Plane Conversations

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.

Picture credit: Wealth Informatics

The race to the bottom that everyone has been watching in the airline price wars may have finally ended. All the frills have been extracted, all the expectations have been dashed, and the glamour of the jet-age has all the luster of a drive-in movie.  The bottom has been achieved.

The entire value chain, from airport taxes to hotel rooms and parking fees have happily stepped into the low-cost void, ready and willing to pick up the slack in airline prices.  The taxi from my house to Seattle Tacoma airport costs more than the airfare to San Francisco.  Three days of parking at the airport costs more than the taxi.  Off lot parking is not much better. God forbid that hunger arrives at it’s destination before you do.

Now watch the prices start slowly creeping upward as airlines come back leaner and meaner subsidized by the pensions of their workers in the post-bankruptcy glory of the deregulation act of 1978.   If American business has been accused of shortsightedness, the 25 year plan of the airline industry is pure brilliance – assuming it was a plan.

From USAToday:  

A new American Express Business Insights study finds that spending on first- and business-class airline tickets increased by 9.1% and 5.4%, respectively, in the third quarter. But on the ground, travelers spent more of their dollars — an additional 10.5% — on economy lodging vs. only 2.2% more on luxury hotel accommodations in that time.

There are likely several reasons for the shift in spending patterns.  Travelers are valuing the products on a “true value” basis.  The value of business class treatment and comfort exceeds the value of luxury accommodations.  Interesting.

The spending trend applies to traveling for business or leisure, the study indicates. ”It really speaks to the fact that (consumers are) so concerned about the airline experience that they’re willing to make the trade-off,” says Maryam Wehe, senior vice president of hospitality at Applied Predictive Technologies. 

How much would a business passenger justify to shorten the air travel portion by 50% while also eliminating two overnight stays?  At Social Flights, we can often provide a door-to-door travel experience that is 60% – 80% shorter in total time yet costs the exact same amount in dollar terms.  Guess what – that’s what Social Flights can do for you.  Social flights provides on-demand, direct, and comfortable private jet travel in a ride sharing form so that you get more travel for less money.

Many experts estimate that only 20% of economic impact is measured in financial value – rather, most of it is measured in intangible value.  The work of visionaries in the areas of Intangible Value and the value of social networks are able to articulate value far beyond that which can be counted with money.  Suppose these principles could be applied not only to corporations, but also to communities sharing an asset such as an airport?

In the race to defend valuable assets from the fiscal cutting room floor, communities are increasingly trying to define themselves in terms of shared community assets from schools to parks museums and even airports.

From:  Worcester Telegram & Gazette – telegram.com.

State officials released a study yesterday saying that Worcester Regional Airport is a boon to the local economy, even though the airport has struggled for years and offers charter service through just one carrier.  The study released by the Department of Transportation said the airport supports 418 jobs and has an annual economic benefit to the tune of $51.4 million.

The Intangible Value Drivers include the following questions for corporations, but this also applies to any community sharing a set of assets.  From Mary Adams from her recent book Intangible Capital, she asks:

• How do you get paid (the key revenue categories on your income statement)? (strategic capital)
• What are the processes and knowledge/data that drive this revenue? (structural capital)
• What are the competencies that your people need to support this business model? (human capital)
• What are the key external relationships that make this model work? (relationship capital)

Apply these intangible principles to any community:

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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This is déjà vu all over again.  By now I would have thought our Congress would have come up with a long term funding authorization for a very critical part of our nation’s infrastructure.  All of us under the big umbrella of aviation (airlines and GA) don’t agree all of the time but for once we all agree to the necessity of funding the FAA and the development of airports and Next Gen air traffic control systems.  We have even accepted the idea that fuel taxes will go up to help fund these initiatives.

ATW online reports that our Congress just passed the 20^th short term extension for funding the FAA.  That’s right, 20 extensions.  If I ran my business finances like that I would have been fired a long time ago.  Somehow our nation’s lawmakers can’t agree to get anything done about this yet no one seems to hold them accountable.

Quoting from the article “FAA Administrator Randy Babbitt, Airports Council International-North America and airport directors around the US have been saying for some time that uncertainty over FAA funding, particularly the Airport Improvement Program that helps finance expansion programs, is causing disruptions to airport construction projects (ATW’s Airports Today, Oct. 5, 2010). “For over three-and-a-half years we’ve been operating on extensions,” Babbitt noted during a recent speech. “It’s been very difficult to run an agency on extensions … We need to restore long-term stability to funding.”

In addition to the disruption of airport construction projects and the stall in developing Next Gen, the FAA has basically shut down the certification of new Airlines and Charter operators. So how do we create any new jobs in our industry if startups can’t start? Those of us already flying are also having trouble getting anything done with an agency that doesn’t know where their next dollar is coming from.

The Democratic controlled Senate and the Republican controlled House can’t seem to figure this out. But this goes back to before the Republicans got control of the house. So it seems that doing nothing about an important issue is the way it goes these days in Washington DC.

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This post first appeared on 4.26.11 in CS&A Insurance blog – Clear on Top

How do we determine is something is dangerous?  Is there a universally known definition or just a matter of opinion?  Webster defines the term as follows:

dan·ger·ous – adj – able or likely to inflict injury or harm

If we stop and think about the literal definition of dangerous, we realize that it applies to most things in our life.  We start off each day with dangerous acts…shaving, taking a shower, cooking breakfast, driving to work…all of which have the ability to inflict injury or harm.   How many of us have cut ourselves when shaving?  How about burned yourself while cooking?  And what about having an accident in a car?   The generally accepted odds are that 1 in 4 people will be involved in a serious car accident in their lifetime.  Let’s take that a step further, based on the average number of automobile trips made by Americans in their lifetime the odds of being killed in an accident are 1 in 140.  Driving is the most dangerous activity undertaken by most Americans on a daily basis and very little thought is given to the dangers encountered because it is just a routine part of life.

Why does the general public view flying as being dangerous?  Any time we cheat the laws of gravity we are entering into a “dangerous” scenario by definition; but is it really dangerous, or is it just different?  According to the National Safety Council, the odds of being killed in a plane crash are about 1 in 250,000.  In comparing these statistics you are 1,786 times more likely to die in a car than in a plane…in other words you are more likely to die on the way to the airport than in flight to your destination.

So what is it that is driving this dangerous view of flying?  In short, lack of education and the media.  This is a funny combination in my mind because the media is supposed to educate, but often times they are just as uneducated as the masses to which they are pontificating.  How does a blind man know what color the sky is?  He trusts the person describing it to him, even if that person is colorblind.  In absence of knowledge we tend to believe whatever sounds the most accurate.  So without further ado I give you some media quotes concerning recent flying scenarios making headlines.

“The Monday night close call, left Obama’s jet 2.94 miles away from slamming into the 200-ton C-17 plane…” – New York Post

This is what is known in the aviation world as a “go around”.  It happens on a daily basis and exists for just such an occasion.  When the required separation cannot be maintained or does not exist, the controllers direct the pilots to break off the approach and send them around to try it again.  Let’s put this in perspective just to give you an idea how far 2.94 miles is…try 15,500 feet.  This is a greater distance than all those aircraft that pass over your house on approach to landing if you live within 30 miles of a major airport.   If their landing lights are on when they fly over your house at night, they are probably below 10,000 feet and only 1.89 miles away from slamming into your house.

“The pilots landed their planes safely but without help from the airport tower.”  – ABC News

“Planes forced to land without help from tower at Reagan Natl” – America’s Newsroom     

News flash…the tower does not and cannot help a pilot land an airplane.  The tower can only give direction and recommendation just like the traffic cop at an intersection.  Pilots land without help from the tower thousands of times every day…it’s how we were trained from Day 1.

Let’s face it, flying is still a widely misunderstood activity and as long as there are reporters there will be inaccurate news reports.  As pilots, we are a relative minority and the understanding of flight is still a wondrous mystery to most.  The how’s, why’s, and what if’s are the stuff of Hollywood legend.  Entire movies have been made around the fear of flying and the perceived dangers that they instill are numerous.  Aviation activities still draw front page news, from the airshow to the accident and the engine failure to the ATC actions.  Is flying dangerous?  Yes.  Is it more so than other daily activities?  No.  It is up to us as pilots, air traffic controllers, and all other aviation support personnel to do all we can to operate as safely as possible and calm the fears of the general public.

Be professional, train appropriately, and be personable.  Just because we can fly does not mean we are above anyone else.

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During training at the American Airlines Learning Center in Dallas, new agents were given a specific protocol for checking passengers and their bags in at the ticket counter.  We were to greet the customer by name as it was printed on the ticket.  Ask them what their final destination was – just to make sure the ticket was right - and ask them how many bags they would be checking.  This was long before that silly question of “have your bags been out of your possession since you packed them,” like anyone would actually admit to that.

I once had a woman tell me that her final destination was her mother’s house.  While I agreed that a visit to her mother was surely a wonderful thing, I could not check her bags to her mother’s house.  She gave me her final airport, I checked her bags through and all was right with the world.

This woman’s trip raises a question in my mind.  I know the city-pair on her ticket; however, that citypair didn’t really  match her real travel intentions.  She might have departed from Columbus, Mississippi, but might actually have lived Macon, Mississippi.  She might have traveled to Charleston, West Virginia, but might actually have needed to go to Parkersburg, West Virginia.  Because of limited choices in scheduled airline service, she ended up with a drive on both ends of her trip.  Now, until we have personal jet packs, we’re not going to be able to leave our homes and fly to exactly where we want to go.  Can you imagine the air traffic nightmares that personal plane a la George Jetson would bring?  Yikes! 

Still, we know that general aviation can reduce our drives simply by virtue of the fact that there are more general aviation airports.  Put new and better technology with new and better aircraft and you have a few people with similar intentions sharing flights.  Vancouver has over 60,000 fans on two Facebook pages and a population of over a half million people in the city, not taking suburbs into account.  Surely a few of those people could agree on a time to go from the Abbortsford airport to the Blatchford Field in a Cessna Mustang.  Wouldn’t you think?

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“Do you have 1000 hours of experience of 1 hour’s experience repeated 1000 times?”

I believe I first heard this question from the Godfather of General Aviation, Richard Collins.  It’s a great question that gets at the heart of our flying habits and willingness to stretch ourselves in our flying.

Some pilots fly under, and only under, very tight circumstances.  They look for CAVU (Clear Air Visibility Unlimited) days with less than 5 knots of wind (never a crosswind), only in the morning, only at their home field and never stray from their local area.  It’s great that they are flying, but they are going to have basically one hour of flight repeated 1000 times.  What a shame because flying offers you and I so much more!

It is far better, and more fun and rewarding, to gain 1000 hours of flight experience.  Go somewhere.  Make a trip an adventure.  Challenge yourself.  Fly to a Class C airport and have dinner.  Master the crosswind landing.  Learn to fly safely in something other than a CAVU sky.  If you need an instructor to help you gain comfort and confidence in some of these situations, then book one today.

Certainly, there will be flights that are similar.  My point (and I think Dick Collins’ point also) is that a variety of experiences and situations help us to become a well-rounded and proficient pilot.   I think in the end, this approach will also keep your flying fun!

So, fly often and always be looking for a new challenge!

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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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09/18/10

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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