Plane Conversations

A strong Commercial Aviation Industry portends a strong private aviation industry.  This article features data from Honeywell Business jet forecast which correlates with the FAA forecast for 2011 through 2031 for commercial aviation.

Social Flights was launched at precisely the right time with up-to-the-minute social technology tools and business methods for aggregating large fleets of private aircraft and building out public charter routes that can meet customer needs.

According to Honeywell Aerospace’s Annual Business Outlook, business aviation is poised for recovery beginning in 2012.  The Honeywell forecast is based on surveys of more than 1,500 flight departments around the world.

The World According to FAA.gov

The carriers have stopped less profitable routes, retired older aircraft, and unbundled services while initiating new services that passengers were willing to pay for such as WiFi.  There is optimism in the industry that the next decade will show sustaining profits as the industry continues to grow in the long term.

The 2011 FAA forecast now calls for one billion passengers to be flown in 2021, two years earlier than projected in last year’s forecast.  Growth over the next five years will average 3.7 percent per year, with average annual growth of 2.5 percent per year for the remainder of the forecast period.  The level of activity and demand is expected to eclipse those published in last year’s FAA forecast. 

Some of the reasons include stronger than expected traffic and higher expectations of economic recovery.  As such, available seat miles (the benchmark for industry capacity) is expected to increase globally by 4.5% next year after years remaining flat or decreasing.  The global market is expected to increase at 3.1% through 2031.

In the domestic market, capacity grew 2.9 percent in 2011 and is expected to grow to 3.0% in the long term.  For the regional carriers, the domestic capacity will increase at 3.8% over 2010 rates.

The average size of domestic aircraft is expected to increase to 122.0 seats from just over 121.7 seats currently. The demand for 70-90 seat aircraft will continue to grow.  The FAA expects the number of 50 seat aircraft to fall (and many will become available for lease or purchase).  The average regional jet size will increase to 54.6 seats while the average length of the trip will increase.

The profitability of all air carriers will depend on stable fuel prices, increase in demand for business travelers, and the willingness of travelers to continue to accept higher prices for less services.  In order to keep costs low, the carriers will need to better match their routes, aircraft capacity, and their markets (supply and demand).  they will need to ground older aircraft, drop low margin routes, and pressure regional carriers to accept lower fees.

 This is where social flights comes in:

All this is bad news for 6-60 passenger scheduled service. However, Social Flights can effectively join these two forecasts by providing public charter services across industries.  The weakness of one mode can be hedged by the strength of the other, and vice versa.  This makes for an excellent investment opportunity in social organization methods for air transportation pioneered by Social Flights.

There is an entire segment where Social Flights can capture market share that commercial carriers would willingly cede to Social Flights in order to keep THEIR own costs low.

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.

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.

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?”

Over the past few months as I have talked both online and offline to people about Social Flights, a question has been raised about the impact of the Social Flights business model on the security of private aviation flights. A recent tweet from @tinsko started a dialogue via twitter about this issue that prompted me to write more on this issue from my perspective as an operator of charter aircraft.

In private aviation, whether operating charter flights, running a corporate flight department or flying your own aircraft, the reality of security is that we know who is on our flight. For starters, on a small aircraft carrying 4 to 12 people it would be strange to be sitting on a flight with someone you did not know, or at least know why they were on the flight. I think all of us who have experienced flying this way can say we have never been on an aircraft when we did not know who was on our flight and why they were on it.

There are ways that we as a charter operator comply with security, such as checking passengers against the no fly list and training of our employees to identify potential threats. These are all good security filters to prevent boarding a passenger who could be a threat.

What most of us will say, however, is that the best security measure is to know your passengers on a more personal level.

When I board an airline flight, most of the time I don’t know anyone else on the flight, unless I am traveling with others from my company or family members. What I do assume is that we have all gone through security screening and no fly lists, so that by the time we get on the aircraft the risk has been mitigated to an acceptable level.  All of this screening does not prevent the occasional passenger going nuts on the flight and trying something crazy. We have seen these stories lately.  Fortunately, the most anyone has succeeded at doing is getting thrown off the flight and met at the gate by law enforcement.

Back to charter flights. As our business model for Social Flights develops, people will self-aggregate around travel intentions and charter flights. They will board a small jet together and go to a common destination. Before that flight they may not have met each other in person, but I am convinced they will know more about each other than they know about the person they share space with on an airline flight.

With the explosion of social technology in the past seven years, most of us now know so much more about the rest of us than we ever have before. We all have put ourselves out there on Facebook, Linked In and Twitter and we have a history of interaction with each other. A history that says way more about who are than a security screening or a government list.

So before I share a Social Flights ride with you I will know a lot about who you are, who your friends are, who your business associates are, and what you have been up to recently. And based on that knowledge I can make some pretty good assumptions about what level of threat you might impose on me and our fellow passengers when we fly together.

Nothing is completely fail safe and our society can never completely protect ourselves from bad actors who are intent on harming us. But our intelligence agencies have proven that good information is the best basis for preventing acts of terrorism.  

I would propose that getting to know each other before we share a ride on a jet might be one of the best security measures we could use. It has never been easier to develop that trust than it is today with the advent of social technology.

Maybe the bigger question to ask is: Will social technology change the way people do business?

Over the past two months I, along with the rest of the world, watched the events unfold in Tunisia and Egypt which resulted in the toppling of decades old repressive regimes. Then the outbreak for freedom spread to other countries in the Middle East  and Libya , and is even trying to gain a toe hold in China. Governments can shut down the internet for a time, but eventually people will figure a way around the firewall. I thought about the part social media played in these events and the discussions in mainstream media about what social media has done in these countries to fuel the protests.

Social media and the technology behind it are not inherently good or bad and do not have any power on their own to do anything. The technology is just another means of communicating. What Social Media has done is enable the world to connect and communicate in ways, and at a speed and distance, never before seen in human history. And right now it is in it’s infancy.

As a student of social media and how it might be used in business and private aviation to change the ways we do business for the positive, I have been met with skepticism as I talk and write about it.

Questions and Comments include:

• Nobody on Facebook will book a charter flight or buy an aircraft
• The affluent (our current clients) don’t use Social Media
• Social Media is some kind of fad and won’t last
• Those who use Facebook only communicate silly chatter about what they had for breakfast and where they went the night before
• I don’t want anything to do with this social media stuff, it is a waste of time
• How do you monetize this stuff and what is your ROI?

Back to Egypt and Tunisia:

History will show that the power of the people to communicate with each other was the undoing of repression. The worry now is that another repressive regime will fill the void as so often has happened in Africa. Somehow this time, I don’t believe the people will allow that to happen. Now that the people have won, who in Egypt or Tunisia will be able to lead the country and not allow the people to communicate online? Another demonstration can happen in an instant. Once freed, people will not go back willingly to being repressed.

So if the power of this communication on steroids called Social Media can topple governments, does its use also have the potential to open up markets and change the way people buy goods and services? I think the answer is that it’s already happening. And it will pick up speed just as the development of the technology has picked up speed.

People, given the tools to communicate unfiltered across borders, cultures and any other boundaries, will drive solutions to market problems that have been begging to be solved.

The air transportation system in this country has major efficiency problems that cannot be solved by the government or the airlines overnight. Our government can’t even agree on a funding solution to update the 1960’s generation air traffic control system, much less solve a market problem.

So if the government can’t solve the problem of inefficient air travel who can? How about we the people, through communication which creates new knowledge and creates innovation and brings new solutions.

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?

Every time someone posts something online the context of their content reveals an intent. Intentions have become transparent and discernment of intent is becoming the wisdom of crowds.

The aggregation of consumer conversations enabled by technology has fueled awareness of market methods and intents. Consumers have found influence and have begun to “opt out” of the old methods created by old market methods of intent to capture and sell.

Social technology has created a transparency of intent. Intent is a relational attribute that reveals motive. The “markets of conversations” are no longer motivated by old methods used by the markets over the last 40 years. Doc Searls says “The Intention Economy is built around more than transactions. Conversations matter. So do relationships. So do reputation, authority and respect. Those virtues, however, are earned by sellers (as well as buyers) and not just “branded” by sellers on the minds of buyers like the symbols of ranchers burned on the hides of cattle.”

A Brands Letter of Intent

A letter of intent or LOI is a document outlining an agreement between two or more parties before the agreement is finalized. Such agreements may be for employment, acquisitions, mergers, purchases of services or products. Agreements which aim to specify the intents of parties engaged in a relationship for specific purposes.

The purposes of a LOI may be:

• to clarify the key points of a complex or simple transaction for the convenience of the parties
• to declare officially that the parties are now engaged with an intent implied or specifically spelled out
• to offer safeguards for when the relationship collapses during an engagement with intent

A LOI may also be referred to as a memorandum of understanding (MOU), term sheet or discussion sheet. The different terms show different styles, but do not show any difference under law. Social letters of intent exist when and where buyers and sellers engage on-line through the exchange of information and later a transaction which has certain expectations of delivery.

Social Agreements Represent LOI’s

When people engage with other people or entire organizations on-line there is an implied social agreement represented within the communications. The social agreement may be in response to an inquiry, a comment on posted content or an intent to investigate or take action from an ad or marketing message. The social agreement may also simply be a response to a need or an exchange of communications centric to topical discussions.

Given the reach of social technology and the engagement of markets, buyers and sellers, the underlying social agreement is similar to the traditional letter of intent. While social agreements are not legal instruments the expectations of fulfillment by both parties remain the same as if they were legally agreements.

The very nature of social technology and the emerging dynamics are raising people’s expectation to fulfill implied intents contained in context with the content (communications). It is clear that traditional marketing and advertising methods are being rejected because the intent of such methods are not what buyers expect. Today’s buyers expect honesty, integrity, responsiveness, performance and respect for their time, attention and intentions.

Cluttering buyers time, attention and relevant intentions with irrelevant ads and slick marketing messages does not show respect. Treating buyers like cattle waiting to be herded does not show respect. The currency of communications represents the value of ones intent to fulfill or fail to fulfill the intent of a social agreement. Failure to fulfill a social agreement means the buyers currency, both in the form of money and communications, will not follow you rather both will be spent and shared elsewhere.

Social letters of intent are not created by or from the supplier rather from the buyer. To ignore or not fulfill these intents means you lose the buyers currency and that of their “friends”. That represents a return, or lack thereof, from this thing called social media.

Lets admit it. Everyone is in pursuit of fame. Whether it is being adored by your family, friends, associates or main stream media, fame makes us feel good. Some know how to create fame and some simply don’t. As more and more people engage with social media feedback from friends, retweets of blog post, comments, connections and traffic illustrate a degree of fame. Whether we admit or not all these things fuel our own perception of “being famous”. It is simply the dynamics of predictable human behavior. We read how others have leveraged social media to gain attention, attraction and an audience. We hear about success stories from people previously unknown but have become known because of what they did with social media. The lessons learned is that fundamentally the more people whom you attract, the larger the audience of readers and viewers then the higher the likelihood that your fame will grow. That is if you are giving something of value to your audience. What Does An Audience Value? There are all kinds of different audiences seeking information, knowledge, relations and opportunities. However ever audience has a common thread of connectivity which is relational. Relational in the sense that someone has something of interest to somebody looking for something. Audiences look for all kinds of things and traditionally fame was achieved by those that attracted the largest audiences to their personality, content, product, service or message. Said attractions received attention from main stream media which just fueled the fame with exposure to larger audiences. This process is changing given the power of social technology.  Technology has enabled individuals and organizations to create their own audiences using content in context with an audiences interest.  The small are learning to create their own fame while the BIG are trying to hang on to fame. Fame creates a draw but the qualities of fame are shifting. The word fame implies the state or quality of being widely honored and acclaimed as well as favorable public reputation. Historically fame was achieved by movie stars, music artist, politicians, CEO's of major corporations and on-profit causes and initiatives. The fame achieved by these individuals was propagated by the media which not only created their fame but enhanced their stature to the masses of consumers who idolized the accomplishments, the adoration and money that seemed to follow fame. Today things have changed and fame is no longer limited to the few rather the many. Fame is now gained from originality.  Fame comes from character and affinity to an audience of people who are drawn by the characteristics of a person or crowd. Audiences are people and the shift in media sentiments is tapping into the basic human fabric, trust. Trust is shifting because influence is shifting. The old days of tricking people with messages, spin and trapping them into a transaction is dieing a slow death. Old media tricks and methods are being rejected by the masses.  The biggest change which impacts the traditional means of achieving fame is that of public trust and confidence. Trust and confidence has traditionally been created by mass media which historically has been contained by the few. Today "new media" is now engaging and enabling the many to create and influence market sentiment about anything, everyone and everything. This "new media, or social media", has empowered the many to create their own stories, publish their own opinions and create their own on-line videos. Fame is no longer limited to the few but open to the masses to achieve. Fame is now achieved by what you do and the value it creates for others. It is no longer limited by your economic status or coverage by main street media. If he word fame implies the state or quality of being widely honored and acclaimed as well as favorable public reputation then what is happening on-line is a road to fame for many rather than the few. This new form of fame doesn’t require millions of followers rather just a small crowd. The small crowd now has reach and  is becoming the major influence over market sentiment about everything. The few are in fact becoming the many and fame follows them at the click of a mouse. Got fame? Use it wisely. Related posts:

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