers about the benefits of flying charter when the commercial carriers drop capacity. Everything from filling more of the seats on a business jet to seriously considering a corporate shuttle.

And operators with good marketing will be educating customers about different ways to use charter that the customer might not have considered. Remember, charter customers get into ruts. Mnay use charter the same way every time and never think about how else they could leverage that business tool.