The article was published in the November issue of Blue Skies Magazine.
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 that has 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 are being challenged, big time. You’d think they’d be the one’s profiting the most, but surprisingly, they’re the one’s 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 has come more DZ’s to the marketplace. These new DZ’s have been taking market share from more established operators by offering tandem pricing not seen in 20 years and more.
The new low price, high volume approach is freaking everyone out, and industry DZO’s are playing a dangerous game of chicken. Who will blink first? Will the establishment DZ’s maintain their $200+ tandems or start sinking prices as not to lose more market share? Can the low price DZ’s 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 have increased their prices steadily over the past 20 years to the tune of $15K per tandem system. Aircraft maintenance costs are soaring, and while jet fuel is less than it’s been in the last decade, it’s still almost double from 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 multi-Cessna owned operators that are benefitting the 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 DZ’s 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.
So, What Does It All Mean?
The business of skydiving is changing, and the pressure has never been greater. This pressure applies to both pricing models. Traditionally priced DZ’s are trying to figure out ways to increase volume while low price DZ’s are continuously hustling to maintain the volume. The stress is immense and so is the burnout.
Being a DZO today requires more than a love of skydiving. The highly competitive arena of free fall mandates operators be savvy businesspeople in tune with modern marketing practices.
The sport has never been healthier, and it’s never been harder to gain and maintain market share.
This winter, DZO’s will need to take a step back, look at the big picture and evaluate what adjustments need to occur to find the sweet spot between price, experience, marketing, and service. One thing is for sure: those who continue to do the same thing as they’ve been doing for years will not survive.