The Dilemma of Tandem Skydive Pricing

Monday, March 11, 2019

Photo courtesy of Cristobal Correa

As I look out the window, I’m seeing an all too familiar sight – an overcast, cold and rainy sky. Again.

Since September 1st of 2018 to the present, this is the most rain Charlotte North Carolina has seen in 140 years.

The theme for the US skydiving industry of 2018 was the weather. In “sunny” California, it’s been rain, extreme heat, and wildfires. The northeast and midwest saw a late start to their seasons due to an extremely wet April and May (and this year shows early signs of repeating that). The Southeast saw a delayed start and was punctuated by more subtropical weather activity (tropical storms and hurricanes) in recent memory.

No matter what you believe about the cause of this climate change, it’s irrefutable that the weather patterns are changing and they’re affecting the skydiving industry mightily.

 

Within the law of supply and demand, the weather is reducing our supply. With lower supply should come an adjustment in price, but it’s not happening. DZ’s are caught in a dangerous trap between raising rates and losing market share, and maintaining low prices but barely getting by as cash flow tightens.

Who will blink first? Who makes the first move? Once the market leader ups their price, the rest will follow, but the market leaders are fearful that the rest won’t follow… and so we find ourselves in a stare down where everyone feels uncomfortable. 

It’s not an enviable position, but for those that are operating at sub-$200 tandems with turbine aircraft and without the additional revenue from military contracts – trouble is here or it’s on the horizon. 

More Challenges

Cessna 182 and 206 operators are best positioned as their overheads are much less, but few are getting rich as high volume must be sustained if operating at lower prices.

Groupon is not the answer. Sales trends continue to drop year after year forcing DZs to stay with Groupon year round. With Groupon’s change in payment structure, the perceived added value for unredeemed certificates is now gone. Furthermore, Groupon is continually changing for their own survival – I wouldn’t tie my entire marketing strategy to a company whose survival is in question. 

Is your DZ using Burble? Register your DZ with Sigma to allow Burble integration at your dropzone.
Is your DZ using Burble? Register your DZ with Sigma to allow Burble integration at your dropzone.

iFly is now becoming a legitimate competitor as we see them categorized on Google as “skydiving” which offers a lower-risk alternative to the real deal without the inconvenience of weather or a long drive to get to the facility. Furthermore, it’s the type of activity an entire family can enjoy together.

The cost of equipment continues to increase. The canopy and container manufacturers have made their annual price increase announcements. The cost to operate at every turn is increasing, but our number one revenue generator is being sold for the same or less than it was ten years ago. 

Staffing of pilots and tandem instructors is as challenging as its ever been. Tandem instructor pay is consistent with what it was ten years ago despite a reduced supply of tandem instructors globally. This isn’t sustainable. 

The discussions of employee classification are forcing a shift in many states causing an increase in operational costs. This trend is only expected to escalate across the United States.

The strong economy is giving our customers more choice on travel and activities – we’re not just competing against other DZs anymore.

We can’t continue to operate with the model that we did ten years ago.

Doing It Differently

It’s time we look at how we run a dropzone with a fresh pair of eyes. The industry is changing. The weather is changing. We have more competitors, but we’re operating as if it were the high-volume days of 2008-2012 and we can no longer do that. The current pricing for most DZ’s in the industry is based on a low-supply, high-demand marketplace and we are now experiencing a higher supply (more DZ’s in the US today than ever before) and lower demand marketplace 

It’s time to rip off the Band-Aid and re-evaluate everything –  how we do things from the standpoint of efficiency, price, customer experience, and staff experience.

Not changing is dying.

Being More Strategic

Two weeks ago, we spotlighted DZO Gordon Blamire’s, dropzone – GoSkydive. The model of GoSkydive serves as the blueprint for today. GoSkydive is focused on an approach that builds customer loyalty by exceeding expectations – their mentality is to be a customer-focused company first and a skydiving center, second. Additionally, how they select their skydiving staff and treat them makes for a positive culture that further serves the customer.

In a world where the most effective form of marketing is word of mouth, this model is the only way to make word of mouth scale.

Reading through Gordon’s article showcases a very strategic approach to running a DZ that feels more corporate, which is a dirty word for some who love skydiving, but the proof is in the pudding and unsurprisingly, they’re having a lot of fun as they’re organized, efficient have a positive culture and most of all, they’re profitable.

It’s obvious, we all need to raise our prices, but not without providing better value for your team and your guests.

Most DZ guests will interact with a DZ between 30 and 45 times from discovery to driving out of the parking lot. Focusing on each point of engagement is critical – more importantly, making sure who is engaging with your guests during the customer journey is more critical.

And we’re just scratching the surface. Keeping costs down with rigorous maintenance and even pursuing different types of aircraft can’t be left off the table.

Is there a simple solution to all of this? No,  but the solution won’t be found in doing the same things we’ve been doing for years.

Everything is changing. It’s time we change too.

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