The Failure of the “Water Flow” Theory
One of the misconceptions in airline traffic markets that continues to confound carriers is a carry-over from the highway traffic engineering profession. The “water flow theory” states that traffic is like water, if you dam up one thoroughfare, traffic will spill over into neighboring streets. This is not actually what happens with human behavior, yet the theory persists.
So commercial carriers still think that if they constrain supply, demand will increase and people will pay more. It is equally wrong to assume that constraints in the commercial aviation industry will translate into a proportional spillover into private aviation. This is likely not going to be the case either.
Furthermore, the absence of a commercial aviation presence does not automatically translate into a growth opportunity for private aviation any more than the absence of a automobile thoroughfare leads to a growth opportunity for motorcycles.
Instead, we look to the economic growth engines as found in dynamic communities surrounding New York City, San Francisco, Nashville, Austin, Los Angeles, and greater Boston areas. Each is socially integrated by a combination of social capital, creative capital, and intellectual capital developed independent of a commercial aviation hub, not necessarily as a result of it.
Our suspicion is that the relationship between Private Aviation services and its potential market is tied closer to the organic integration of diverse communities rather than random flows of traffic responding to commercial aviation problems.
The argument that traffic will be diverted from Commercial Aviation to Private Aviation is still valid but for reasons that we may not expect. Private aviation is perfectly scaled to strategically bring into contact social, creative, and intellectual capital assets from diverse communities such as NYC, Nashville, Austin, etc. This is a subtle but profound difference.
Likewise, the highest value economic benefit does not come from random interactions; rather, it comes from highly targeted and strategic combinations of factors that produce economic growth – then they are allowed to interact randomly to induce innovation.
This same objective is the mantra for Brand managers, Social Media Gurus, Economic Development Agencies, Technical Conferences Organizers, Recreation Industries, and Innovation enterprises, in fact, the ideal private aviation customers.
The degree to which the private Aviation Industry can enable strategic high-value interactions is the degree to which the ‘interaction market’ will flow to the lift services that they provide.
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- Feb 22, 2010: CFM Charter
Commericial airline traffic and executive jet charter are two seperate classes of travel. There has been much effort to convert a first class business traveler to charter or fractional share buyer but there has been slow progress on this.