Plane Conversations

Paraphrased from an excellent article in the Wichita Business Journal by Emily Behlmann:

With all the attention social media is getting these days, (the results) of a recent survey shows that 45 percent said social media was a low priority.  Deanna Harms, executive vice president at the Greteman Group , a Wichita branding agency who lists aviation brands to be a specialty, says business aviation companies, some of the most major brands in Wichita, have hung back on [Social Media] even more than other B2B firms.

Harms says she thinks one reason could be related to recent criticism of business jets as unnecessary luxuries. “Even in newsletters, it’s difficult to get aircraft owners to agree to being profiled,” Harms says. “You’ve heard the campaign ‘No plane. No gain.’ Aircraft owners, unfortunately, often think, ‘No ink. No criticism.’ The minute you start talking about your use of business aviation, the naysayers attack.”

Let’s rethink this:

Social Flights uses social media tools to fill empty legs and sell primary charter “by the seat”.  We also provide limited calendar air service (FAA Part 380 Public Charter).  In addition to marketing, we use these tools to aggregate private airplane operators and their inventory so we can “systemize” a large virtual fleet.

These innovations are a far cry from the domain of the demonized elitist corporate jet owner.  In fact, we are hearing from dozens of small communities who are functionally stranded without access to commercial aviation with very few other practical travel modes. Communities passionately ask us for air- service into a hub like Atlanta instead of bouncing around several regional airports and enduring a 3-hour drive to anywhere.  Millions of American need access to each other and global markets beyond their parochial economies.  People need opportunities – that’s what social media is all about.

You can’t Globalize until you Regionalize

Regionalization is where small communities want direct service to other small communities.  Social Flights is introducing air service between Branson MO, Nashville, Tri-cities TN,  Austin, and Milwaukee. It almost takes less time to drive between some of these places than to fly commercial. The same holds true for Wichita.

It Boils down to Supply and Demand

Meanwhile, hundreds of commuter jets are coming into the market.  Utilization of corporate jets is 1/20 of a commercial jet.  Corporations are looking for increased revenue from their jet assets.  Manufacturers can deliver white tails into a new air-service system to keep production lines steady. Airlines can off load volatility (overbooking and low yield flights) to private carriers, Next Gen air traffic control will open thousands of smaller airports to air service, ironically, this includes Wichita.

This boils down to huge inventory, huge need, greater efficiency, and nobody to serve the market.  Our prediction is that Social media is the glue that will hold this thing together.  People travel across their social graph (Facebook, linkedin, and g+ connections) not to the hub airports, period.  People want to work where they live and play, not just surviving in 1 of 28 U.S. hub cities. People want to go to where they are going.

There is profound opportunity in private aviation and Social Flights is the pioneer.

From Analytics Magazine

Airline accountants and statisticians perform two extremely important functions. The first is called “Yield Management” and the second is called “Fleet Management”.

Yield management is how airlines put the right customer in the right seat at the right price.  Fleet management assigns the right airplane to the right time table at the rights price.  This is the important integration for all airlines.

The Easy Way Outbound

Most charter brokers do not bother with yield management or fleet management.  They hammer hard on sales; they scope out the wealthiest passengers and find them the jet that delivers (to the broker) a profit they can sell up to the passenger for fast turnaround.  They neither expand the market to more people nor help existing clients share a plane among each other.

With proper yield management, a private ticket could “value out’ the same as a premium class commercial fare.  The North American premium class market accounts for 6.6% of all airline traffic and 22.7% of all commercial airline revenue (IATA 2010) of 147 Billion dollars.  Premium travel is a 30 Billion Dollar Industry. General Aviation Manufacturers Association (GAMMA) shows total billing of general aviation aircraft of $7.3 billion.

How to Double Your Market

Applications of yield management can easily double the number of passengers that would take a seat on a private aircraft.  Meanwhile application of fleet management can nearly double the amount of available revenue seats; after all, 40% of private flights are empty.

Today’s private aviation industry has both a fragmented supply and a fragmented demand.  Operators do not communicate with each other, they do not share legs, They do not share inventory, they do not allow customers to talk to each other or share a jet between them.  Even the taxi industry lets people share a cab.  As long as the industry is fragmented, investors, hospitality partners, and most importantly, passengers, will look elsewhere for their investment in time and money.

New Features At Social Flights

Social Flights offers instant quote feature that allows passengers to immediately cost out the price and flight time for a private aircraft between any two airports in the US.   Social Flights then helps passengers communicate with each other so that they know the true cost before they are accosted by a broker.  Social Flights publishes a wide range of aircraft and airports where they may fly.

Social Flights builds alliances and partnerships with owners, operator, passengers, hospitality, and support services so that everyone can see what everyone else is doing and price accordingly.  Social flights posts empty legs, lists events in various cities, and refers service providers that can help out passengers on the ground

Watch us Grow

Keep in mind that each of these features represent initial applications of both yield management and fleet management.  This is a huge innovation for private aviation.  As the dataset increases and becomes integrated, we will begin performing essential calculations that the airlines use to manage their fleets.

Bring your information and inventory to us and let us combine it into new markets and customers – there is a lot more going on at Social Flights than many people realize.

A vertical market (often referred to simply as a “vertical”) is a group of similar businesses and customers that engage in trade based on specific and specialized needs.  Vertical marketing can be witnessed at trade shows. Obviously, the term “vertical” has important implications for the aviation industry and I could not help myself from playing with these words.

At Social Flights, we are constantly researching methods and systems that will cause “the value game” to spin freely.  In quick review, the value game involves the 4 pillars (again, verticals) of our business plan; the operators, the travelers, hospitality industry, and the entrepreneurial community must come together around the shared aircraft.

One of the key elements is finding the skill set for hundreds of entrepreneurs “community organizers” that we will deploy to geographic areas to help fill private airplane inventory in both directions (to fill primary and empty legs). The more that we study this very important community role, the more we realize that the skill set is most dependent on knowledge of vertical (there’s that word again) markets.

Verticals

For example;  We seek to find someone with a great deal of knowledge of the national wedding planner industry who can access the data from all wedding planners and combine it with the data from the Social Flights Network.  Our algorithms will determine matches and the community organizer will create the flights.  Similar Verticals include Life event, holiday, and funeral Industry.

Professional Event:  We also seek people with strong ties to a University where we could locate aircraft to suit predictable needs such as alumni weekend, spring break, intercollegiate tournaments, academic recruitment, and vip lecturers.  The person who can manage this type of relationship can earn a significant amount of revenue on a residual basis for managing and maintaining the relationship.  Similar verticals would include professional events, industry events, and retreats.

Corporate Travel Vertical: More and more companies are looking for ways to save costs on jet ownership while also avoiding the commercial aviation system.  When we look at the data, a significant proportion of travel is going to the same places; i.e., remote offices, branches, production facilities or meeting long term customers and sources.  A person who is familiar with the travel needs of corporations can make an extraordinary income with Social Flights.

So let this be a call to action for entrepreneurs and travelers alike.  Look at your network.  Do you command respect and influence in your vertical?  Are you looking for a way to earn residual income for your social, creative, and intellectual knowledge assets?  Are you good with numbers and can you spot the arbitrage opportunities in raw data?  Then maybe you should consider an affiliate relationship or franchise ownership with Social Flights.

After all, the opportunities are…well….vertical.

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.