First Post. Greetings.
Originally Posted by
CaptainProp
There are both types on the market, those that are transparent and those who are not. Everybody on the market, clients and service providers, know that there will be a broker fee of about 7-10% added to the actual cost of the trip. It’s not like it’s a secret so it’s up to you if you want to be transparent and play with your cards open and work towards building a long term relationship with your clients or not.
I don’t always know personally, but our private office would never accept a charter trip to be sold on our aircraft without knowing how much the broker, if there is one, is taking for their services.
CP
There are definitely both types on the market - ranging in skill level and personality types. Completely unregulated industry on the broker side of things. You have everything from one-man operations to large multinational public firms.
Some brokers even have their client sign the agreements with operators directly - and bill the operator for a comission post-flight which is built into the price.
The days of the "Gentleman's 20%" are over - there is too much saturation in the market, too much competition, and clients are too smart and most will "shop around" to price check their main broker.
That's not to say that every once in a while a broker can take home a big slice of pie. I've seen comissions of 60,000 USD happen. Is it relatively rare? Yes, but a sly broker who doesn't care for the long term relationship can pull the wool over on an inexperienced client. No way the broker is revealing what he paid the operator directly when this happens.
There are other tricks too. A broker will confirm with a client (contract or cleared funds) - then go back and ask for a discount to "win the trip" because the client is "between a couple of options". If the operator drops their price - pure money in his/her pocket because the client has already confirmed.
Another is cancellation fees - if there is a mismatch in cancellation fees between Client-Broker & Broker-Operator, you better believe Broker is taking that difference.
Another fun part of the industry is the differences between the markets in the USA and Europe. USA is much more price sensitive, abrasive, and fast paced. Absolutely filled with Ex-Wall Street. Europe is more posh, status oriented, and less price sensitive. Planes are a lot newer as well. Asia and the Middle East are interesting markets of their own, and Africa is the complete wild west. South America doesn't get much action.
Where are you based OP? I imagine the UK?
Have you heard of Avinode?
One last thing I'll mention is that contracts in this industry don't really mean much. At the end of the day - whoever has possesion of the funds has the leverage.
I say go for it. If you're nervous about taxes, insurance, etc. you can just have the client sign with operators directly until you learn the ropes.