Plane Conversations

When commercial airlines do not optimize seat sales they loose money. Historically airlines have looked for “lanes” that have high demand thus insuring increased sales of seat capacity. Now they are using social media to fill seats.

Some airlines say that social-media outlets, such as Twitter and Facebook, are beginning to disrupt the traditional sales cycle. Some airlines are sending sales out directly to customers at all hours, making pricing far less predictable each day.

Social-media sales of  airline seats has just begun and it will change the way airlines have traditionally sold seats. After all empty seats represent leaving revenue in the air.

What About Private Jet Charters?

Private jet charter operators seek buyers who will pay for the entire plane regardless of how many seats are full. 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.

A recent New York Times Article titled “Fly a Private Jet at Public Prices” states “The dirty little secret of the industry is, about a third of our flights are empty,” said Alex Wilcox, chief executive of JetSuite, based in Southern California, which recently began posting last-minute $499 deals on Facebook for empty legs on the company’s four-passenger Embraer Phenom aircraft. “Say a Gulfstream pulls into San Francisco and is going back to Vegas empty,” he said. “A few years ago, if you were to say, ‘if I give you $500 will you take me and my family?’ you would get laughed at.” But the recession changed such attitudes, Mr. Wilcox said. Now, he said, more companies are saying, “Sure, it’ll help pay for the gas.”

Revenue Is Revenue to Some

Allen Howell, CEO of Corporate Flight Management, looks at empty legs as an opportunity to expand his market of consumers and gain incremental revenue. Allen Howell says ” If I have a plane flying empty from one city to another I am a fool if I don’t open the seats on that leg to paying customers.”  ”Think about it, the value we create by selling the seats on empty legs is five fold:”

1. We increase the potential of building relations with future charter prospects
2. We provide consumers with an experience that exceeds all expectations
3. We create incremental revenue streams that go right to bottom line profits
4. We increase and expand our circles of influence by leveraging the power of social media
5. We begin to create repeat customers that are common to travel circles we service

Click on pen to

In a recent meeting of shareholders, Berkshire-Hathaway executives reported that NetJets has returned to profitability after big losses in 2009. The company reports that NetJets had a pretax profit of $ 57 million (US) in the first quarter of this year which is compared to a $ 96 million (US) loss last year.

Warren Buffett attributes the turn around to putting David Sokol in charge. David Sokol also runs the company’s energy – utility business, MidAmerican, and is a candidate to take over Berkshire Hathaway’s operating businesses as a successor to Buffett.  

We have posted a couple articles on NetJets over the past few months regarding the viability of their business model built on fractional jet operations. NetJets is a key leader in our industry and how they fare will make a big difference in the future of private jet travel.  

The key will be if the company can sustain profitability over the long haul. If they can, then it proves they have a working business model. One quarter of profit or even one year of profit does not make a business. You can cut overhead and get most any business profitable if there is some present sustainable revenue stream, but can you grow it in the new economy? Will more people line up to buy fractions of business jets as they did in the last 15 years?

A lot of new business jet orders were canceled in the downturn of the economy. Will NetJets start ordering new aircraft again? Will they operate under a similar business model as they have in the past or will they have to come up with a new way of structuring their fractional business to make it work in the future?

It costs a lot of money to own and operate a business jet and there are fewer companies today than there were two years ago who are willing to spend the money, whether it is a whole aircraft or a fraction. NetJets may get new business from companies who overreacted by shutting down their flight departments last year; but, that will be limited.

Unless business jet travel innovates to the point where the occupied seat cost is brought down significantly, the NetJets client will remain the high end business user and elite traveler. That market is small in comparison to the rest of the travel market.

So where does the new client for flying on a business jet come from?

Click on pen to

Glamping at "Tent City", Paws Up, Montana.

Working in the private jet business, I know all too well that maximizing time is one very important factor for the business traveler today.  Well, what about the leisure traveler?  If you had a choice to start your vacation from the moment you stepped onto a beautifully appointed private aircraft, or rather endure a very long and irksome commercial flight where the vacation doesn’t actually start until you are finally able to walk through the airport exit, wouldn’t you choose the former?  Well, how about an outdoor experience where all of the frustrating elements are removed and you are able to maximize your leisure time by doing the fun activities you head out into the open yonder for? 

 Now I love the idea of sitting around a campfire and getting out amongst nature, but cringe when faced with the thought of struggling with tent poles, sleeping on a lumpy ground and bugs.  “Glamping” (glamorous camping) has taken camping to another level, one that involves your very own butler! Waking up in the morning on 300-count cotton sheets to the sound of water rushing over the rocks of the legendary Blackfoot River, and actually knowing where my toothbrush is, makes for a great start to the day.  No longer having to scurry around looking for firewood to start the morning breakfast or sleep in a musty smelling sleeping bag.  This new style of camping will allow you to enjoy every moment of your outdoor adventure, without the frustrating elements which bring you down from your fresh-air-high.  We live in an era where we are always looking for ways to maximize our time.  We can do this by flying private instead of commercial, we can text 5 people in seconds, and we can have our campsite butler do the dirty work!  

 Glamping sites are popping up everywhere, and at Paws Up in Montana none of the creature comforts of home are missed.  Your 270-square-foot, beautifully-appointed tent comes complete with king-sized bed, electricity, spacious deck, nearby private master bathroom (with heated floor), twice-daily housekeeping service and butler-prepared gourmet meals.  I mean really, who wants to collect firewood and cook canned food at the end of a long day of horse riding or golf?  It allows you to sit, wine in hand on your very own deck and take in the fresh air, the spectacular view and delight in the fact that you are glamping, not camping.     

With glamping’s focus on comfort and convenience, it is easy to spend most of your time doing what you really want to do when you camp, and that is experience the outdoors. For me, you’d have a hard time getting me off of the saddle of a horse, but you might find your favorite place to be on a mountain bike, behind the wheel of an ATV, or breaking in a new pair of hiking boots.  Every day brings new beauty and adventure and since the warm summer days in Montana seem to never get dark, you will fill your adventure vacation with hundreds of moments you’ll never forget – from the very moment you step onto your private aircraft.

Glamping is for those only wanting to sleep under “5 stars”.

Click on pen to

In our ongoing discussions about how to reduce the costs of flying private aircraft by putting together a way to share a ride I posted a blog titled “Would Business Travelers Share?”

We believe that people would be willing to share a private jet flight with others provided it left at a mutually agreed on time both coming and going.

So if you can answer the when question (when we all want to go) what about the who (who will I share a ride with) question?  

Who you would share the flight with?

Would you share a flight with your competitor? Probably not. You would not want to have your competitor in close quarters for two hours listening to your discussions about today’s meeting or presentation.

If you are on a business trip would you share the flight with a group of college kids going to spring break and ready to party?

When you ride on the airlines you don’t have much choice who you sit next to. You may get lucky enough to sit next to Kevin Smith and share his space? Or a bratty kid who keeps kicking you and you can’t kick back?

If you were sharing a ride on a private jet charter flight it would be very easy to know in advance who was sitting next to you. With all of the social media profiling surely you could just go take a look at your seat mates Facebook page or LinkedIn profile and figure out if they might be OK to share the flight with. It would seem that knowing who you are riding with could be very easy to determine and even control.  

You never know, the person you share the flight with may end up being your next friend, client, partner, collaborator…..

Click on pen to

A Saturday, February 27th article in the Columbus Dispatch, by  Marla Matzer Rose covers the story on NetJets and Warrens Buffett’s letter to the stockholders regarding the company’s performance.

I posted on November 17 about the announcement of NetJets pilot layoff. At that point, revenues were off 41% and new aircraft sales were off 79%. Since that post, more layoffs have happened and in this article, the following is stated by Warren Buffett about the financial situation at NetJets:

“In the eleven years that we have owned the company (NetJets), it has recorded an aggregate pre-tax loss of $157,” Buffett said in his letter. “Moreover, the company’s debt has soared from $102 million at the time of purchase to $1.9 billion in April of last year. Without Berkshire’s guarantee of this debt, Net Jets would have been out of business. It’s clear that I have failed you in letting NetJets descend into this condition.”

Buffett said he had been “bailed out” by David Sokol, whom he appointed CEO of NetJets in August after the abrupt resignation of longtime CEO Richard Santulli.

Buffett praised Santulli for instituting “top-of-the-line standards for safety and service” at the company that are being continued, but said that the leadership of Sokol, who is chairman of Berkshire-owned MidAmerican Energy, and considered one of Buffett’s likely successors has been “transforming: Debt has already been reduced to $1.4 billion, and, after suffering a staggering loss of $711 million in 2009, the company is now solidly profitable.”

Buffett echoed what Sokol has said about NetJets, that it is “likely to operate at a profit in 2010, assuming there is no further deterioration in the U.S. economy or negative actions directed at the ownership of private aircraft.” For 2009, NetJets posted a $711 million loss. The losses were largely due to write-downs on the value of aircraft, with a smaller amount attributable to the cost of laying off workers.

Much like the financial performance of the airline industry, NetJets has not made a profit in aggregate for the past 11 years.

Something is wrong with a business model that has an aggregate loss over the long haul and we are plagued with it in both the airline and private aviation industries. More money has been lost than has been made, and because the industry is glamorous, more money will pour into bad business models in the future.

According to Mr. Buffett, the company is now solidly profitable since all of the cuts in both pilots and overhead. So what has changed about the business model to fix it? Do they shrink their way to profitability?

What created the situation in the first place? Was the model broken to start with and just needed a deep recession to make it obvious? How do you lose more in one year that you can make in 10 years? 

On this site we talk about the airlines and their broken system but private aviation has its fair share of issues and financial problems. Something has to change if we are to sustain long term viability as an integral part of the national transportation system.

Click on pen to

There are 77 million of them and, according to an online article on Barron’s website, Baby Boomers are being ignored by marketers.  What’s more, they are being ignored when they are the group who has driven 45% of all consumer spending for the last 60 years.  In the next few years, it is estimated that the number will grow to 52%.

So who are the marketers going after?  They favor the 18- to 49-year-olds, as they are the age group who are forming opinions, forming families, and are making major purchases like homes, cars, etc.  However, they are not the age group with their wallets out ready to spend.  Look at most advertising done today; it is aimed at the younger, hip crowd, in spite of the fact that over half of spending comes from the 45 to 63 year olds.   And this trend is expected to continue for the next 20 years, Barron’s says.

So what about the traveler?  Do we, in the aviation industry, target the Baby Boomers or Gen Xers?  Do we even know?

Travel Marketing Decisions interviewed a series of experts to gather insight into this enormous and potentially lucrative segment.  Below are some truths about Baby Boomers and the marketing implications for the travel industry.

1. Boomers consider travel a necessity, not a luxury. This is good news for the industry on two counts. First, the sheer number of boomers traveling will cause business to grow. Second, since travel is a necessity, Boomers engage in it no matter how scarce their time or money. Their travel behavior, therefore, is less dependent on life stage or the economy.

2. Boomers have traveled more than their predecessors. While their parents first visited Europe when they retired, Boomers criss-crossed the Continent as students.  They’re already seasoned travelers, and know what they like and don’t like.  They also seek out more in-depth ways of experiencing familiar places. 

3. Boomers want to have fun.  It’s not surprising that adult teenagers put a premium on having a good time. Although fun, like beauty, is in the eye of the beholder, Courtney Day, of a New Jersey research and marketing firm, said companionship, stimulation and the cultural/social experience make travel fun for Boomers. She added, “Part of the enjoyment of the experience is knowing it’s unique - that’s part of the rush.”

4. Boomers demand immediate gratification. Unlike their Depression-era parents, Boomers grew up in times of plenty. Easy gratification bred a desire for still more and quicker rewards. As a result, Boomers don’t wait to take the trips they want.  If they don’t have the money, they just use plastic.

5. Boomers are not passive. They want a measure of control in designing their travel experience, and, once on the road, they want to choose their activities. “If you tell them they’re going to do A, B and C, they might want to do E or F,” noted editor Malott. The challenge for travel marketers is to make it clear their product offers plenty of options.

6. Boomers think they are special. Having always been a force to be reckoned with, they are very demanding consumers.  Whether they go budget or luxury, Boomers tend to want the best.

7. Boomers like creature comforts. This fact, according to Malott, actually keeps Boomers from booking the exotic locales they profess to like. Day puts a slightly different spin on the issue. “A tent is OK,” she said, “but it better have a great view and great food. Even if you’re in the wilderness, luxury is being served a delicious meal without having to lift a finger.”

8. Boomers are time deprived. To get relief from their stressful schedules, Boomers vacation where they can do absolutely nothing but be pampered. Or they may go to the opposite extreme, choosing adventures that are physically or mentally challenging – or both.  When booking travel, Boomers also need time-saving devices.  They like 800 numbers, the Internet, videos and virtual reality because they offer convenience and interactivity.  Internet use is so common among Mature Traveler readers, editor Malott automatically lists website addresses along with phone numbers. Day pointed out that Boomers use the Internet more for information gathering than booking. “It’s human nature to want to feel connected to what you’re about to sign up for,” she said. However, she added, Boomers also like the freedom of not involving other people when they are exploring a subject. Their attitude is, “When I’ve decided, I’ll initiate the next move.”

9. Boomers will pay for luxury, expertise and convenience. ATM fees, nannies and bottled water prove Boomers are willing to pay for what they want.

Seems to me Baby Boomers are the perfect customer for the private aviation industry.  So how do we reach them?  We should concentrate on adding value to the process of buying experiences.  So…a Citation XLS or a Lear 45?

Click on pen to

A  February 1 article by A. Pawlowski of CNN titled “How old is the plane you’re flying on?” says the following: “Few people expect luxury while flying, but these days, even the basics seem to be in bad shape. It’s not uncommon to find your tray table broken, the in-flight entertainment system not working and your seat cushion worn — all of which can make you think, how old is this plane anyway?”

“But for now, the reality for many U.S. air travelers is that most of their journeys take place on planes that have been in service for a decade or more and show it, though in ways that have no impact on their safety – like worn interiors, broken creature comforts and less than spotless conditions.”

Sounds more like riding on the metro rail than flying on an aircraft. Maybe that is what the experience ends up being in the future? Mass transit by Air! 

The average age of the fleet of the seven large U.S. passenger airlines – including American, Alaska, Continental, the merged Delta and Northwest, Southwest, United and US Airways – is about 14 years old, according to The Airline Monitor. It found American and Delta/Northwest had the oldest fleets, at about 16 years on average. As of the end of 2008, a small percentage of the merged Delta/Northwest’s planes dated back to the late 1960s.

U.S. fleets are among the oldest in the world, said Richard Aboulafia, an aviation analyst at the Teal Group in Fairfax, Virginia.

So all of this begs the question about safety and are these aircraft still safe?

Most everyone will agree, as do the experts quoted in the article, that the fleet of airline aircraft in the United States are maintained to the highest standards in the world and that they are safe. The safety record of US airlines have continued to improve each decade due to good maintenance, technology upgrades in the cockpit and better training of pilots and maintenance personnel.

I have no fear of getting on a 16-year-old aircraft operated by a major air carrier in this country and no worry about arriving safely. The professionals who fly and maintain these aircraft are the best in the world, in spite of the bad press of a very few isolated incidents where the pilots are “working on their laptops” and forget where they are.

The Airline Industry is Safe! But what about the experience?

Is the traveling public going to resign themselves to the idea that all they can expect is to safely arrive? That’s all you expect when you hop on the metro rail in any major city.

There is an alternative for the traveler - it’s called private aviation or business aviation and it’s anything but the same old experience!

Click on pen to

On a recent podcast interview with Max Flight and the guys who are regulars on the www.airplanegeeks.com pod cast, I made the statement that flying on business or private aircraft is “social.” One of the guys asked me to define what I meant by “social”.

 Honestly speaking, I did not really even think about the definition of social when I made that remark - it just came out.

So here is a definition of social that I like: “marked by or passed in pleasant companionship with one’s friends or associates”.

My off the cuff response was that flying on a private jet is a pleasant and enjoyable experience. It is comfortable and the treatment the passenger receives from the flight crew is good. Compare this with the anti-social experience of riding the airlines.

Why shouldn’t travel by air be social? I mean it used to be when I was a kid. As I wrote on my very first post on this blog site – I remember that first airline flight in 1969 on American Airlines. We put on our best clothes like we were going to church. The flight attendant and pilots made us feel special and even gave us wings!

The one airline that engages in social flying today is Southwest Airlines. One of the last Southwest flights I took was coming out of New York’s LaGuardia Airport.  While waiting for the passengers to finish boarding, the captain entertained us by playing ‘Oh, Susannah!’ on the harmonica.  He jokingly said that he was not going to stop playing until everyone was seated. I love it! Taunting a bunch of New Yorkers with a song from the South on the harmonica. Truth is, even the New Yorkers loved it. Now, that is Social!

I hope Southwest never loses that social culture they have carefully created and nurtured over 30 plus years of operating.

Why can’t all airlines get the culture of making it fun and social. Even if we are crowded into seats a little too small, at least they could make it fun.

Having said all of that what is so ‘social’ about flying on a private jet? 

First and foremost, it is a more personal experience. You are greeted by the pilots who help load your bags as you board the aircraft. They know your name and you will know theirs.  They may tell you about the enroute and destination weather, if that is a factor, and they may ask if you are OK with proceeding. I usually say, “I am good if you are” but some folks would rather wait it out or go another day if the weather is too lousy. Wait a minute. You mean I can call it off?  You bet you can.

Once on board, you get the feel of riding in the limousine instead of the subway. It is easy to ask the pilots a question like “where are we?” or” what is the name of that river?” Or you can just sit back with your friends or business associates and enjoy the ride in comfortable seating. Want to talk business with your travel mates? You don’t have to worry about the guy behind you listening in on the conversation since you already know who he is. When you arrive on the other end you are usually greeted by the smiling face of a person who parks the aircraft at the Fixed Based Operation (private air terminal) at the destination. Most roll out a red carpet even if you are not a rock star!

You then walk to the terminal (FBO) and someone has your rental car keys ready or the hired car is waiting close to the aircraft and you are off to your ultimate destination – the business meeting, dinner or vacation spot. If the business meeting runs a little long, the aircraft will not leave without you. A courtesy call to the pilots or company dispatch will update the crew so they can update the flight plan -emphasis  here on “courtesy” since the pilots do have legal lmitations on their time and need to be rested to be safe to fly you home.

One of the most common feedback points we get from customers is how much they enjoyed flying with crew and frequently they request to fly with that same crew again. Flying is a comfortable experience when you get to know the crew upfront and they get to know you. People like to be treated with respect by the people they do business with.  On a private jet, courteous treatment is the norm, not the exception.

If all of this sounds like an experience “marked by or passed in pleasant companionship with one’s friends or associates,” then it’s social.    

Click on pen to

When it comes to air travel today, no one enjoys it.

Is There A Better Way?

Watch the video below and give this alternative some thought the next time you think about using a commercial airline. This alternative would have enabled me to go to New York City and back within the same day.  Total travel time would have been roughly five hours instead of 18.  And it would have cost me less!

Click on pen to

Part 4 in a Series on Social Media and Business Aviation: Written In Collaboration with Jay Deragon

Over the past few weeks I have posted several articles on social media – the new method of communicating to the market. I am an admitted novice in the world of social media and technology, but my eyes are starting to open to the possibilities created when social technology and business aviation collide.

We have discussed the opportunity social media presents to fight the war the airlines have declared on general aviation by getting our message out in an unfiltered way.  We have also discussed social media as a means to increase our visibility to the market as well as to communicate with that market in order to innovate and better meet its needs on its own terms. All of these are game changing strategies.

So now I want to ask some what ifs!

What if there was a social grid or network built for the purpose of becoming the e-marketplace for private and business aviation travel solutions? What if this social network allowed, encouraged and facilitated the market to come together to aggregate a demand that is currently outside of the supply that  traditional channels of distribution make available to the market?

What if the market could then go to the suppliers of private aviation and request trips or routes of travel where individual travelers could buy seats, filling the aircraft, driving the price down?  Maybe the price would still not be as low as mass transit airline travel, but still would be much lower than today’s pricing of private aircraft flights.

What if travelers could input their travel profiles into the social grid in such a way as to speak to the entire market and to form affinities around common travel patterns? Would travelers be willing to share their travel  information with the market in a profile, sharing where they go, when and how often? Would travelers talk to each other about their travel needs if those conversations led to more new, innovative and efficient travel solutions than have ever existed before?

What if all air charter providers and small scheduled airlines (niche airlines) could input supply into the grid, including empty legs?  What if on-demand charters were quoted instantly so that the market had real time visibility to the solutions they need? What if all of these suppliers could participate on a level playing field and in a system that costs the users only when a transaction takes place?

What if the other parts of the business travel supply chain were able to participate as well? Would the hotels, resorts, rental car and limousine services have an interest in participating in the grid?

What if private aviation operators could collaborate to create a bigger market?  What if we woke up someday and realized that we’ve been monopolized by technology controlled by some organization that isn’t even in our business? What if we all created a new collective “social grid” in which the general market of travelers realized they could use our system rather than the old commercial system?

What if we could collectively reinvent ourselves as an industry with the aim of serving the larger market? What would be required? Who would agree to collaborate? Who would agree that if we don’t, someone else will?  And we’ll all lose when we should have been leading all along?

If we could simply start to build a dialog around all of these questions what could we do? Should we do it? If not, then let’s not even try to answer these questions.  Let’s keep doing what we’ve been doing. Einstein once said “insanity is doing the same thing over and over and expecting different results.”  What happens if we all decide to be sane?

If you think we need to do something else then join me and invite others to join us in creating a new future where we can all win.

Who will jump into the dialog? Who will invite others to do so as well? Is there anyone out there?

Where are the answers to all of these “what ifs”? Could they be out there in the market of conversations that could create the new system that creates the answers?

The answers are out there in the minds of people wanting to create a new future. Are you one of them?

Click on pen to