Plane Conversations

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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An article in CAIXIN Online  states that China is opening up a low altitude segment (less than 1000 meters) of its airspace for General Aviation. This may seem like small news since you can’t do much with business aircraft below 3000 feet, but it is really the beginning of a change that will have a major impact on the growth of General Aviation in China.

A friend of ours in China followed on with an email yesterday that said “Beijing  Lanzhou and another 3 cities have opened the low altitude airspace for policy trial yesterday”.

Wichita is sitting around waiting on the rebound in the US and World Business Aviation market and the opportunity is about to be unleashed in the largest country in the world. Maybe a little more attention should be focused on the largest market opportunity for Business and General aviation for the next 20 years?

Here are some interesting excerpts from this article about the potential in China:

According to a research report from the State Council, China’s general aviation sector is at an “initial stage of quick growth.” The report expects China’s general aviation aircrafts to increase to up to 100,000 units. Currently, only 1,000 general aviation aircrafts are operated in China, compared with more than 200,000 in the United States

In case anyone missed that: “units” mean “aircraft” and the numbers were growing from 1,000 to 100,000.

According to the report, as the world’s largest aviation market, the U.S. has seen its general aviation industry create more than US$ 102 billion in value every year, accounting for more than one percent of the country’s GDP. Liu Ping, chief editor of the industry journal China Civil Aviation said that the effective access to low altitude airspace will create 100 million yuan in growth within the general aviation industry as well as large number of job opportunities.

China’s government seems to understand the impact that aviation would have on economic growth by viewing the impact of General Aviation in the US. I think maybe they get it more than the politicians in Washington DC. A growing General Aviation market means new and well paying  jobs.

One of the limiting factors for China opening up airspace will be overcome if they can implement a satellite based air traffic control system. By doing so they would leap ahead of the US who is using 1960’s technology to control air traffic flow through ground based radar. Presently China is working with limited air traffic control capacity and using systems that are also outdated and restrict traffic flow in major hub airports.  

The question is: How long will it take for China to address the issues that really open up airspace for practical use of business aircraft? Can they open up the airways for real air traffic flow as they have done on the ground with the massive road building projects?  

When they do address these issues the sky will be the limit.

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Business aviation has taken a beating in the past two years.  While we are now seeing some signs of recovery, we must remember that those signs do not constitute prosperity. We can blame industry difficulties on the government or on the economy, but the reality is that we need to quit following the old business models. In many areas, we are doing things today just as we have for the past 30 years.

If we look to the technology sector of our economy as a possible success story to emulate, we see a constant flow of innovation in the market. Computing technology gets not only faster and more productive by the day, but it also gets cheaper. Social Technology has taken on a life of its own with changes happening faster than even the social media gurus can keep up with.

Those of us in aviation know that we cannot change or innovate as fast as the technology sector of this economy. Or can we?

When it comes to the aircraft design and regulation compliance that make our industry safer, admittedly we cannot go any faster than the government allows. New aircraft designs are also limited by the allocation of capital and have long cycles from initial investment to development to payoff. The tech sector can crank out new smart phones every six months, but we can’t just crank out new jets that fast.

Aircraft design and safety compliance timing may be out of our control, but that should not stop us from innovating.

Innovation starts with conversations. Doc Searls coined the term “the market is conversations” in his 1999 book The Cluetrain Manifesto.  With consumers self-aggregating and expressing intentions online, why can’t we engage in the conversations and meet those intentions?

We need to expand our market by engaging the larger audience of travelers in conversations about the value proposition of business aviation and even leisure travel by private aircraft. It starts online these days and ultimately moves to face-to-face contact.

We also need to challenge our market and our industry to start conversations on how to deliver business aviation at a reduced cost. The solutions must come from the entire supply chain, with everyone involved in business aviation as a part of the solution.

I have yet to hear anyone say they would like to go back to riding on the airlines after experiencing travel on a private aircraft.  What I have heard, hundreds of times, is that they can’t afford what we offer; so, they grudgingly go back for more of the misery of air travel by mass transit.

What are we going to do about it?

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