Background;
When a tour operator starts up, they will usually rely on ad-hoc flight seat purchase, but with variable pricing this soon introduces costs outside of their control which could limit the sale of their products. To overcome this a tour operator usually negotiates group rates with an airline to agree an amount of seats for a given price.
As demand increases further, a tour operator may schedule planes exclusively for their customers (a charter flight). They buy the entire plane for a fixed cost. A chartered flight isn’t published by the airline, and is exclusively sold by the tour operator (operated by the airline).
Problem
Since contracts are negotiated years in advance, I suspect many tour operators have a challenging decision ahead.
Do they re-contract to charter or do they try to negotiate group rates to reduce their liability, but at a higher per-seat rate?
I predict that with airlines trying to manage their fleet and the loss of business passengers paying full fare that airfares will have to increase the average price to rebalance their costs and turn a profit. Flights in 2022 have already increased, add to that the increase in carrier surcharge (YQ) and increased airport charges, the ticket can be at least 50% more than it was pre-covid (2020).
Supply vs Demand.
Post covid the demand is less known than previous years, and with the recent Ukraine invasion (and the global changes) driving up inflation, charter flights could pose a risk to tour operators profitability and their supply chain.
I expect that those tour operators who have a fixed flight cost as part of their packages may change to a dynamic priced model – this is common place for airlines, and some tour operators today.
Without reliable year on year, charter flights in 2023 could be an expensive risk.