Plane Conversations

Carol Pucci from Seattle Times recently wrote this article about her experience with airlines that code-share:

“With more airlines marketing each other’s flights as code shares, it’s getting harder to figure out who’s actually doing the flying. It also makes it a bit harder to find the best price.  Code shares are marketing alliances that allow airlines to sell seats under their own name for flights operated by a partner airline. The airlines share in the revenues and passengers can earn and use their frequent-flier miles on either carrier.”

The irony is that on-line travel agents started a price war that has eliminated the incentive for airlines to distinguish themselves on “service” or even distance. This relieved them of the responsibility to excel. The underlying assumption imposed on the passenger is that all airlines are equal and all flights are the same – until they are not.  For example: Air France and Delta are code share partners:

Carol further writes: “Air France was selling a Seattle/Zagreb (Croatia) round trip, with a connection through Paris, for $1,214 versus $1,408 on Delta for the same flights, a savings of $194″.  

The law of one price

The problem with code sharing is not that you fly on the other partner’s aircraft, the problem is that the price is does not correlate with the exact same product, rather, it varies by whom you buy the ticket – that, by any definition, is broker’s world.

Private air service carriers and charter operators currently suffer from an extreme form of broker’s world that not only prevents carriers from code sharing, they also keep prices unpublished so the customer has no idea what they are paying for.

Of Brokers and Fixers

Imagine if Air France and Delta and United all had to operate different planes and there was no way for travelers to compare compare prices. Instead, a group of brokers could manipulate supply and demand to maximize their own profits. So for example, if the airplanes fly 1/2 empty, then brokers could charge double the airfare.  Obviously, this is an extremely inefficient way to operate an air service industry.

Fly Social in more ways than one

Social Flights is a platform that accommodates code sharing among many partner air service operators while also standardizing the cost of flying on a per-mile / per-time basis.  Social Flights performs the same yield management operations for a diverse inventory of private jets as the commercial carriers perform for their shared fleets.

The Social Flights platform permits the private air service operators to sell charter lift on a per-seat, per-leg basis.  Instead of generating dead heads (empty legs) operators can code share such that every flight is a primary leg.  Operators who are closest to the passenger will inherently be lower cost since a “re-positioning” fee would not be needed. This alone may cut the price of private travel by 50% (half the cost without dead/reposition fee) while also increasing operator revenue by 50% (by doubling the size of the market).

You can call it a code-share or you can call it a ride-share, but Social Flights calls it a breakthrough in air service efficiency.

Any number of b-school power plays will cite the competitive advantage necessary in hard economic times.  But how many people talk about the cooperative advantage?

Information is power

When the buyer has the same information as the seller, markets are more efficient.  The Internet has made information free and easy to transport.  So, understandably, any business that hopes to survive by restricting information will ultimately find competition from a start-up that does not.

The “equal information” playing field

This scenario plays out over and over as industries as diverse as newspapers to higher education to government to commercial aviation are forced into profound transformation by the availability of equal information.  True to conventional wisdom, good information creates more good information and bad information creates more bad information. For Social Flights, our best customer is the educated customer because they’ll educate each other.

Coming to an Airfield near you…

The true cost of flying private jets is one of the best-kept secrets in aviation.  Corporate Jets are a source of mystery, controversy, and symbolism. There are many reasons for suppressing true costs such as avoiding public disclosure of VIP expenditures,  or to protect profit margins enjoyed by charter brokers.

On the other hand, there are many important and legitimate reasons why some people should fly private instead of commercial. Social Flights believes that there are many situations where the true value of private flight greatly exceeds the cost of private flight for a large population of travelers. The problem is to find possibly millions of passengers who do not know that Social Flights applies to them.

Information Transparency

For this reason, it is essential that a baseline cost be established in a market so that everyone can use the same data to make educated decisions about how to travel efficiently.  It is essential that the market can eliminate price distortions, suppress arbitrage opportunities, and equalize asymmetric information.  The focus of the industry should be on expanding the market through transparency, not short term gain by hoarding the limited existing market.

Cooperation is the new market advantage

Social Flights has developed an instant flight quote feature that calculates a nominal estimate to fly a private aircraft from any airport in the US to any other airport in the US.  This establishes a baseline on the actual cost to fly.  From this baseline, jet operators can bid and win missions that are naturally most profitable to them. Or, operators can cooperate with each other by sharing legs in an abundant market rather than compete with each other for a constrained market.

Event planners, corporate executives, travel agents, economic development agencies, and travelers of every type now have the information that allows them to access private aviation inventory for businesses and the magnificent value that it brings to communities.  That is the new market advantage.