Aviation Marketing: What are the Options?
The market is never wrong; cars are more efficient that buses. Otherwise most people would not spend an average of 7000 dollars per year to own and operate a car instead of buying a yearly bus pass for 400 dollars. So why hasn’t private aviation taken off?
ROI (Read Only the Index)
On the basis of ROI (return on investment), bus economics are superior to car economics. But not so obvious in this equation is the freedom for diverse interactions to occur between people, institutions, conversations and ideas. With car economics, more targeted ideas are exchanged, more transactions executed, more high-value productivity is delivered, and greater access to socially valuable options is assured.
Options are assets
An option is defined as the right, without the obligation, of executing a business objective. Yes, stopping for a gallon of milk on the way home from work is a business objective. As Warren Buffet so famously said prior to the fiery dot com tailspin, “if stock options are not a liability [balance sheet line item], then what are they?”
A Balancing Act
Also not so obvious is that some types of human interaction have been accelerated by an astonishing rate in just a few short years due, in no small part, to social media. Yet, other types of human interaction remained static, regulated by the availability of travel options. This increasingly upset balance that will drive something…maybe even a jet.
With a standard ROI model, private aviation costs too much. However, with options analysis, the business case improves. Options are the new financial system and variance is the new financial instrument. People are now in a position to demand immediate results. Time, conversations, and experience are the new currency. They value the right, but not the obligation, to change their minds. The financial crisis has taught them to collect assets and reject liabilities – human contacts are an asset and trivial encounters are a liability.
Anatomy of an option
A financial option has several important parts: a strike price, an exercise price, an expiration date, and settlement terms. The difference between the strike price and the exercise price reflects the variance (volatility) of the product. High variance commands greater difference in price of the strike and the exercise price (either buying or selling). This is what people are trading among themselves in social media – they are trading options.
Read the rest of the book
The value proposition of private aviation is likely due to private aviation’s inability to articulate financial products other than ROI. The marketing of private aviation must be done in a manner that is very different than how the major airlines advertise their travel products. The distinction will surely be fought in the ROI vs. Options domain.
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