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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When you go into a store to buy anything, the rational person will always compare the quality of the object against the price of the object versus any alternative products or markets.

When you buy a home, the property is characterized by descriptions for “quality” (construction, neighborhood, schools) and a series of  ”quantities” (number of bedrooms, square footage, price)

When you cross the road, you look both directions in order to assess the quantity and the quality of the traffic that may or may not kill you.  Are the traffic slow moving pedestrians or are they fast moving trucks?

When a bank makes a loan, they “quantify”  all of your valuable things like your home, cars, 401K, and personal income and they use the credit score to measure the quality of your finances (debts, credit pulls, past history, bankruptcies, etc).

Supply and demand cannot, absolutely cannot, be determined by any other means other than by measurements of quantity and quality.

In fact, economics is the science of incentives where the fundamental graph is the supply and demand curve.  Both supply and demand behave according to inputs of quality and quantity, specifically price and availability.  Supply and demand for anything absolutely cannot be determined by any other means than by coordinates of quantity and quality.

Investors manage risk.

Risk is an asset, if it weren’t, insurance companies would not exist.  There are three things that an investor must know in order to manage risk.  1.  They MUST be able to identify their exposure to peril.  2.  They MUST be able to estimate the probability that the peril will or will not impact them.  3.  They MUST be able to determine the cost of the consequences in the event that the peril happens.

Again, within the definition of risk – to which ALL INVESTMENT RESPOND, are the characteristics of an asset; what is the quantity (1) and (3) and what is the quality (2) of the peril.  If the investor does not CLEARLY SEE these three positions, they will not invest. Period.

This is what drives successful markets and what kills unsuccessful markets.

To ignore the fact that all rational human behavior, intentions, decisions, reactions, conversations, relationships, education, ideology and every other state of human consciousness in a market, corporation, community, family, or social network ARE NOT characterized in the form of a quantity and a quality, is frankly, ignorant to ones market, irresponsible to one’s community, and incompetent to one’s profession.

Yet so many people do not see themselves as an asset.  Maybe someone should give people permission.

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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 yesterday’s Conversational Currency, our good friend and provocative thinker, Dan Robles, shares some powerful insights as to how Social Media can be used to allow people in large urban areas to share the cost of big-ticket items they don’t need regularly, specifically cars.  The ZipCar company he cites is a great illustration of how this can work.  Now, let’s stretch our minds a bit and put that concept into a private aviation setting.  Aircraft used on the ZipCar model really is using Social Power by the Hour.

Social Media Power By The Hour

Making human knowledge and intentions tangible in a market place opens up the possibility of a whole new class of business plans.  We call this Social Power by the Hour.

A Social Trifecta

1. Obviously, Social Media is powerful.

2. Fractional ownership or rental of assets is an emerging trend in our environmentally, geographically, and monetarily constrained economy.

3.Vendor Relationship Management (Doc Searles) promises to change the shape of traditional advertising in the future.

What if we combined all three?

ZipCar is an excellent example of the fractional membership for automobile transportation. There are many advantages but also huge drawbacks. $7.00 per hour is a lot to add to a casual lunch at a sidewalk café or any social experience.   Then there are all the lost options like the one-way-trip, guaranteed availability, all those rules and regulations.  So, it’s pay now or pay later.

Social memberships

What if your friends in the social network also had ZipCar memberships and the scheduling were interchangeable?  Suppose you could find a ZipCar anywhere and park one anywhere?

Now, enter the Vendor of goods and service. What if the Vendor were to subsidize the cost of the ZipCar to bring 4 people into the restaurant, club, or event?  What if amusement parks, zoos and art exhibitions helped pay for full car-loads of friends to drive themselves to events?

The Vetting Mechanism:

What if the real social value of the ZipCar could be compared to car ownership for each intended trip?  How would this influence your decision to drive, plan, or combine events into your user experience?  What if Vendors could influence that cost to drive incentives?

Power By The Hour Game

The Above schematic is What I’ll Call the Social Media Power by the Hour Game. Everyone is part of the same social network and can talk to each other.  Each Box represents a player that can influence the cost of the power by the hour. The True Value Calculator keeps score by comparing each transaction value to the equivalent car-ownership or public transportation value.

Set your filters and wait for the proposition…

Instead of scheduling, everyone (including passengers, vendors, social network) start by setting a bunch of filters that represent their approximate intentions.  The system compares the intentions with ZipCar locations and compares it to the True Value Calculator.  When a suitable transaction is in play, all the players are notified.

Once the game starts and enough people play, statistically, there should be ZipCars distributed proportionally around the city and all vendors will be managing their marketing campaign with 100% ROI on their impressions.  The system will become a self optimizing money game.

A fully convertible currency

At first, this may seem like an application to sell ZipCar memberships, but actually, it is selling odds and entrepreneurs are placing bets.  The ZipCar is simply a mechanical device that converts social currency into money.

A few Scenarios:

Scenario 1: When a vendor notices a group of friends going to the mall, they can pay for part of the ZipCar with a lunch coupon.

Scenario 2: Amusement park or event promoter can see when a family has no plans and can offer a free ZipCar to them

Scenario 3:  The bigger your social network, the cheaper it becomes for you to drive a car

Scenario 4: Vendors can bid for the ZipCar audience with Packages of discounts, coupons and also earn impressions and trust.

Scenario 5: Friends can see what other friends are doing and can jump in the same ZipCar

Scenario 6: ZipCars can be parked densely at events since you will not necessarily leave in the same car that you came in.

Scenario 7: As soon as you park, the zip car becomes available for someone else.  As soon as you need one, there is a high probability one is parked close by.

Scenario 6: ZipCar options can be traded like currency to buy things on, say, Craigslist

And many many many more……..

End result: The bigger your social network, the cheaper your Power By the Hour.  The bigger the social network, the more effective WOM marketing becomes.  The bigger the social network, the more options are available to users.   The greater the social network, the more SOCIAL VALUE a ZipCar membership will have in comparison to independent car ownership. The bigger the social network, the more social currency can trade hands as the Dollar fails.

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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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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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How are we doing with the strategy of  applying social media and its associated technology to communicate to the market?

Our company made a decision back in August of 2009 to engage with the market through this blog site and through other forms of social media including Facebook, Twitter and LinkedIn.

That decision led to the launch of www.PlaneConversations.com on October 5th. We have to date published 136 posts and I thought it might not be a bad idea to let my fellow aviators know how we are doing in this new work.

We have tried to communicate relevant ideas and thoughts on what is going on in both the General Aviation and the Airline Industries. We have voiced our opinions and a few have listened.  Some days have been good and some days not.  

Here are a few things we have learned so far:

• Although free, for the most part, social media takes time because, ultimately, it is about communications.  As we started communicating to the market and to our peers, we had to take the time to think about what we wanted to say and we had to take the time to listen to what everyone else was saying.  So, free isn’t really free.
  
• We have met people, built relationships and had conversations that, without the use of social media, would never have happened. We can no more assign a monetary value those relationships than we can assign one to friends and family. Instead of constantly thinking about what it will do for our business, we have learned just to focus on getting to know people and whatever happens, happens.In any case, by developing these relationships we have been enriched, we have grown and we have benefited. Hopefully those we get to know will benefit as well.
• We have learned that there are voices out there speaking passionately about general aviation and about the value proposition of flying in one’s own aircraft or in a business jet. Compared to the total population of general aviation businesses, the number of voices is small, but it is growing and new voices are heard each week.
• We have learned that it is not about accumulating Twitter followers or Facebook fans. Amassing numbers of followers does not translate into sales or some type of return on investment. It is about the quality of the relationships built and not about the quantity of “followers.”
• We have seen that our counterparts at the airlines have still chosen, for the most part, to remain disengaged from the conversation. They are still using the traditional models of big media, PR machines and for-hire voices to sell their message. I don’t see any high level airline executives talking directly to the market and engaging. Will they wake up or not? Time will tell, but so far they are still hiding under the rock.

I am not sure how many hours I have personally spent writing, researching and conversing with people but it would be hundreds of hours by now.  Writing a blog while leading a business in an industry that has been in economic crisis mode for 18 months has not been easy. I gave up an extra hour or two of sleep each day to keep my writing from interfering with the day to day task of keeping our company going and succeeding. Some days it started to seem like work but most days it was more like fun and the passion to communicate has grown as I have pressed on. I believe it has made me a better communicator to those with whom I was already regularly communicating- fellow employees, customers and vendors. They may or may not agree with that.  If they don’t agree, they have ample opportunity to let me know.  That is what being social is all about, yes?

So, is the social media effort worth it? Yes, it is.  Has it made our business better?  Has it given me a better understanding of the market and those we want to reach?  Yes, it has!  Am I able to translate it into an ROI or quantify the results financially? Not yet, I can’t.  However, time will tell; so, give it a year  and we will see!

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Aviation supports a role in society that is analogous to the Internet itself. While the hard work gets done at the points on the ground, Aviation provides the diversity of ideas that can congregate.

Sure, Twitter, Facebook, and Linked in are great for broadcasting across the globe, but nothing can happen until the rubber meets the tarmac. Emerging trends in the Last Mile of Social Media portend opportunities for Private Aviation.

The following video describes how the components of the next economic paradigm must act locally, but share globally. For anyone wondering what to do next or where the great opportunities are, think about building out the Last mile of Social Media.

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I have been around private aviation all of my life - literally grew up at the small airport; so, I come with a different perspective of private aviation than the majority of travelers in the United States and, for that matter, in the world.

I had probably ridden on hundreds of flights in small airplanes before I took my first ride on an American Airlines 707 in 1967.

As a kid, I took it for granted that flying somewhere in a small airplane was normal and, for sure, fun to do.  I never really thought about how efficient it was or wasn’t. For kids it is not about efficiency and time; it is about the experience of the moment. So, riding on the 707 for the first time was maybe the coolest thing I had done in my seven years on this earth. Riding with my Dad in a Piper Cherokee Six was just plane fun, but it was an everyday thing.  

When I grew up and went to work, it all became about time and efficiency and less about experience.  The world is now moving at the speed of the internet, which did not exist when I was a kid. I am in a business that provides aviation services, including private jet travel. Now, it is all about efficiency, time savings and the experience wrapped up together in a 500 mph machine called a business jet.  

I still ride on the airlines a lot. I can’t afford to fly on our own aircraft on many trips, because it is just a couple of us traveling and it doesn’t make sense. So, I reluctantly go through the same drudgery that every other road warrior goes through because sometimes you just have to go and price does matter.  However, I know what the experience of flying private aircraft is like.  I think about the problem of making it affordable, so that the many can experience what the few know to be a really great way to travel. I think about it some days until my head hurts.

A lot of technology inventions start out expensive but they become affordable for the masses. Not yet with the business jet! 

Do you remember the first price of the big screen plasma TV? Was it $7000 dollars? I looked at the sales ads on these TV’s for three years and month by month the price went down.  When the prices went below $1000 for that same $7000 TV, I was the proud owner of the not-so-new technology, but still nice TV.  

So how do we make Private Aviation affordable for the many and not just the few?

It already is affordable in many instances, but the market is just not aware of or may not be ready to fly in a small, single-engine, prop plane like I grew up flying around in.

So you want to fly only in an aircraft with two jet engines?  Today, that is not affordable relative to the airline prices when you have to buy the whole aircraft even though there may be only two people traveling together.

I am not sure if the exact number is out there but my guess is that less than 5% of all travel by air is done through private or general aviation.

So the “few” today is a small number of the market, but through innovation, the “few” needs to become the “many.”

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