Last month I wrote about the economics of regional flying and the spiral nature of larger aircraft literally “driving” more air passengers to larger hubs. Before that we looked at the economics of the regional “pilot shortage”. Indeed, small community airports are feeling the pinch of fewer planes and fewer pilots. Looking ahead, how will demand for travel from these rural communities be satisfied?
Comfort vs. Convenience
Consolidation of the regional industry along with the shift to larger gauge aircraft will help alleviate the regional pilot “shortage.” The communities with the strongest economic growth will transition from 50 to 76 seat aircraft. What’s in store for the rest of rural America? Some say the automobile will replace regional flying. This substitution has already begun, but doesn’t meet everyone’s needs, especially business travelers pressed for time. There is a difference between high-end comfort offered by the majors and high end convenience offered by the upstarts.
New business models
In response the contraction of traditional regional flying, new business models are emerging to satisfy small community travel demand. CAPA outlines these in a recent series of reports.
Imagine Air grew 40 percent in 2014. Its customers buy single engine Cirrus aircraft and allow the operator to offer charter services. OneJet and Delta Private Jets are examples of more traditional business aviation charter services. Brokers such as Telluride Flights help customers find the right charter.
Former Frontier CEO, Jeff Potter, now runs Surf Air. After an initiation fee, its members in California pay $1,750 per month to fly as much as they want. Members use a mobile app to book their flights, such that Potter described the company as the Netflix of the air. In Colorado, Fresh Air advertises “All-you-can-fly membership to Telluride, Aspen, and Eagle-Vail for one low monthly fee.”
Wheels Up is a membership company which contracts with Gama Aviation to operate a fleet of King Airs and Cessna Citations in the domestic U.S. market. However, CEO Kenny Dichter describes the company as “a technology company that is trying to substantially change the market”, a nod to the fact that sales and distribution is the primary challenge to overcome.
The advent of the sharing economy has transformed many sectors in the travel space. Ubair’s co-founder David Tait explained that a multi-person trip is a little more expensive than a commercial flight but without all the hassles. He described a family ski vacation that would have cost $500 per person for a family of five and taken six hours door to door by air. The Ubair trip cost as little as $2,000 for the aircraft and took an hour and a half.
Jetsmarter is employing elements of Uber and JetSuite is focused on developing apps to make empty legs available. The challenge for bringing “Uber” to the aviation sector is that private jets are much more expensive assets than cars.
Let’s not expect to find a “one size fits all” solution for America’s small and mid-size airports. Innovative and creative solutions are the best bet.