“We arrange for a feature story headlined ‘Charter is dead’ and I have three short questions”, the calling newsman said to me, several years ago in what used to be the Sales Department of a Central-European airline primarily doing, well yes, charter work. The way I vaguely remember it, in no time I answered with a monologue even before his first question came through, being totally transported with the subject and the question – both in view of a discourse I was already too familiar with and his use of one of the most threatening and final words.
Half a dozen years later, charter is still alive, and I was proven right! Cold comfort, since the debate rages on. Pretty accurately, the system of charter airlines has been observing the debate and its theses over the past decade, aiming at orientation, selecting options and applying answers to their system.
In the school of Joseph Schumpeter, the charter industry can be seen in the “evolutionary process of continuous innovation and ‘creative destruction’” (Freeman, 2009), which many will argue is valid for its dynamic entrepreneurship, however isn’t for the necessary change-perception and -orientation. Although the principle wasn’t established with a specific branch of trade in mind, I will presuppose it to postulate the analogy. The lack of innovation might be a, if not, the cause for its stagnant situation, alongside others – at first sight. There is very little need to innovate the classic one-off or ad-hoc charter. Due to its unforeseeable and erratic nature and curiosity, only a few specialist players will carry on doing this commonplace business, which was present in all cycles ever since the emergence of commercial aviation.
Quite the opposite happened to the business circumscribed “migrant worker’s charter”, which merged into scheduled “VFR” traffic (a much better paraphrase) progressively alongside deregulation, liberalization, low-cost boom and the creation of the global village. To cultivate the charter field with innovations is a task mainly left to the players relying on inclusive tours work, simply because it is possible and worth trying, also due to their tremendous size. Responding to their awkward sandwich position (or even prisoner’s dilemma?) between legacy and low cost carriers, as well as to modern consumer preferences, they revised the design of the business: IFE became a must-have (akin to legacy carriers), freebie catering was questioned (leering at low-cost carriers). For the sake of higher utilization, flight schedules were escalated beyond assumed standards of acceptance (often being pioneers).
In Eastern Europe after the Cold War, inclusive tour charter became the trailblazer in aviation’s development (and largely still is). I dare to say that low-cost (contrary to no-frills) and the hybrid carrier model were inventions created in or by the charter branch. – An interesting phenomenon still persisting, albeit mainly in the national market places, is the Nash equilibrium in inclusive tours charter markets. Unsettled in that sandwich position lately, it has been stable enough to even attract attention of the cartel watchmen in former decades.
These days are over, and the equilibrium will be the exception proving the new rule. Studying whether other players will take a risk to achieve a co-operative outcome is too cumbersome and doubtful, if one needs to keep straight on; the more, if one suspects other’s irrationality, which doesn’t match the criterion of common knowledge. Some players moved in an astounding direction and decided to shrink – isn’t that a sophisticated interpretation of the economist’s law by gradual “creative destruction”? – Paradox, isn’t it, that just like Schrödinger’s idiosyncratic cat, the air charter industry is either dead or alive, however only if you observe and detect closely at a given time, it will appear in a definite state. Until then, it remains both alive and dead.
“There is a difference between a shaky or out-of-focus photograph and a snapshot of clouds and fog banks.” (Erwin Schrödinger)