Plane Conversations

Social Flights is preparing for release an important document which spells out the relationship that Social Flights seeks to create with private jet operators across the United States.

The document is a written specifically to operators of private aircraft fleets.  Our objective is to demonstrate how Social Flights can increase their fleet utilization, aircraft yields, and overall business success.

The first part of this paper begins with a discussion about empty legs and finishes with a discussion of all the ways that empty seats on empty legs can be converted to cash flow.

The second part of this document discusses the challenges of technology in aviation.  While airlines use big data to maximize their profits, the on-line travel agencies use big data to minimize airline profits.  The resulting game of cat and mouse creates pricing silos that distort markets.

Social Flights can convert your seats to cash flow one way or another, but cash flow nonetheless.  Social Flights restores consistency among the pricing silos so that travelers can compare true door-to-door value of a private flight vs. a commercial flight.  Social flights creates true transparency to increase the efficiency of the market.

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Travel is the most expensive advertising vertical in the world.  Airplanes act as market amplifiers for products, services, and events.  A great deal of marketing value can sit in those empty seats and there is no way for operators to convert that value to cash.  Social media is an amazing marketing tool that can amplify a message across a broad landscape where content is king and reputation is currency.

NextGen air traffic management will increase the number of airplanes that can occupy the airspace, but it does little for ground traffic or traveler comfort – yet this same technology will open smaller airports and private routes to private operators.  Social Flights will act like “code sharing” agreements that the airlines have adopted for years.

Finally; the door-to-door value of the Social Flights experience must include integration with ground transportation, hospitality, events, tourism boards, corporations, communities, and ultimately, economic development policy.  This is where the commercial airlines utterly fail in their profit calculations.

Social Flights air services will provide a platform of shared legs, shared inventory, and coordinate consistent route structures from a pool of operators and aircraft using the same yield management and fleet management principles of a large commercial airline. Social Flights brings these stakeholders to the table, converts their data to a shared value format, and provides a seamless  travel experience that is always unique, always fast, always luxurious, and always safe.

In return, we ask that operators provide Social Flights with data feed to their inventory.  This may require an operator to add a business process to their day-to-day activity, but it is our intention to be able to deliver far more value than what the operator invests.  In short, you will be able to calculate the ROI on your association with Social Flights.

Let’s fly together!

Until we can price all air transportation correctly, we will not be able to price any air transportation correctly.

Social Flights is the premier air transportation company that sells private jet service on a per seat basis.  This is important because there is no other way to compare the time-value of a private jet against the time-value of a commercial jet unless they are priced in the same manner.

Unfortunately, highly competitive markets determine the price of a seat on a commercial airline, not necessarily distance of the flight.  This does not make very much sense – for nearly any other product, you pay for how much you consume. If only commercial airlines were priced like private aircraft: by the mile.

Why does an airline ticket need to be 400 dollars 6 weeks prior to departure and 600 dollars 2 weeks prior to departure, except to maximize profit? Nothing else changes except as a proportion to distance traveled. But think of all the accountants, marketing personnel, and strategic planners constantly manipulating price inputs that have nothing to do with passenger satisfaction.

Every airline use essentially the same types of aircraft, they pay the same cost in fuel, and they have similar direct costs in labor, landing fees and gate contracts.  You would think that a 3000-mile trip would cost X amount more than a 1500-mile trip… all day long, for each and every airline.

This chart shows the actual fuel cost to carry a 200 lb payload 1750 miles between DFW and LAX for various types of commercial aircraft assuming jet fuel price is about 3 dollars per gallon (at the time that this industry study was published).

I did some back o’ the napkin calculations and concluded that a Lear 35 burns 5 times more fuel per 200 lb passenger than an MD-80.  A Phenom 300 is about half of that, or 2.5 times that of the MD-80.  The average would be around 3.3 times the commercial jet.

The Golden Ratio

This is a terribly difficult calculation to make so bear with my assumptions here.  But suppose all things being equal, we can say generally that a private aircraft cost is 3 -5 times greater than the commercial airplane while the door-to-door time is  1/3 – 1/5 the time of the commercial flight.  The factor of 3 – 5 (depending on the comparable averages) puts the cost of the traveler time in parity with the cost of the airline time.

Why does this matter?

Now, some honest comparative market analysis can take place by simply adding and subtracting time and money from both parts of the Golden Ratio to account for various attributes of the trip.  For example: shorter drive to smaller airports, no long lines, non-stop flights can be added or subtracted from the “time” part of the ratio.  Meanwhile; the cost of parking, airport taxes, cost of food, cost of lodging, and the cost of traveling to your final destination, etc., can be added or subtracted from the cost side of the ratio.

The Data will set us free

To liberate this information is to empower the traveler, the operators, the community and the hospitality industry to make rational decisions.  Communities can design rational incentives for tourism.  Corporations can make rational decisions for employee travel, and economic planners can make rational investments in intermodal transportation.

25% of Airline Delays Due to Volume

Have you wondered recently why air travel seems to have gotten worse but you can’t exactly understand why?  Are more people traveling?  Is the economy going gangbusters?  Is Social Media bringing the world together?

A quick stroll through the transportation department bureau of statistics is truly revealing.  The airline industry is methodologically reducing capacity AND increasing profits.  This does not make sense – how can any product sell less and make more?

For example:

The number of domestic flights has reduced from just over 10 million in 2005 to only 7 million in 2011.  This is the same number of flights as 2000

Revenue passenger miles have fallen from 570,854,623 to 473,968,295 over the same time period. That is roughly 100,000,000 less seat miles flown.

That makes sense because available capacity has dropped – seat miles have diminished from 739,841,385 to 571,129,091

Meanwhile load factors  (passenger-miles as a proportion of available seat-miles) have jumped from 77% to 83%.  Yup, that means that airplanes are a lot more crowded.

So then it should not be surprising that 25% of all delays are from overloading as airlines pull away from smaller airports and work the hubs harder.

Well, we know that aviation is a difficult business and that the industry racked up major losses but things are better now right?  The industry profits are well over 5 billion dollars.

But where is this money coming from? Well, first the reservation change/cancellation fees collected are 2.3 billion dollars in 2010 – this is the money that we pay the airlines for delivering ZERO service, seriously.  The baggage fees collected are also over 3 billion dollars. So there are $5B in fees and $5B profit…do the math.

Does anyone see what’s happening?  Can anyone see what direction these trends are headed in?  Does anyone see the alternative?  We do – the future opportunity is to build an alternate system of non-stop service using public charter certification on private jets.  If you are a traveler, set yourself free.  If you are an investor, Social Flights is a magnificent opportunity getting better every day…

Google Search for the term "Jet Charter"

Google Think Insights is an amazing resource for looking at who is searching on certain terms, and from where.  This post shows two search categories and related terms from which we can draw several general ideas about private air travel.  These data demonstrates that an increasing amount of people are searching on terms such as private jet, jet charter, VIP travel, etc.

Another curious trend is the term “Jet Charter Cost” is also increasing significantly as people seek to find the value threshold for private air travel vs commercial air travel.

Recession or transition?

These data all refer to a date range between the dates of january 2008 and December 2011 corresponding to the greatest economic downturn in the US since the Depression.  There are likely many forces acting on the market including the pullout of commercial aviation from minor market, few travel alternatives,  increased usage of internet search technology, increased business travel needs, and upper class growth rates.

The increase in terms related to cost may suggest that even the most wealthy are becoming cost conscious, more people want to fly private, more businesses need to fly private in order to access their market, and more VIP travel is required.

It is not surprising that the term “business aviation” has a similar location density to the term “Jet Charter”.  This reinforces the suggestion that corporations increasingly need to send their executives on travel outings.

Social Flights is in the business of social organization too:

It is likely that wherever executives go, so too will managers and lower level employees.  Social Flights has long suggested that there is an opportunity to increase private charter shuttle service between key locations.  Likewise, there are opportunities for companies to share private aircraft scheduled to fly between regions.

Next we looked at the term “VIP Travel” and identified the following locations where the terms were searched.  We found a similar increase in VIP Travel related terms as we did for terms related to jet charter costs, except related to supporting services such as reservation, booking, schedules, and services.

This suggests that the door-to-door experience is underserved and that an air transportation service that is able to connect the dots would hold a true value advantage over one that just drops the passenger off at a hub airport.

Search terms are important because they indicate the intentions of a market.

While little is ever conclusive, the rate at which something changes can say more than the thing being observed alone.  At Social Flights, the demands of a dynamic market are clear.

1. Companies must have business travel options.

2. A door-to-door value proposition is essential.

3. People are searching online more than ever

4. The commercial airline industry leaves a market underserved.

Economic recessions have been shown to be more about technological transition and adjustment rather than any single underlying factor.  We believe that this transition will be no different.

All of us at Social Flights extend our deepest holiday wishes to all the people who have supported us during this our Launch year.  A lot has happened since February 2011.  We thought we should report to you what has been accomplished and some new developments underway:

Over 13,000 people have joined Social Flights Traveler’s Network receiving unlimited access to the following services:    

• Over 90 Private Charter Operators have joined the Social Flights platform.
• Over 500 aircraft are available in the Social Flights Virtual Fleet.
• Social Flights website can now deliver an instant auto quote under our “Create a Flight” option.
• Social Flights Allows you to embed our quoting feature in your website
• Social Flights Developed a full suite of Community Airline services for small cities that are losing – or never had – airline service.
• Social Flights allows members to create alerts to desired locations or invitations to join a flight formation.
• Social Flights assures privacy with our internal networking features which are never released to the public domain.

Beginning next year:

• Social Flights will expand scheduled public jet charter service through the community airline program to smaller markets and even “stranded” communities.
• Social Flights will expand one-way flight program from 100 per day to over 1000 per day
• Social Flights is building out the affinity travel and social jet charter service to include colleges, Sports, concerts, conventions, events, tourism, and family travel.
• Our Elite Travel Services division will initiate international social jet charter service between the US and China as well as Latin America.

To our Partners:

Our partner network is growing to include hotels, Concierge services, tour operators, marketing firms, Facebook page owners, event managers, and economic development agencies.

Our partner network will continue to grow to serve the traffic that we now steadily deliver hassle-free to your communities.

These are the highlights off the accomplishments this year and some insider information on what to expect next year. 

If you are a traveler please invite your friends and colleagues to share a jet.  If you are a community or event organizer, please keep in mind that we are here to serve you and your community travel needs.  If you are a certified aircraft operator, let us help you increase utilization of your inventory.  If you are a hospitality or experience service provider, please let us help you build travel packages around the freedom of flight.

Few people get on a commercial airplane to enjoy the fine food, friendly conversation and sensational view – but that may change as KLM continues to innovate in social media.  Some may remember that KLM was the first to provide on-demand service from Europe to Miami booked entirely through social media.

This time, KLM is banking on the fact that people who have both an origin city and a destination city in common, would have other things in common as well. KLM observes that people share information with each other so freely on social media- so maybe they’ll share information with each other on “Social Airlines”.

Will something get lost in the translation between the virtual and the reality? Fortunately, Anne van den Berg was kind enough to provide Social Flights with a translation of her Dutch language blog,  Editor Anne Daily:

You always have to wait and see who will sit next to you on an airplane. A crying kid or a smelly man, it is not always fun. Soon, this can be in the past. The Dutch airline company KLM will be offering seating suggestions based on someone’s Twitter or Facebook account. The goal, says an executive from KLM, is letting, mainly business, passengers network. I am very curious how this will work. 

Well, we are asking the same questions at Social Flights.  In fact we are attempting to fill small aircraft on direct flights based on a similar assumption that people of like interests would choose to share an airplane together.  While the KLM starts with a full plane and sorts people by interests, Social Flights hopes to go one step further and use such data to “kickstart” scheduled “flash Charter Jet” service.  So while KLM sees an important branding advantage, Social Flights sees and entirely new paradigm for air transportation – public Charter Jets.

Anne van den Berg continues with the following analysis:

- What kind of customers are you serving? I wonder, what customer are waiting for this service? Personally, I like having some conversations with my neighbour in an airplane, but, mainly when I return from a trip, I want to sleep. Nó contact. If someone will come and sit next to me with the expectation of discussing the state of the world in a highly intellectual manner, it is very probable he will be deceived. 

- And what about privacy? I expect that customers will have to do an opt-in, but do you want to give everybody insight in who you are? If you put your Twitter information out there, sure that is public already, but Facebook? That is mainly meant for family and friends (although some people will stretch that definition). 

KLM has since disclosed in this CNN article that mutual acceptance to use the social seating tool will be required. KLM was quick to note that the intention is not to create a dating game and they did not disclose if they would charge an extra fee for the service. Further, they they did mention adding any amenities in support of the friendship event.

This leaves me wondering what the implications of being “unfriended” in virtual space and reality space at the edge of physical space.  In any case, Social Flights will be watching KLM developments actively. Thanks Anne for the tip and translation on this story – let’s share a flight sometime.