Airplane rental rate base on supply & demand.

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Paul Sinthunava

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Paul S.
Hey all,

My FBO was asking me the other day what would I think if they rent out their planes just like car rental instead of one price fit all? What they mean was rate go up and down depend on demand and supply, time of day. From what they said I think they like to get their fleet utilized more especially in weekdays. They also said their highest rate will remain pretty much the same as what it is now but they willing to accept lower rate if customer willing to book couple weeks or months in advance but pretty sure there will be some kind of cancellation fee if flight could not be done.

For me, I like the idea and willing to book couple weeks in advance if I could save some money. Do anyone of you have any thought what might or might not work?

Fly Safe.
 
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Creative thinking----good be a win/win.
 
Nope, I prefer one price and that it be known, I'm fine with trying to build the variance into the fixed price. I don't want to be thinking if I rent now, or if I get back by then it will be cheaper. Screw that, bad enough trying to figure out weather.
 
N1120A said:
I can see positives and negatives. Offering discounts for planes that don't do well isn't a bad idea
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Might be an interesting business model. I think this idea makes the most sense.

Otherwise, I would kind of hate having a variable rate every time I want to fly.
 
Personally I'd think on a very simplistic level it could make some sense.... say a little cheaper rate during the week as an attempt to encourage rentals in those slots.... or a discounted bulk rate for a long trip...but in my thinking it would be fixed and known....
I would not like chasing unknowns personally.
 
if I owned a flight rental outfit and most of my planes sat around weekday mornings not being used I'd offer steep discounts to them, better off making some money for nothing.. assuming at least that the hourly rate still covers the basic operating expense of the aircraft.. I wouldn't make it super complex though, just sort of like a happy hour or early bird special thing.. any rental bookings until 2 pm are 20% off.. something like that.
 
I see the value a prime/off-prime rate structure. Not a fan of cancellation penalty.
 
TCABM said:
Not a fun of cancellation penalty.
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One of the flight schools around here charges an hour of CFI time if you don't cancel within x hours before your reservation. I think it's fair in all honesty.
 
What I don't like is airplane hogging.. someone will book a plane for 9 hours then only use it for one and a half..

I hate Draconian rental requirements as much as the next person, but when you show up at the airport and the plane that was booked from 9 a.m. to 7 p.m. is sitting on the ramp at 11 a.m. all buttoned up that's frustrating
 
I know our FBO's rates are based on their operating expenses with only a small percentage of profit built in. If they offered any breaks it would end up costing them money to have the planes flying. I could see maybe charging a premium at peak demand, if demand was a major issue. Given current events, I don't think that will be an issue for a while.
 
Next up, auctioning off rental time when two or more want the same time!
Maybe depends on how variable the weather is where you are. Here it would never work out booking long in advance. Also they’d be losing money for what? Everyone could just book (if they can still cancel) and just cancel if they couldn’t use the time, or sell it on to someone else.
Maybe daytime hours, if there are lots of hours that don’t get used, might encourage folk that spare strapped to adjust their schedules and book mid morning or something.

We have too few training planes, and in flying season the plane is booked all the time. Right now, the last few month almost no bookings but we have either had huge winds and/or low visibility literally since last year.
Looking back through the logs there were weeks and weeks with either no, or maybe one or two hours per week.

wouldn’t work here.
 
Is block time (a discount for some number of hours paid in advance, sometimes with an expiration date) still a thing? I haven't rented in years.
 
I like the weekday/weekend idea.

With minimum daily times for overnights.

A flying club I once belonged to had discounted block times paid in advance.
 
If an fbo is going to offer discount rates for booking months in advance, I think it would have to be for dry rates. Changes in the price of fuel can make a big difference in the margins.

I also don't like the cancellation penalty if you consider that weather may ground you for that day. & how can we predict the weather months in advance. Do pilots need another pressure (losing deposit money) that might influence them to take a flight in weather conditions that are outside of their comfort level? This could pose a safety issue.

I think many FBOs operate on such very low margins per rental hour that I don't see how they can afford to lower the prices enough to encourage off-peak rentals. Personally, I would be concerned if my FBO was offering big discounts to get the planes flying more because I would be thinking that the FBO might have a difficult time staying open when all their frequently flown planes start needing engine overhauls.

My last consideration is that if an fbo has cheaper rentals, but it is harder to get an available airplane, I would rather pay a bit more somewhere else that has more availability when I need it.
 
I could see a cancellation penalty becoming another factor that inclines a pilot towards riskier aeronautical decision making when faced with the choice of either paying a cancellation penalty or flying in marginal weather.
 
Makes perfect sense.
Physical things and services have no inherent value and are only worth as much as people are willing to pay for them so this model reflects reality and represents most efficient allocation of resources.
 
hindsight2020 said:
It's about to get real cheap in six months.
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Indeed ... with all these governors joyfully participating in what is a bidding war on who can **** up their local economy more , that’s how it will end.
 
Dana said:
Is block time (a discount for some number of hours paid in advance, sometimes with an expiration date) still a thing? I haven't rented in years.
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the school I'm renting from offers it... After a couple flights now the last time I was out I went ahead and did it. I figured since it's taking me a few flights to get my rusty finish shined up I'd might as well do it. Cheaper is cheaper, even if only a little I thought. It's a bit of a choke because in this case they want at least $1k payment up front.
it just gives a $5/hr discount so in reality it's not worth it. With rental rates what they are these days it only buys a few minutes over $1,000. I'm kicking myself over not running the numbers first.

Back when I was doing my training I think block rate was also $5 off....much better deal back in those days.
 
midwestpa24 said:
I know our FBO's rates are based on their operating expenses with only a small percentage of profit built in. If they offered any breaks it would end up costing them money to have the planes flying. I could see maybe charging a premium at peak demand, if demand was a major issue. Given current events, I don't think that will be an issue for a while.
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lsaway said:
If an fbo is going to offer discount rates for booking months in advance, I think it would have to be for dry rates. Changes in the price of fuel can make a big difference in the margins.

I also don't like the cancellation penalty if you consider that weather may ground you for that day. & how can we predict the weather months in advance. Do pilots need another pressure (losing deposit money) that might influence them to take a flight in weather conditions that are outside of their comfort level? This could pose a safety issue.

I think many FBOs operate on such very low margins per rental hour that I don't see how they can afford to lower the prices enough to encourage off-peak rentals. Personally, I would be concerned if my FBO was offering big discounts to get the planes flying more because I would be thinking that the FBO might have a difficult time staying open when all their frequently flown planes start needing engine overhauls.

My last consideration is that if an fbo has cheaper rentals, but it is harder to get an available airplane, I would rather pay a bit more somewhere else that has more availability when I need it.
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FBOs own the gas, so they should be able to price even more aggressively than flight schools.
 
Paul Sinthunava said:
Hey all,

My FBO was asking me the other day what would I think if they rent out their planes just like car rental instead of one price fit all? What they mean was rate go up and down depend on demand and supply, time of day. From what they said I think they like to get their fleet utilized more especially in weekdays. They also said their highest rate will remain pretty much the same as what it is now but they willing to accept lower rate if customer willing to book couple weeks or months in advance but pretty sure there will be some kind of cancellation fee if flight could not be done.

For me, I like the idea and willing to book couple weeks in advance if I could save some money. Do anyone of you have any thought what might or might not work?

Fly Safe.
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Nothing new about this. Flight schools and FBOs already have this option. Downside is when you book in advance, you're also vulnerable to not having access to the plane when you actually need it. The typical 'down for maintenance' trust me, I've seen it happen one too many times.
 
Paul Sinthunava said:
From what they said I think they like to get their fleet utilized more especially in weekdays.
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If that's all they want then the planes will just fly less on weekends, for an over-all loss. But if the problem is lack of capacity on the weekends, causing lost revenue, they could free up a few hours by offering a discounted "dawn patrol" throughout the week at reduced rates. Some of the same ones that clog up the weekend schedule can maybe be induced to fly before work, rather than after, on the weekdays (net gain).
 
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I've never personally rented from, or worked at a flight school / rental place with enough margin to make any significant discounts in the aircraft without risking losing money. Not sure how good of an idea this is, unless they are jacking up their rates during high utilization time periods - which honestly might not be a bad idea.
 
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