Plane Conversations

The following are excerpts from a March 9 Chicago Tribune article by Jon Hilkevitch.  

Passengers on U.S. airlines will pay relatively small increases in airfares over the next 20 years, but they should expect more flights crowding the nation’s busiest airports, including O’Hare International, the Federal Aviation Administration said Tuesday.

Travelers hoping to stretch out across an empty seat next to them will likely be out of luck. And, sorry, the small regional jets that are so unpopular among a significant segment of passengers are here to stay, although the commuter airlines will begin retiring their 50-seat jets in favor of somewhat larger aircraft.

The FAA now says it will take until 2023 to hit the 1 billion mark, indicating modest annual growth from the 704 million passengers carried in 2009 by U.S. airlines, on both domestic and international flights. Total passengers will rise to 1.21 billion by 2030, the agency said.

Coming off 2009, when U.S. airlines lost $8.1 billion, the total number of commercial flights is forecast to decrease 2.7 percent this year, the FAA said.  Flight volumes will then grow at an average annual rate of 1.5 percent by 2030, the FAA said.

Jetliners, which are nearly full on most flights today as the carriers try to prop up airfares, will stay that way, leveling out at 82 percent of all seats occupied on flights over the next 20 years, the FAA said.

While most passengers will continue to fly on the big, mainline airlines, that segment of the industry will grow the slowest over the forecast period, officials said. The biggest percentage gains will occur on international flights, followed by regional commuter airlines that operate smaller aircraft. Those regional airlines bucked the negative industry trend by turning a profit in 2009, FAA officials noted.

Twenty-nine large hub airports, including O’Hare and Midway, are projected to handle the bulk of the increased flights, growing at an average of 3 percent a year in landings and takeoffs through 2030, the FAA said.  It means that to prevent aviation gridlock, the FAA must complete its ambitious transformation of the nation’s air-traffic system, dubbed NextGen, to a satellite-based system that replaces the current ground-based radar.

So what does all of this mean for Private/ Business Aviation?

The airlines are going to crowd more people on aircraft by constraining supply in an effort to raise prices; they are going to use more regional airliners; they are going to focus more on the 29 major airports in the U.S., and focus more on international flights.  This looks like mass transit to me.

None of these trends provide better solutions for business travelers in small and mid size markets.

What it does spell is more delays, crowded flights, less tolerance on bad weather days at crowded hubs (I am feeling that right now sitting at ATL on a busy travel day and bad weather).

In all of this I see opportunity like never before for the general aviation and business aviation sectors to step up to fill the voids and ease the pain.  There are 5500 airports and the airlines are going to focus growth on the top 29? They only fly to around 500 airports in total so that leaves a lot of room for private aviation to provide point-to-point solutions between the rest of the nation’s airports.  

Air travel is supposed to be about time efficiency and if the FAA is correct in their forecast, the time to travel by air mass-transit is going to slow down even more, which widens the gap in time gained by flying private and helps close the gap in costs when you value your time.

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4 in a 4 part Series:

In the previous posts in this series, we discussed the gaps in Price and Time between Private Aviation and Air Mass Transit travel.  This time we are going to look at the gap in customer experience.

It is easy to measure price in terms of actual dollars and in terms of the value of our time, which we can use as an offset of the price gap. The more difficult gap to measure is the difference in the experience of the two forms of travel. To date, I am not sure if anyone has been able to accurately quantify the difference in the traveler’s experience. The ability to measure the traveler’s experience on either a private aircraft or an airline and compare that to the alternate experience, would give us a more meaningful comparison between the two.  That comparison could then be quantified and translated into a monetary measurement, which would go towards offsetting the price gap.  I believe that offset would be a valuable tool in selling private aviation services.

Here is what we know for sure!

Those who have experienced private aviation as a form of travel often justify the high price by speaking of the better experience as opposed to traveling by air mass-transit.  Call it the Hassle Factor of the airlines: the anti-social behavior of the passengers we share space with in an airliner, the rude treatment we sometimes receive, the lack of control over where we go and how we have to get there, the uncomfortable feeling of being compressed into a space that is measured in inches of seat pitch, the food served (or mostly not served) on the planes, the baggage abuse (bags don’t have feelings but I don’t like my stuff being abused) and on and on……

You get the point.

Stack that against the experience of private aviation.

Not one single person I have spoken to in 28 years of being in this business has ever said to me, “I can hardly wait to go back to traveling on the airline since I can’t afford to travel in a private aircraft anymore.” Not one. Every aircraft owner, charter customer or private pilot / aircraft owner pilot cites the better experience of flying by private aircraft as the number one reason to close the price gap. They don’t know how to quantify it but they know what they know. How good would it be for our industry to develop a tool that measures the experience, quantifies it and then translates it into dollars?

As consumers, we purchase experience with our hard earned money every single day. We pay more for an iPhone than for a Blackberry because we like the experience. We ride in a luxury car rather than in a compact car because of the experience. Both serve the same purpose since we arrive at the same time regardless of the type car, but what a different experience to ride in a nice driving, luxury car as opposed to a compact.

If we can ever measure and quantify the experience and then communicate that measurement to the market we might be able to come a long way in bridging the price gap that has prevented the many from experiencing the joy of travel by a mode that the few have become accustomed and maybe even addicted to!

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Part 3 in a 4 part Series

There is a huge gap between the time it takes to get from origin to destination by Private Aviation and the time it takes on the Airlines. In some cases, even a small, single-engine, propeller aircraft can get you there quicker than the airlines. In all cases, a business jet aircraft can get you there quicker and here is why:

• Your schedule:  You start by setting your own schedule when you use private aviation. If it makes sense to leave at 7am, then you leave at 7am. You set the time of departure based on when you want to arrive on the other end. Have a meeting at 10am?  Then you set your departure time to arrive in time to make your 10 am meeting. Easy enough. No traveling the night before.
• Closer airports: With over 5500 airports in this country and only 500 of them having any commercial service at all you have an additional 5000 airports to choose from when you take a trip via private aircraft; so, in all cases you can get closer to your real destination. Instead of going into the large commercial airport closest to where you want to go, most of the time there is a smaller airport that saves a lot of driving once you get there. That also works on the departure end. In larger cities there are several airports located on different sides of town, allowing you to pick the one closest to your home or office and leave from there. If you live in a small town, then you no longer have that sometimes one to two-hour drive to a big city to catch an airline flight. In our home state of Tennessee, we have more than 80 airports; so, no matter where you live in our state, you are no more than 30 minutes from a public airport. Smaller airports are less congested, giving you the added benefit of less time holding in the air or on the ground due to busy airport traffic jams.
• Direct Flights: You always go direct with private aviation; so, you waste no time going though a hub airport with one to four-hour layovers and multiple boarding processes just to get to your destination.
• No standing around: Flying in private aircraft, you can show up between five and ten minutes prior to the departure time you set, park close to the private aviation terminal and, in some cases, pull up next to the aircraft to unload bags. You are greeted by the pilots and you board immediately. You can skip the time wasted riding the shuttle to the terminal from long-term or off airport parking, queuing up for baggage checks, security screening and then waiting at the gate for 45 minutes.  There is no way you can plan on getting to the gate just five minutes before scheduled departure – the air mass-transit’s Contract of Carriage forbids it.

When you compare the two methods of air travel, the savings of time by flying private aircraft can be hours per trip and, in many cases, even days.  When we get people to their meetings and back on the same day, they tell us that the airlines would have taken two days with a limited meeting schedule or three days if they wanted a full day of meetings.

Everyone has a value on their time and it is especially important to quantify that value when you think in terms of productivity in business. Those who charge directly for their time like accountants or lawyers can easily quantify their time and compare the options to see if they can gain productivity by using a more efficient means to travel. Most travelers don’t think about it because they assume that they don’t have an option. What if we gave them a tool to measure the productivity of alternate means of travel? Could that close the gap?

What is your time worth?

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2 in a 4 Part Series

In this discussion, we will focus on the gap of pricing between Private Aviation and Airline Travel. Is there a way for us to partially bridge the gap? And, if so, how much do we need to bridge it to make it worth the time savings and better experience?

A round-trip airline ticket from Nashville, Tennessee, to New York City (BNA to LGA) costs between $525 (with one stop) and $1100 (non-stop).  Expedia publishes a travel time of 3:45 for the one stop and 2:00 for the non-stop, a difference of an hour and 45 minutes.

Flying the same route in an eight-passenger private jet costs approximately $10,000.  That price is the same whether you fly by yourself or if you take seven friends or business associates with you. You save at least two hours of terminal time avoiding the airline and your experience will be better.

Most of us have difficulty justifying this price since we seldom need to take seven friends or business associates with us; so, the price per person is $10,000 or maybe, at best, $2500 if there are four of us going.  That’s often still a tough sell.

As I see it, there are only two ways to bridge the gap between the two modes of travel:

• Bring the total price of the private aircraft charter down relative to the mass-transit price
• Fill the aircraft with eight travelers

The first solution can work from both sides.  The gap shrinks if either airline fares go up or air charter prices go down.  If both things happen, the gap shrinks even more.   While I don’t believe the gap will ever be totally closed, every incremental movement works to the advantage of our industry, taking into account private air travel advantages in the other two gaps – passenger experience and time savings.

Private air travel can bring the price down when fleet utilization goes up. Many of the costs of traveling by private jet are fixed; so,  you can lower the overall operating costs with higher utilization, which allows you to spread the fixed costs over a wider base AND which allows the traveler to buy at a lower price point.

Private air travel can also bring the costs down by utilizing new technology aircraft that are more fuel efficient and cost less to maintain, thereby driving down the variable operating costs to deliver the service.

These two ways of driving down costs have been used by the airlines to deliver a consistent service at lower price points. Southwest and JetBlue are the best current examples of this in the US air mass-transit system.

That leaves us with the problem of filling the seats. How do we fill enough of the seats on private charter flights to drive the costs down for each person traveling? Can we solve this problem? Would travelers migrate to a private jet flight if they could buy the seat for $1250 round trip ($10,000 divided by eight) when they could pay $1100 on the airlines?

A 10% pricing gap put into the overall matrix of price, time, and experience is a game-changer.  With that narrow of a gap, those who are used to the airline experience, but who tolerate it only because there is no real alternative, are likely to move to private aviation. Those who are already used to the price of private aviation might not sacrifice aircraft exclusivity; but, realistically, they aren’t the ones walking the bridge we just made from air mass-transit to private aviation anyway.  While some of them make take advantage of the shared aircraft, they aren’t really our target market.  We want the passengers using air-mass transit only because they have no alternative.  We want the passengers who have given up flying altogether due to the negative experience and wasted time.  We want the passengers who are in search of the better mousetrap because we believe that private aviation is it.

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Part 1 in a 4 Part Series

There are three distinct gaps between flying by Private Aircraft and Air Mass-Transit:

• Price: In most cases, flying by private aircraft is more expensive than flying by airlines. The best way to understand it is to compare the price differences between taking a taxi or limousine and taking the bus or metro train. It is difficult to get the price gap to close when one form moves masses of people between points on a schedule and the other form moves a few or even only one person on-demand. How can the limo ever be as cheap as the bus?

• Efficiency of Time: In most cases, flying by private aircraft will be more time efficient since you set the destination airport and schedule, rather than flying on the route structure and schedule the air mass-transit service sets. Air mass-transit routes may not include the airport closest to your origin and/or destination and the flight paths may not even be the most direct routes between the two airports. The nature of mass transit requires the traveler to show up early at a terminal that may or may not be close to their true origin and then queue up to get through the systems of ticketing, boarding and security,  all adding time to the total travel. Private aircraft, for the most part, avoid all of these time killers. Measuring the time difference is easy enough for most of us and putting a value on our time should also be easy. Once our time value is quantified, we can measure the time gap and put a value on it. Quantifying that time gap in dollar terms helps close the price gap.

• Experience: The passenger experience gap existing between the two forms of travel is one which no one can yet precisely quantify, but is one that we know to be vast just from our own experiences. Those who use private air travel often talk about the experience and rationalize that the experience itself justifies the price gap. When those passengers cannot totally make the time-price gaps meet, they make the final closure based on the quality of the experience. Traveling in a private aircraft is as pleasant and social as taking a road trip with friends or family – or perhaps even more so. Traveling on the airlines is as pleasant and social as taking a road trip with the Griswolds – or perhaps even less so.

How can we quantify all of the gaps between private or business aviation and air mass-transit so that we can accurately measure them?  Once we quantify and measure the gaps, how do we close them so that more travelers will be drawn to the superior mode of travel we have to offer?

Closing or shrinking the gaps will make it possible for more people to use private aviation as an alternative to airlines and, in some cases, even other forms of travel. Could it be that people who have chosen not to travel at all due to the negative experience and wasted time factors of mass-transit travel may choose to travel again?

Does this make sense?

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In a recent article in the Wall Street Journal, Scott McCartney talked about security taking longer than the flight.

Ever since the December 25 bombing attempt, travelers heading to the United States have had to face much tighter security.  The federal government issued new rules which made inbound travelers have to go through a number of screening processes which include some pretty intrusive searches.  And the crazy thing is people adjust.  We have all become indoctrinated to this.  We don’t like it, but we just have to do it.  

I know this because I flew from Brisbane, Australia to Los Angeles a week after the attempted bombing.  I was told that I would have to be at the airport three hours prior to my flight.  I went through a number of searches, pat-downs, emptying out of personal belongings and carry-on luggage.  I removed my shoes about four times.  My teenaged son, who happened to be walking ahead of me alone, with his hands in his pockets, wearing a hoodie over his head, was approached by security to have an explosives test.

The article says:  “If you’re coming inbound to the U.S., it’s going to be a tough summer unless we get some creative change in the security rules,” said Steve Lott, a spokesman for the International Air Transport Association, a Geneva-based group that represents airlines around the world.

Airports, airlines and government agencies around the world have hired more screeners to perform the “enhanced” security that the U.S. now requires for any flight headed to or flying over the 50 states.

Airline officials said that government agencies and airports in North America, Europe and Asia have promised that they will staff up enough to prevent long lines and delays as travel picks up this spring and summer. “All we’ve got at this point is their word and we hope their word is good,” said an official at a U.S. airline. “It’s a concern.”

This affects not only those traveling to the US from overseas, but also domestic flights around the country.  So, what’s the alternative to removing your shoes and standing in long security lines?  You could always get a bunch of buddies, or other business travelers heading your way, to charter a private aircraft.  You’d be surprised at the price of dividing a charter flight by six or eight.  And you’d love the fact that you can drive to the FBO, grab a coffee and board the plane from the ramp 15 minutes before wheels up.  And I haven’t even started on the luxury of the experience yet.

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Way back on October 16, Allen Howell wondered if Social Media would replace or simply complement face-to-face meetings.  The topice has generated a tremendous response which continues even now, months later.  Here’s what you had to say:

Social Media as a Precursor to Face to Face

Chris Stompolos, Principal and Producer at Rolling Boulder Films, LLC

“Business will always, and still does come down to people knowing people, trusting people, collaborating with people. I think social networking platforms has made things considerably easier to break the ice, but when it comes to closing the deal, its always so much of a nicer way to do business sitting across from someone. Bottom line really: You want to do business with people you trust and like.”

Gary Copher, Regional Leader at Primerica Financial Services

“I may be able to start the relationship building process on a social media site, but rest assured, a client is not going to sign over their multi million dollar investment portfolio to me based on a few Facebook chats, no matter how much they like me. … I find social media to be a valuable tool in the networking process.”

Khoushik K, Business Development Executive at UnitForce Technologies

“Social or Professional networking sites help you to extend your reach & eliminates the geographical barriers. …it cannot replace the trust & comfort that is intrinsically built in case of a Face-to-Face meet because humans are tuned to trust / believe a person he/she has met in-person.”

Bright Ibeawuchi, Director at Business Aviation Network

“Social networks in their current state will not replace face to face communications. Not even the most sophisticated video conference system can match the tactical feel of a handshake and eye to eye contact.”

Nazmi Sankary, Regional Marketing Manager at Hadid International Services

“I believe that social media has affected our life patterns a lot but it can’t replace face to face contact at all specially for who prefers to read others by looking at thier eyes!”

Social Media as a Complement to Face to Face

Rusty Keighron, Insurance Practice Leader at Docstar

“FB also enhances FTF communication. Just returned from a trade show where there were folks I needed to see who are FB friends but weren’t in the exhibit hall. By sending them FB reminders that I was there, I was able to see them and make a FTF contact that would otherwise have been left to chance (or not have happened at all).”

Anthony Kirlew, Social Meadia Marketing Strategist, Author, Speaker

“The role of Social Media as a marketing tool is to increase the company’s outreach and brand awareness. It is a complement to an online marketing strategy, but its goal is to make a connection with the intention of moving to an offline engagement where business can be conducted.”

Pawel Rzeczkowski, Experienced Finance Professional

“Social networking will not replace the need for personal contact but it will augment it resulting in lower business travel frequency. Once the contact is established you will need less face to face contact to sustain the relationship. But at the same time you will be able to manage more contacts. Not sure if it will be net a gain or loss or wash on travel.”

Charlie Davenport, Senior Recruiter at Dampier Recruiting Associates

“Social media lets us know when the person landed, when they got off the plane, when they were approaching the baggage claim, when they left the rest room, when they first saw their bag, when they first realized it wasn’t their bag, when the got done lol’ing, and on and on.. but as noted in the article linked to this discussion, social media will never replace the face to face.”

Mercedes Soria, Development Channel Manager at Deloitte

“Completely agree, social media has replaced much face-to-face communication but it is not the end-all of face-to-face meetings. People are still people and 80% of communication is body language which gets lost in social media types of communication. … Social media has its place specially for brand awareness, marketing but it needs to be proceeded by well thought planning efforts. It is just one more tool out there for Marketing (yourself or your business) and it should be treated as such.”

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With the dawn of industrialization came mass production, and mass production lead to mass marketing.  Mass marketing lead to the growth of mass media including Newspaper, Radio and TV.

Everything was driven by costs and profit and pushing stuff out to the consumer who also happened to be part of the mass of producers and marketers.  If you make it cheap enough and market it to the masses, they will consume it.

With everything geared towards the masses, mass transit developed in the cities to move people to and from their jobs as workers in the large corporate factories that mass produced.

Mass transit started with the rail system and then added buses and eventually the airlines developed into the mass transit system of the air.

Mass transit is all about price and when price is the driving factor, the needs of individuals are sacrificed for the needs of the masses. Load everyone up like cattle, route them through the hubs, off load and reload on to the next flight that gets you somewhere near your destination, maybe not so quickly or in the most comfortable or sociable environment, but do it cheaply.  It feels more and more like riding the metro rail?

So the airlines developed terms for describing productivity and efficiency that sound much like production manufacturing terms:

• CASM: Cost per available seat mile.  A seat mile is one seat covering one mile.
• RASM: Revenue per available seat mile. The amount of revenue generated for every seat available covering a mile.
• RPM: Revenue per passenger mile.  The revenue generated per passenger flown flying one mile.

All of this sounds like mass production.  Are airlines in the business of providing transportation to the flying public or are they in the business of producing ASM’s and selling them at a profit generating RASM?

Is there a point where driving the CASM down to make a profit overrides best safety practices?  That is a question being asked in the Frontline Documentary entitled “Cheap Flights”.  I will leave that answer up to the safety experts for now.

Does the public merely want to get from origin to destination and back again for the lowest possible cost?

Will the public pay for something better than mass transit delivered at the lowest cost?

In the economy of the future, people will be more aware of the value of their time and they will have the tools to quantify its value.  They will also value the experience of travel and quantify that experience in a social cost or benefit.

Just as people are longing for the personal touch and experience of buying their food at the farmers’ market versus buying mass produced food, they will long for and seek out solutions to every facet of their lives, including travel that gives back quality, experience and relationships.

And let’s not forget that people want their time back, spending it how they choose, and not how the systems of mass production forces them to spend it.

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This has got to be one of my favorite recent airline stories – Airlines’ On-Time Arrival Performance Best Since 2003.  Since 12 February, news outlets all over the country have carried the story and airlines all over the country are nearly breaking their arms patting themselves on the back.  Here’s the key word in all of that, though: arrival.  Nobody is getting all excited, crowing about on-time departure statistics.  Now why is that?

Flights still aren’t leaving on time and the space-time continuum seems to be intact; so, what accounts for the better performance?  On-time arrival numbers are up because block times have been padded with additional time.  As noted by Scott McCartney in the Wall Street Journal on 7 February: “Delta Air Lines Flight 715 from New York to Los Angeles now takes more than seven hours to fly across the country, according to the airline’s March schedule. That’s an hour longer than the same flight in the same type of aircraft took in 1996. A Phoenix-Las Vegas flight at Southwest Airlines that used to be scheduled at 60 minutes now gets 80 minutes. What was once a two-hour American Airlines trip from Chicago to Newark, N.J., now is two-and-a-half hours, according to the airline’s schedule.”

Aha!  The extra time wasn’t squeezed from the space-time continuum, it was squeezed from you!

Let’s add this up, shall we?  Your round-trip ticket on American Airlines between Chicago and Newark costs you $735.40.  Your one checked bag costs you another $50, round trip.  Estimating that you make $50 per hour (and that’s being WAY on the safe side), the increased flight time costs you $50.  Increased time to get through security costs you $100.  Now, let’s take that further.  Let’s say you live in Wheaton, Illinois, and the drive to Chicago’s O’Hare airport takes you at least 45 minutes, but you can get to the DuPage County Airport in only 20 minutes.  In terms of the value of your time, you’ve just spent another $42.  Add another $31 for parking in a main parking lot at O’Hare and the total for your travel is at $1008.40. Add additional meal, room, parking and wasted productive time costs if your meeting schedule requires that you stay the night. Now, add the aggravation factors: the toddler in 14B having a two-hour temper tantrum; for aisle seat passengers, the galley cart bumping your knees and getting up every 15 minutes to let your row mates up to use the lavatory; for window seat passengers, losing half of your seat to the person next to you who may not fit into their own; waiting to deplane; waiting for baggage; waiting for a taxi.  Multiply the aggravation factor by the number of days in a year you spend traveling.  How’s your blood pressure doing?  Mine is up and I’m just writing about it – you’re the one sitting in the seat.

Let’s compare this “improved performance” with business aircraft performance.  Arrive at the smaller airport of your choice 15 minutes prior to departure.  Park your car for no charge.  Walk directly to your aircraft and leave immediately. Barring air traffic and weather delays, the aircraft leaves when you tell it to; so, the departure is always on-time. Upon arrival, walk directly from your aircraft to an awaiting taxi or limo.  Today’s planning software is more accurate than ever; so, you’re arrival is always on-time.  Your fellow travelers are the ones you chose – no tantrums, no seat sharing.  Within federal guidelines, the length of stay is what you chose – no unnecessary wasted time or room and meal costs.  Now, how’s your blood pressure doing?

Does aircraft charter always make sense?  Not by a long shot.  But is it always the spoiled executive perk that many would have you believe?  Not by a longer shot.

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Delta Air Lines’ recent acquisition of North Carolina-based Segrave Aviation speaks volumes about the airline’s recognition that private aviation / business aviation is a viable part of the air transportation system in the United States.

At a time when major air carriers are reducing capacity, pulling out of small markets, and scrapping to make a profit (which for the most part has not happened in a long time), Delta is doubling the size of its corporate jet charter subsidiary Delta Air Elite.

These guys are on to something.

Maybe they see the real value of a system where General Aviation plays a role that compliments the Air Mass Transit System as opposed to viewing us as the enemy?  More and more, airlines seem to be consolidating into route structures that serve the high-density traffic lanes between major US cities on domestic routes and between major US cities and major centers of commerce worldwide on international routes.

Can General Aviation serve as a feeder to the airlines much like their subsidiary and code-sharing commuter airline partners have done over the past 20 years?

General Aviation has the flexibility to move with the markets of demand much easier than the airlines do. Flights can be added at the spur of the moment as demand changes with travel seasons, or even events such as conferences and conventions where thousands of people move to a city for a three day event.

And we all know, for sure, that General Aviation delivers a much more stress free and efficient travel experience than the airlines have delivered so far.  

So maybe the mantra should be if you can’t beat them out of business, buy them?

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