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.

Social flights continues to grow as our users finding new ways to integrate private jet service into their experience travel itinerary.  As with most early adopters, there is a larger vision driving their actions – it’s not to be “first on the block” to experience private travel.  They are the “first OFF the block” in a new form of luxury; The Time Value Experience.

Luxury does not mean the same thing for everyone and this poses a challenge for brands and product designers.  The top tier brands are learning that 45-55 year old who make up a large portion of their markets have a different set of standards when it comes to travel.

Instead of wanting to be pampered with exquisite and precision service, the new generation of luxury travel is seeking value, authenticity, and uniqueness.  They want local experiences, not a duplicate of their home in a new place.

“Value Based Driven”

via Young, affluent travelers disavow luxury defined by older generation – Travel Weekly.

Ellen Bettridge, vice president of American Express Retail Travel Network, told agents and hoteliers attending the 2011 International Luxury Travel Market conference in Cannes, France, last month. “They just know more. Everything’s at their fingertips.”

Knowing your customer’s preferences and accommodating those preferences are two different things in hi-end travel.  Creating “value” is not easy, it takes a lot of work, planning, and technical knowledge as well as follow-up and community management.  Unique experiences, by definition,  don’t come with instructions for the service provider. Competition, by definition, attacks the uniqueness of your service.  Alternatives to your service are as easy for competitors to market as for you.

One of the best ways to achieve uniqueness is to use your brand to integrate with other experience services – a local competitor may not be a competitor after all.   Think about Disneyland;  Mickie Mouse does not compete with Pirates of the Caribbean, rather, they are integrated into the whole grand experience.

If your guests will come for one 2 days, they are more likely to stay for 4 than return for another 2. Then, they are more likely to return if they haven’t “done the whole park”.  If they become comfortable with a place, they will return over and over forming new family traditions that they can identify with and share with their friends…..

Chris Sanderson, co-founder of the Future Laboratory, a London-based brand-marketing firm, asserted, “It’s not about ‘fly and flop.’ It’s about ‘find and seek.’” What makes serving this group tricky is that agents can’t fall back on tried-and-true brands, at least when it comes to accommodations. 

Social Flight is capable and available to serve any community by providing operations in public charter and private charter with modern turbine aircraft.  We have a growing clientele of vacation and resort communities banding together and taking control of the tourist experience instead of depending on outside airlines, charter operators, or tour organizers to do it for them.  Make the “Time Value Experience” your Brand image and make Social Flights your airline.

Social Flights is featuring this property sharing opportunity from AirBnB.com and it’s owner to present a unique way to visit the Olympic Peninsula and the Olympic National Park in the State of Washington. This is the first time we’ve done this because it is a great way to demonstrate the versatility of Private Social Travel.

Cinnamon Bear Cabin is walking distance to the (semi) private and uncrowded Lake Cushman Golf Course and within a few miles of three amazing bodies of water; Lake Cushman, Lake Kokanee, and the Hood Canal (actually a Fjord remnant of the ice ages).  Hood Canal is known for crystal clear saltwater scuba diving, crabbing, clam digging and seasonal salmon fishing.  Lake Cushman is a 4000 acre  glacier fed lake at the foot of 7000 ft mount Washington in the Olympic Range.  Lake Kokanee sits below the Lake Cushman dam and offers a serene  trout fishing experience through its meandering canyons.

The nearest commercial airport is 2 hours away, but Social Flights can bring you and your group directly into Sanderson Field in a private aircraft from anywhere in the US, less than 15 minutes from this very special location where you will pick up your car, keys, and license for fun and adventure.

Olympic National Park is comprised of nearly 1 million acres of the Olympic Mountain range. The Olympics literally halted the glaciers that carved the surrounding geography many thousands of years ago and are now home to unique species and wildlife ecosystems.  The ONP is one of the last remaining temperate rain forests in the World with ancient old growth featuring trees of astonishing size.  Yes we all know of the great sequoias of California, but Imagine cedars, douglas firs, sitka spruce, and hemlock trees 15 ft in diameter and up to 300 feet tall.

Indian heritage is alive and dominant in several areas offering cultural and recreational opportunities found nowhere else.  You can also visit Lake Quinault, The Western shores, and many hot spring locations all easily accessible from Cinnamon Bear Cabin.  In the Northern portion of ONP, you’ll find crystal clear Crescent Lake - a body of water so rare and so old that it’s the home of some species of fishes that exist nowhere else on Earth. Crescent Lake is called a “National Treasure” with 5 stars on TripAdvisor.com

Hiking, camping, Kayaking, festivals, casinos, local artisans, scuba diving, golfing, fishing, sky diving, are all abundant in the Olympic Peninsula.  What you will not find are crowds, tourist traps, tourist crime, pollution, blight, traffic, and harassment.  The Olympic Peninsula has one of the lowest population densities in the US. Local prices are local prices and not tourist prices.  Cinnamon Bear Cabin is perfect for people who want to experience the best of the Pacific Northwest without needing a vacation from their vacation afterwards.

The choice is yours, you can navigate the Gauntlet of the travel industry whose sole purpose is to drive revenue, add fees, sell advertising impressions, waste your time, and reach into your wallet at every fork and bend  on the roads most traveled. Or, you can go for a private experience with all the cherished memories that you expect for your time and money at a cost that is comparable to anything that the commercial travel “processing” industry has to offer. It’s about a colors of time for your money, not the colors of money for your time. You live once, make it count

Say what you want about big government consumer watchdogs – increasing information transparency in business transactions makes markets more efficient.  Telling someone that they can fly from Albuquerque to Tucson for 59 dollars only to find an 80 dollar fare plus add-ons for everything from baggage, talking to an agent, to requesting a paper boarding pass – this just goes over the top of any ethical disclosure standard.

* additional fees and taxes apply

According to a recent article from the L.A. Times: New rule requires air fare ads to include taxes and fees, starting Jan. 26, no more asterisks.  A new U.S. Transportation Department rule requires all advertised air fares to include any compulsory taxes and fees, including fuel charges and the Sept. 11 Security Fee.

At Social Flights, we go a step further – we will tell you the time tax that you pay by not using point-to-point direct private service.  For example; if your cheap fare takes two connection flights, with long waits, parking and airport fees plus extra overnights, we will happily tell you that if the value of your time is more than X dollars per hour, then we are cheaper. We can take you there  in 3 hours instead of 13…but I digress.

“The price advertising provision was adopted to make sure passengers know the full amount they will have to pay for air transportation when they buy a ticket,” said agency spokesman Bill Mosley.

It’s all about money and time

If anything, quoting a true cost in any form – dollars AND time – provides the traveler with a broader way of thinking about competing options.  Many short flights have a true speed of less than 60 miles per hour.  The customer needs to be able to compare with the cost of driving.  If there are several overnights involved, the traveler needs to be able to measure those costs against taking a train and sleeping car.   Of course, private air travel on a shared charter jet holds a distinct segment of the value proposition.

The airlines also described the new rule as “arbitrary and capricious” because the practice of advertising fees and taxes separately has been used for years by “virtually every other industry in the United States.”

Passengers held captive

The airlines may have a good point – although we would prefer that they held themselves to a higher standard than “every other industry”.  The fear is that if they quote the true cost, then people would look for alternatives while they still have time … before they are held captive.  See, it’s all about money and time.

In Japan and Europe, high speed rail often competes with air travel for short distance routes.  While it may take 3-4 hours door-to-door to travel 300 miles in an aircraft, the high-speed train can cover the same door-to-door distance in more comfort, the same time, and for less money.  An automobile may need 6 hours to complete the same journey at a similar cost of ownership.

What many peoples fail to realize is the possibility that a community can operate their own airline. This alternative is being pioneered by Social Flights. The regionalization of air service is a new concept that allows communities to own and operate one or more aircraft maintaining control over the schedules and locations where the aircraft flies.

In the United States, a rift continues to grow between available air service and reasonable alternatives to air service. This creates a substantial burden on families; but it also creates a compound burden on the economy upon which those families depend for their livelihood.  If corporate travel is constrained, the economy as a whole is constrained.

From this article in the NY Times:

Consider the new realities of air travel. Competition is decreasing, fares are rising and airlines are adjusting routes (and charging extra fees) in ruthless calculations to extract the greatest possible revenue per mile flown.

Few people take into account the social value of air transportation.  There are very few studies that can measure the impact on a community when they are immobilized due to lack of a service that had previously been available. There is no true economic category to describe such loss except as a tax on travel.

A regressive tax is taxation that takes a larger percentage from low-income people than from high-income people. A regressive tax is generally a tax that is applied uniformly. This means that it hits lower-income individuals harder. Social Flights can restore this value with a regionalized public jet charter system.

Now we can add “Travel” to the list

Sales taxes that apply to essentials are generally considered to be regressive as well because expenses for food, clothing and shelter tend to make up a higher percentage of a lower income consumer’s overall budget. In this case, even though the tax may be uniform (such as 7% sales tax), lower income consumers are more affected by it because they are less able to afford it.

<via American Eagle to park planes, reduce service – Dallas Business Journal>

The small city gets the regressive travel tax

American Eagle announced that they would reduce frequency in a few select markets, they would discontinued seasonal service from D/FW to Augusta, Ga. Eagle would also discontinued service from Chicago to Tri-Cities, Tenn as well as discontinued service between Miami and Savanna, Ga., and Miami and Fort Myers, Florida.  American Eagle would also hasten the cancellation of Los Angeles-Boise, Chicago-Calgary and D/FW-Fayetteville, N.C., service from Feb. 9 to Jan. 31.

So how many people would these reduction in service decisions impact? If we just add up the populations of the smaller metropolitan area in each city pair, we can estimate economic loss of opportunity under the assumption that the larger city would have alternate options. Fair enough?

Augusta, GA: 556,877

Tri Cities, TN:  500,538

Savanna, GA: 347,611

Ft Meyers, Fl: 618,754

Boise, Id: 616,500

Calgary: 1,230,248

Fayetteville, NC:  366,383

The Creeping Costs

The total is at least 4 million who will lose one more degree of economic freedom.  4 million people will pay a regressive tax denominated in time, money, and dignity in some form or another for the benefit of stockholders in American Eagle. 4 million people will lose the economic benefit of travelers from large cities.

On closer inspection, with the exception of Calgary and Boise, all of these cities are well within 1000 miles of each other.  Each of these cities is well within 1000 miles of cities just as large as those that American Eagle is diminishing service.

While a hub and spoke model may break down economically, a regionalization strategy may work quite well.  It has been proven that people are willing to pay a premium for direct service (otherwise the airlines would not be dropping less profitable indirect service).  It is also obvious that people place a premium on their time and hassle as demonstrated by trends in online shopping, communication, and social organization.

These ingredients simple add up to a regionalization air transportation route structure enabled by online social organization tools such as Social Flights where community airlines can form around community priorities.  Social Flights can restore this value with a regionalized public jet charter system.

I often feel “Lost” as I continuously review what is happening in the air transportation industry. So many people are stranded in time and place by the anxieties, harassment, and limitation the air transportation system.  It is only getting worse as airlines push in and pull out of markets with abandon disrupting the dreams and aspirations of millions of people with the stroke of keyboard.

Or, perhaps it is the holiday season now upon us that leads me along the nostalgic trail of family and friends who I miss so dearly. Or, it could be the recession that forces me to look outside my own community to achieve economic security in these difficult times. Meanwhile; social media technology increases my exposure to like minded people, new ideas, and a bewildering array of events and opportunities – many of which I can no longer access efficiently.

The easy thing to do would be to accomodate the situation and limit my goals and aspirations to that which others serve up to me on the platter of their choice.  I could simply give up and be content with my lot in life as determined by others.  I could dedicate my talent, education, and experience to lesser parochial tasks that happen along the jungle trail.

Or, I can seek the vulnerabilities of the forces that control my ability to travel.  I can exploit weaknesses in their business model and I can find others willing to join forces to bypass those externalities altogether.

I have chosen the latter and in the process, I have met some of the smartest, engaging, and interesting people that I could have imagined.  I no longer flash back to the past – I flash forward to the future.  That is the secret ingredient to never being stranded in the choices of others.

2012 will be the tipping point for many people. I believe that communities will begin to organize around the assets that government and corporations can no longer provide.  Communities will make the choices that determine their own future, sanctity, and preservation.  Self-organization will become the fabric of the social landscape.

My job it to show people that there is no reason why they cannot run their own airline; any where and any time they choose.

Few people get on a commercial airplane to enjoy the fine food, friendly conversation and sensational view – but that may change as KLM continues to innovate in social media.  Some may remember that KLM was the first to provide on-demand service from Europe to Miami booked entirely through social media.

This time, KLM is banking on the fact that people who have both an origin city and a destination city in common, would have other things in common as well. KLM observes that people share information with each other so freely on social media- so maybe they’ll share information with each other on “Social Airlines”.

Will something get lost in the translation between the virtual and the reality? Fortunately, Anne van den Berg was kind enough to provide Social Flights with a translation of her Dutch language blog,  Editor Anne Daily:

You always have to wait and see who will sit next to you on an airplane. A crying kid or a smelly man, it is not always fun. Soon, this can be in the past. The Dutch airline company KLM will be offering seating suggestions based on someone’s Twitter or Facebook account. The goal, says an executive from KLM, is letting, mainly business, passengers network. I am very curious how this will work. 

Well, we are asking the same questions at Social Flights.  In fact we are attempting to fill small aircraft on direct flights based on a similar assumption that people of like interests would choose to share an airplane together.  While the KLM starts with a full plane and sorts people by interests, Social Flights hopes to go one step further and use such data to “kickstart” scheduled “flash Charter Jet” service.  So while KLM sees an important branding advantage, Social Flights sees and entirely new paradigm for air transportation – public Charter Jets.

Anne van den Berg continues with the following analysis:

- What kind of customers are you serving? I wonder, what customer are waiting for this service? Personally, I like having some conversations with my neighbour in an airplane, but, mainly when I return from a trip, I want to sleep. Nó contact. If someone will come and sit next to me with the expectation of discussing the state of the world in a highly intellectual manner, it is very probable he will be deceived. 

- And what about privacy? I expect that customers will have to do an opt-in, but do you want to give everybody insight in who you are? If you put your Twitter information out there, sure that is public already, but Facebook? That is mainly meant for family and friends (although some people will stretch that definition). 

KLM has since disclosed in this CNN article that mutual acceptance to use the social seating tool will be required. KLM was quick to note that the intention is not to create a dating game and they did not disclose if they would charge an extra fee for the service. Further, they they did mention adding any amenities in support of the friendship event.

This leaves me wondering what the implications of being “unfriended” in virtual space and reality space at the edge of physical space.  In any case, Social Flights will be watching KLM developments actively. Thanks Anne for the tip and translation on this story – let’s share a flight sometime.

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

The internet connects people and moves things.

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

Do Private Jet Operators Understand The Implications?

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

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

What Are The Implications?

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

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

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

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

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

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

Broken Business Models

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

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

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

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

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

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

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

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