This article also appears at dropzone.marketing.
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If you’re in the business of skydiving, the money must be flowing like manna from heaven. There are more USPA members in the history of the sport, meaning more skydives are being made than ever before. Manufacturers have more people to sell their products to and wind tunnels are popping up in nearly every town with a population of more than 1,000 people.
Skydive historians would be hard pressed to think of a time that has seen more positive growth for the sport. So what’s with the morose article title?
There’s a group in the industry that is being challenged, big time. You’d think they’d be the ones profiting the most, but surprisingly, they’re the ones struggling: the drop zone owners themselves. Not all, but most. Sleepless nights are starting to become all too common because with this surge in jumping have come more DZs to the marketplace. These new DZs have been taking market share from more established operators by offering tandem pricing not seen in 20 years or more.
The new low-price, high-volume approach is freaking everyone out, and industry DZOs are playing a dangerous game of chicken. Who will blink first? Will the establishment DZs maintain their $200-plus tandems or start sinking prices to not lose more market share? Can the low-price DZs continue for the long term before they must raise tandem prices to keep up with soaring maintenance costs and tight cash flows?
Common sense says the low price of $99 to $169 tandems can’t possibly be maintained. How can it? Prices on absolutely everything have gone up. Every manufacturer building tandem containers and canopies has increased their prices steadily over the past 20 years—to the tune of $15,000 per tandem system. Aircraft maintenance costs are soaring, and while jet fuel costs less than it has in the last decade, it’s still almost double what it was 20 years ago.
What are we missing here? It seems like 1+2 does not equal 3, yet the deep discount price trend doesn’t appear to be abating.
Believe it or not, it’s the Cessna operators who benefit most from this model. Lower maintenance costs are allowing for bigger profit margins than the larger players with multi-engine aircraft trying to keep up.
Back in the day, it was always the aspiration of Cessna 182-owned DZs to grow into a turbine operation. Now, that may not be the best business plan. Certainly, the days of the multi-engine Twin Otter are numbered. The Cessna 208 (Caravan) will continue to gain popularity as the maintenance costs of a single-engine aircraft are more appealing and economical.
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