How to negotiate your airline contract
Starting in May and ending the next summer, negotiation season is a tough moment for charter brokers. Getting the right terms with airlines is essential for the high season to come, but this is a difficult task, as all contracts differ from one another.
When chartering an airplane, here are some important points you have to pay attention to, no matter whether you are going through a broker or a consolidator, or negotiating directly with the company.
Favoring one-leg based trips
Only buy your flights on a one-leg base, with 2 possible PNR for a round trip. That’s the market trend that has been promoted by low-cost airlines for many years now.
It will increase your sales by giving you a possibility to link your one-ways with other regular flights, either to create dynamic packages or to sell your distressed seats on CitizenPlane.
People have stopped looking for Saturday-to-Saturday trips. They want more flexibility.
This will also allow you to use CitizenPlane easily, as we are on a one-leg based system as well. This may not be a problem for charter flights, where you always get one PNL per flight. The difference for allotments is that it is common to buy them for a group of people, making it harder to sell one-ways separately. But now, even on long-haul flights with legacy airlines, some tour operators already have 2 PNR and pay the same price for the trip. Should it be an issue with your internal tools, then I recommend that you update those tools.
Knowing the amount of your Airport passenger taxes
Pay attention to the Airport passenger tax. Even though it is normally mandatory, some airlines don’t mention that pax tax reconciliation will be made after the flight. That means you will have to pay pax tax to the airline straight away and only get reimbursed after the flight.
It is an important topic, especially for non-Schengen flights where pax tax can be important. Check that pax tax and their amount are mentioned in the contract.
Getting confirmations fast
For charter flights, there is usually no deadline for the confirmation of the schedule in the contract. You should nonetheless ask the airline to confirm slots, handling and parking as soon as possible.
Indeed, during the summer period, airports can ask for stricter regulations due to increased traffic. The sooner your request is handled, the best chance you have to get the slots you asked for.
Also make sure your schedules are confirmed when you post flights on CitizenPlane. Handling schedule changes is always a pain, and could result in reimbursing passengers.
Negotiating good fuel reconciliation conditions
Beware of fuel reconciliation! Nowadays nobody can predict what the fuel rate will be in 8 months or more. That’s why airlines generally add fuel reconciliation conditions. This could have an important impact on the final price. The Platts index number is a good reference. You can check this official rate on the online IATA tool.When negotiating your contract, be sure to ask for a maximum increase compared to the Platts index. Contracts typically state that if the fuel price at the moment of the flight increases by more than 5%, then there will be a certain repercussion on the price. This repercussion should only concern the proportion of the contract's price that is concerned by fuel (typically, 30%). This proportion must also be specified in the contract.
Being able to sell your flights
Make sure that the plane seats are truly yours and that you can sell them, even without pairing them with a hotel! It will be more comfortable using Citizenplane if you have no restrictions. You will be in a safer position knowing that you can sell some leftover seats on CitizenPlane.
We’ve encountered this problem for some tour operators we worked with. Usually the airline ended up agreeing to let them sell some seats. Still, it will be easier for you not having this restriction mentioned in your contract with the airline.
Checking your cancellation conditions
Check that you are able to cancel at least part of your flight series if necessary. Make sure cancellation delays and retrocession conditions are sufficient to avoid putting your company in danger.
Now it’s up to you 🙂