Plane Conversations

Airlines are taking a beating from on-line conversations.

In yesterday’s article titled “Four Strategic Social Experiences” we illustrated, using a word cloud, what a consumer might find if they were searching for shared experiences about a particular airline. Not good.

A new report from PhoCusWright finds that “Flyers are essentially giving airlines a grade of C+, which is barely above satisfactory,” said Carroll Rheem, director of research for PhoCusWright. “But even more concerning for airlines is that their most valuable customers — business travelers and those with higher annual household incomes — are even less happy than the average.” Airlines are stuck in a spiral to the bottom.  They all compete on price and subsequently as margins get squeezed so does service.

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The beginning of online travel created new business models that changed the dynamics and relationships with buyers.  Now with the advent of social technology the dynamics are changing again.

instead of the traditional travel site being the brand the brand has become the traveler.

As a result, the present online travel bazaar has become a race to become more social. Technology and savvy buyers have dramatically changed online travel over the past two years. The app market, for instance, has swelled from virtually nothing to billions of dollars in just a few years, and smartphone owners love their access to a gaggle of Wi-Fi finders, flight status updaters, local restaurant finders, budget booking assistants, translators and more.

Websites offering unique travel-oriented services have made a strong showing, too. They include Wanderfly, a personalized travel recommendation travel engine à la Hunch and Pandora; and GTrot, a site that allows travelers to share their itineraries with friends and get travel advice within their networks.

Applications like these will continue to grow, improving the efficiency of the overall industry by improving the connectivity of air travel information between flights and friends.

Chasing the Lowest Common Denominator

While on-line applications enable travelers to connect and collaborate, few if any do anything to improve the travel experience. Commercial airline travel experiences are abysmal and getting worse. While the efficiency of commercial air travel for consumers and businesses has diminished could there be a better alternative emerging?

Social technology will not enhance the value of on-line travel sites enough to improve pricing.  Social technology has become a “must be” rather than a differentiator and it, by itself, doesn’t change the lowest common denominator, price.  Finding “best” prices has become easy given the power of search and the recent introduction of Google Flights.  Finding the best experience and the highest value has become difficult but may change soon.

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An airplane moves people and connects them with other people and things.

The internet connects people and moves things.

Airplane operators know that using aircraft can be an expensive proposition. Use of the internet is free. If you combined something expensive with something free what happens?

Do Private Jet Operators Understand The Implications?

There has been a saying in the private jet business: If you have to ask the price, you can’t afford it. People who use private jets generally haven’t hunted for the best prices because it’s a status thing. These two statements used to be foundational truths in the private aviation business. But things are changing.

There are a finite number of wealthy people and/or corporations who desire to own or use a private jet regardless of the cost. Most charter operators have chased all the wealthy people for a sale so operators end up chasing the same customer over and over. Even the wealthy are feeling the economic pitch and shareholders are questioning the cost of and need for private aircraft.  Now charter operators are being pressured to justify and lower their cost. Cost has become transparent thanks to the internet.  Yet most operators do not fully understand the implications of transparency and social technology on old business models and methods.

What Are The Implications?

Business travelers and affluent individuals are becoming disenchanted with commercial flights, crowded airports, flight delays, and inconvenient schedules. These travelers are looking for alternatives to save time and reduce the hassles of commercial air travel. So they go to the internet to examine private aviation alternatives. What do they find and see?  At most, Web.1.0!

When you do a search for “private jets” or “private aviation” what comes up on the first page are listings of jet brokers (those that don’t operate or own any jets). You also see lots of references to “cost per hour, fractional jets and a host of other terms that are foreign to buyers”.

So let’s say someone decides to click on any of the links. They end up on a static web page with pretty pictures of expensive jets and self- proclaimed accolades of how great this company is then an 800 number to call for a quote.

So if someone looking for an alternative to commercial air travel hasn’t already lost interest in their search then the next step is to actually make a call. Then someone answers the call and begins asking questions to the caller of which the caller has no idea what they are talking about. Not wanting to sound stupid the caller fakes their way through the dialog expecting to get a quote at the end of the call. Instead the broker/operator says “can I have your email or number so I can get back to you?”

If the buyer agrees it then takes the broker/operator at least half a dozen phone calls, faxes, or emails, before you can get a charter estimate which may or may not be correct. Then the operator/broker emails you the quote of which has so many disclaimers and its format doesn’t make any sense to the buyer. All this, and you have not boarded the plane yet.   Besides that all he buyer wanted to know is what is my seat cost and what I get for it.

By now operators are reading this saying “You don’t understand our business model, we don’t sell seats we sell jets”.  To which I would say “I know but every jet has a certain number of seats and the total cost is represented by a cost per seat, full or not.”

Broken Business Models

According to a Forrester’s recent report, there are about 53.8 Million socially engaged eBusiness travelers in the United States alone. A new market opportunity for private aviation. It’s all about the passenger – they have the money.

Certainly not all 53.8 million business travelers would consider private aviation as an alternative travel option. But let’s say 1% would which means 53,000 potentially new customers.

The private aviation industry couldn’t imagine having 53 thousand new customers because their mindsets are frozen in old business models and expensive archaic operating processes.  Today’s charter revenues barely cover the aircraft management and operational costs, and almost never reach levels necessary to cover an aircraft’s cost of ownership. At the same time in the charter world an aircraft flies empty 40% to 60% of the time.  What a waste!

It is time for a revolution in innovative private aviation business models if the industry wants to capture the significant growth opportunity fueled by demand from disgruntled business travelers looking for viable alternatives.

Old mindsets are saying “You don’t understand how we operate”. My response is “You don’t understand how to change the way you operate”.

-Ralph Waldo Emerson “Who you are speaks so loudly I can’t hear what you‘re saying.”

Stay tuned for “What Would Jet 3.0 Look Like?”

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Alfie Kohn, author of  No Contest:The Case Against Competition writes:

Noncooperative approaches . . . almost always involve duplication of effort, since someone working independently must spend time and skills on problems that already have been encountered and overcome by someone else.

Sound familiar?  Look around and in almost every industry you see competitors beating each other into the ground while reducing the end value to the customer and increasing cost.

Julie Browser, of IBM writes “The traditional concept of business as a “winner takes all” contest is giving way to a realization that in the networked economy, companies must both co-operate and compete. Termed “co-opetition,” this new perspective requires companies to create business strategies that capitalize on relationships in order to create maximum value in the marketplace.

“Co-opetition”– a model in which a network of stakeholders co-operate and compete to create maximum value — is one of the most important business perspectives of recent years. Internet and mobile technologies have made it even more necessary for companies to both co-operate and compete, by enabling relationships through information sharing as well as integrating and streamlining processes.

In today’s networked economy, co-opetition is a powerful means of identifying new market opportunities and developing business strategy.

Take the private aviation industry.  Everyday thousands of private jets fly empty. Those who charter jets pay the round trip cost of a jet whether they use it round trip or not.  The process creates what is known as “empty legs”. Empty legs are usually one way trips flying empty and yet already paid for by somebody.  Most Private operators try and sell the empty leg at full charter prices and thus few ever sell an empty leg.  Empty legs represent seats unused leaving revenue in the air.

What if these private jet operators shared all their empty legs with the public and sold seats on those legs?  By cooperating they would expand their markets, create value for consumers and generate more revenue.  But many won’t do that because they view themselves as competing with each other rather than cooperating.  In the meantime revenue is lost to the air. In this case they end up doing less alone rather than more together.

Business is both competition and co-operation

In the past, people saw business as a “winner takes all” or “zero-sum” game. The networked economy moves away from these purely competitive plays to recognize cooperative relationships that leverage value created by those in the network. Competition — the other aspect of co-opetition — occurs after businesses have created new value in the market and expand the value proposition through quality and creativity.

Social Flights business model is about creating cooperation with private jet operators with the aim of expanding the market and creating new value for all parties involved. For it to work the suppliers must cooperate in order to gain increased market share through new value offered to travelers who in turn create new revenue.

So, will you consider cooperating?

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Good ideas travel easily and far along trade routes.  Ideas like irrigation, Apples, grapes and wine spread along the Silk Road. The paper and writing spread new ideas leading to increased literacy, the scrapping of old philosophy and the creation of new social orders. The printing press then led the way for today’s mighty publishing Industry.  But don’t forget a simple fact, travel is the substrate of the next economic paradigm.

Ideas: A Chain with many Weak Links

Seth Godin wrote a wonderful article about the publishing industry called The Domino Effect.  He observes that:

1. The middlemen (bookstores) have too much power to limit shelf space.

2.Authors are separated from their readers and don’t have the data to contact them directly.

3. Pricing is based static, slow, and largely irrelevant of content or any form of supply and demand which is of little benefit to the reader or the author.

4. Ideas from books travel much farther and faster than the book itself which does not translate into book sales.

Mr. Godin’s point is that given how important books are, the Chain has many weak links between the author and the audience. Publishing is due for an extraordinary disruption and Seth is going to change it with The Domino Project.  But how many other industries suffer from the same weak-chain syndrome?

Travel: A Plane with many Weak Links

Well, if Books and Travel spreads ideas along the Silk Road, then they must have a lot of other things in common.  If we apply Seth’s observations to the commercial airlines:

1. We see that Airports and airlines have tremendous power to limit gates, times, and availability of routes.

2.  Airlines have no idea why they are carrying all those people around.

3. Pricing is static, segmented, slow, and has very little to do with the actual supply and demand for travel.

4. Travelers are transporting ideas which move faster and more broadly than the aircraft itself and which does not translate into more airline tickets sold.

Where ideas spread; value is created

What is so powerful about ideas?  Most innovation gurus discount raw “ideas” as the useless drivel of idle minds. “Show me the money, not the ideas”, they bark.  If ideas are not innovation, then what are they?  If Ideas are not valuable, then what are they?

The Travel Economy

Travel technologies and applications are being sold for incredible sums of money.  Every airline merger is big news and every geolocation application is huge business.  Travel data is a lightening rod for everything from pricing to privacy.  Social Media applications are getting that migration routes are an excellent marker for “value flow” and therefore, cash flow.  Airline Travel is still the most favored mode political disruption because the links in the economic chain are so weak.  Travel is serious business.

The “New Value” Integration:

Every industry with weak links between production and end use are candidates for disruption in the great integration. Any idea that can strengthen the link in the chain between origin and the destination of an idea is a product of the great integration.  The Social Value creation process and astonishing opportunity will happen at the weak links between origin and destination of any product or service.

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Part 1:

This past week I spent a quick seven days in China, mostly in Beijing, but also a couple days in the south in Shenzhen and Zhuhai.

Zhuhai is the host airport for China’s International Air Show that promises to grow in importance over the coming years. The format of the Air Show was a combination of performance by jet teams, with exhibition halls and static display of aircraft on the tarmac – both military and civilian.

China’s national aviation industry company – AVIC – dominated the exhibit halls with mockups of military, UAV, airline and even small general aviation designs of the future.

Besides the day at the Airshow we also got to visit an FBO / Charter base in Beijing of Deerjet, which presently is China’s largest corporate jet charter company. Deerjet is a wholly owned subsidiary of Hainan Airlines and operates under the authority of the airline’s authority to fly both domestic and international flights. Over a short few years Deerjet has grown its fleet of mid and heavy corporate jets to 35.

In conversations with various people in country about how GA is developing, the prevailing opinion about the use of corporate jets so far is that it is primarily for pleasure flights for the newly created wealthy. I did not see many smaller GA aircraft – light jet, turboprop or piston singles. The few aircraft I did see on the ramps at three large airports were Gulfstream, Challenger and Hawker 800 series.

For the elite, the prestige of showing up in a Gulfstream matters more than price or efficiency.

The “Fixed Base Operation” as a support for GA is almost non-existent at this point. Which comes first – the aircraft or the FBO? I guess it will be the aircraft and then the FBO may eventually show up at airports to meet the demands of private jet flights.

In a country of fast growth, huge geographical scope, and 1.4 billion of the world’s population there has to be a tremendous opportunity for GA in the next 20 years.

Our company, along with Middle Tennessee State University’s Aerospace Department, will host a delegation from China in December that will have focused discussions on general aviation trends in China. The delegation will include legal scholars looking at airspace laws, members of the CAAC and senior managers of a China GA company.

This trip to China was an opportunity to meet people, build relationships and get a first hand view of what is happening in the GA sector of the aviation industry. The buzz in media and government in the country indicates that the government recognizes the value of a developing GA industry and the benefits in job creation and economic efficiency.

They have not figured out just yet how GA works as it does in the US and Europe, but they will figure it out. How long will it take and how fast will it grow are the bigger questions.

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09/24/10

It’s Friday Down Under - the last day of our General Aviation flying adventure.  The nearly one hour drive from mid-town Sydney to Bankstown Airport gave us plenty of time to discuss today’s mission.  Unlike other mornings, this day began with a crisp, blue sky and light winds.  And, with a high pressure system keeping all clouds away, we were really pumped up for the flight.

Tim chose to fly a reversal of our previous flight.  This time, we toured Sydney first, before heading off to the south for some low level (500 foot) coastal flying.  We finished up with a trip inland towards the Blue Mountains and the gorgeous views the ravine flying provided.

Today, Bankstown Airport seemed to be as busy as Atlanta’s Peachtree DeKalb Airport.  There are three parallel runways at Bankstown and all three were in use. We were number five for take-off on Runway 29 Right or just the “Right” as they say here.  We heard the new call from the tower of “Line Up and Wait” just as we called “ready” at the Holding Point, or the Hold Line, as we say in the States.  Almost immediately, we were cleared for take-off directly behind a older Cessna 172 which was lifting off.  The Cessna planned to depart in the same direction that we did; so, since the SR22 is quite a bit faster than the 172, Tim had to make allowances to keep clear of the aircraft before overtaking it.  Off the ground, we overtook the 172 even before exiting the Class D airspace and beginning to look for our visual ground reference points. 

Within ten minutes, we were over the Pacific at 1,500 feet awaiting our clearance into Sydney Harbor, which came right as planned.  (We had filed a VFR flight plan before departure to let them know we were coming.) Inbound on the Harbor Scenic One, we were advised to watch out for an Airbus 380 that had just departed towards our direction.  We picked it up visually at about ten miles - quite a distance, but at 747 big, the Airbus isn’t hard to see.

Making our two orbits over the harbor, we departed back towards the coast and were cleared for our low level coastal flying.  We flew down past Botany Bay and Jibbon Point before heading on to Seacliff Bridge.  This time we saw no whales, but the views were still magnificent.

Maintaining a listening watch on Sydney Radar 124.55 and with a right climbing turn, we now headed west towards Lake Burragorang that sits surrounded by the painted canyons of the Blue Mountains. We crossed the ridge on the south side of Lake Burragorang, then dropped below the ridge line and flew up the lake.  The only hazard we had to watch for was a power line draped over the north end.  We saw absolutely no one on the lake and no signs of any development at all.  Talk about getting away from it all…we were there!  We agreed that today was the best flying day of the trip.

Turning towards home, Bankstown, the pattern was just as busy as as it had been when we left an hour and a half earlier.  It sure was comforting to have the Cirrus Skywatch Traffic system alerting us to other aircraft. Tim used this to pick up the closest threats before slowing to blend in with the other approaching traffic.  We were number four for landing!

As we rolled out on final, the controller cleared us for the Center runway and that was that.  Tim greased the landing and taxied us back to Regal Air to say our good-byes and to give our our thanks to our new friends and to the aircraft that gave us such incredible views of Oz.

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09/22/10

Tim’s concert in Sydney was a smash hit with an overflow crowd.  After that incredible experience, he was able to make another flight around the beautiful Australian countryside.  With expert help from Regal Air and Peter Edwards, we planned a journey West via the Blue Mountains where there was some fantastic flying and scenery along the canyons.  We weren’t more than 20 minutes away from Sydney, but there was effectively no population at all.

Turning back to the east, we climbed up over the hills and made straight for the coastline in the hopes of catching a glimpse of whales again and to set up our arrival for the Harbor Scenic One flight around Sydney Harbor.  As we flew along the coast at 500 feet, one of Tim’s daughters spotted a whale.  Although, this one did not stay surfaced as long as the ones up north had, it didn’t matter.  The most important thing to her was that she saw a whale and that made her trip. 

Crossing the controlled airspace boundary to the north, I radioed in to get what, in Australia, is known as an “Airways Clearance” to fly the Harbor Scenic One.  That is just a clearance much like what we get in the United States to fly into controlled airspace.  The Australian version has very specific visual check points and a strict altitude of 1500 feet.  We orbited twice over a check point before receiving our proper transponder code and clearance.   I  hope that the video I shot of the route turns out well – the flight was beautiful.  This tour took us directly into Sydney Harbor approaching the famed Opera House and Sydney Bridge.  We made two, 360 degree turns to the left before departing to the northwest.  Once clear of the airspace, we dropped back down for some more coastal flying.

We navigated visually to the Brooklyn Bridge (they have one here too), which is the starting point for the visual arrivals into Bankstown.  We proceeded to Prospect Reservoir for the final check-in with the tower.

Tim had a 15 knot cross-wind on final and he greased the landing.  After a few photo ops, we were back in the car and headed back to the hotel with some happy passengers, as well as two happy pilots who are still amazed to be flying in Oz.

Cheers!

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09/20/10

G’Day!  We were supposed to fly into Melbourne, but as is the case in all flying, sometimes the weather just doesn’t cooperate.  Melbourne’s weather was gusty with cold winds and low ceilings; so, we chose to bypass that part of the journey and remain in Sydney…perhaps another time.  Sunday, we let the SR22 rest and I did some sight seeing with the family.  

But on Monday I went out to the Bankstown Airport.  I traveled via the train and bus system since a taxi would have cost more than $100 each way and would still taken 40-50 minutes. I had a multi-day rail/bus/water taxi pass for $54; so, I tried it out and with some help of the locals (remember I had passed the English proficiency exam).  The bus dropped me off just at the street’s edge of the airport with just a short walk to Regal Air.

Backpack loaded, I strolled into the hangar where I met Peter Edwards the owner and director.  Regal Air is a Cirrus Maintenance Facility and another first class organization with an extremely skilled staff.  Peter and I discussed the routing that would provide a great tour of the city and surrounding area.  There’s a special route that, with ATC permission, takes you almost overhead of the famed Opera House and Sydney Bridge.  To get this permission, we had to file a VFR flight plan requesting the Harbor Scenic 1.

Peter and I did a thorough pre-flight on our SR22 that now had 14 hours.  This was only the second Perspective equipped model he’d seen and I offered up the left seat.  I think that he can fly anything with wings!  After a brief training session on the Perspective (especially the radios), we were off climbing to 1000 feet within the Class D airspace then on to 2000 as we headed further north.  The clouds prevented us from climbing much higher.

Automatically, we switched our transponder from 3000 to 1200 and soon thereafter contacted Sydney Radar for clearance into the filed route.  We were given another visual checkpoint to report (I’ve never done so much reporting of visual checkpoints in all my years of flying, by the way).  Once there, we were cleared for the air tour.  We made two circuits inside the harbor before we departed back to the north for some serious coastal flying .

Flying coastal is just that….flying along the coast line.  Today we flew at 500 feet, past all the famous beaches and across the approach end of Sydney International.  The airport wasn’t busy at the time; so, no worries about traffic.

Coastal flying over, we flew again to a visual arrival route checkpoint for the trip back to the Bankstown Airport.

Peter gave me invaluable instruction and served as a superior tour guide while in the air.  All that should help when Tim and the rest arrive into Sydney and want to do some Cirrus flying. Tim and crew arrived today for his concert tonight.  After that I expect we’ll have some good stories to tell of his flying adventures.  Cheers!

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09/18/10

We departed Brisbane today -  Tim in his chartered jet, me and my family in the beautiful Cirrus.  Aircraft payloads are limited not only by weight, but also by mass.  And that was the one thing I forgot to plan on.  We have luggage for two weeks of travel – three of the bags are oversized.  But, as they say in Australia, “No worries.”  The SR22 rear seats fold down; so, with one seat folded, we were able to pack it all in and still have room for my daughter….she was pleased.

My days of study and preparation were put to the test as I filed my first Aussie IFR flight plan.  In Australia, the pilot has to contact the radar controller to get an IFR code prior to taxiing if you plan on departing in visual conditions and then getting your IFR clearance - sort of like a composite flight plan in the US.  We began the flight in visual conditions and activated our IFR portion about two hours later.  The controllers were most helpful all along the way.

As we departed Archerfield visually, I explained to Brisbane Radar that I wanted to first fly a coastal route north to look for whales and then turn south for a coastal routing past my third waypoint before picking up my IFR flight plan.  She merely said, “You can expect that.”

Off to the north we went at 1000 feet and, sure enough, we flew over more whales on their migration. We then turned south towards the Gold Coast and onwards.  The regional controllers advised us regarding traffic along the way, pretty much like they do in the US.  The further south we went, the more the wind picked up and the turbulent the air became (south westerly winds here are like the cold north westerly winds back home). At that point, I activated the IFR portion of our flight plan and climbed to 5000 feet.  After confirming our route, it was pretty routine flying except that in the US we get a full route clearance. In Australia, every controller I was handed off to on the radio confirmed only the routing within his/her sector.  I had to read that back each time.  

I am very glad that I had studied the VFR arrival procedures into Bankstown.  They expect you to fly a visual approach if the weather is VMC and, unless you request an instrument approach well ahead of time, you might find yourself holding for a long time until you get an approach clearance.  Again, the Enroute Supplement was extremely valuable in describing the visual checkpoints, as was the Visual Terminal Chart for Sydney.  ATC likes for you to fly canned arrivals - no GPS direct stuff here!  So, I came in knowing the reporting points and was able to fly directly to Runway 11L. Oh and another thing, when they have parallel runways operating, they just tell you cleared to land on the left…no numbers.

The only things that I wish were better here are the taxiway markings.  For the most part they are non-existent.  When I landed at Bankstown and requested assistance finding the FBO here, the controller didn’t know how to instruct me to get there.  I had it marked on my airport diagram; but, since there were no taxiway markings, I was a bit unsure.  One of the security trucks was listening on the radio and he gave me some directions.  All in all it was a great flight with unbelievable coastal flying (sometimes as low as 500 feet!) followed by an uneventful IFR portion into Sydney. 

Monday, I head back to the airport to fly with some of the locals to get the best sight-seeing routes of the Sydney area.  Until then, Cheers!

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