Friday, July 8, 2016

The rise of the private airline

A new breed of members-only carrier is about to launch in Europe, offering small planes, small airports and as many flights as you like for one monthly fee.

Half a century after the champagne- and kerosene-guzzling “jet set” took off, a new group of frequent, but more frugal, flyers has quietly emerged in the US: the propeller set. In the summer of 2013, a start-up called Surf Air began flying a single-engine Pilatus turboprop between Silicon Valley and Los Angeles. The plane might have had only eight passenger seats, but it boasted a revolutionary business model. Rather than buy tickets, its passengers paid a monthly membership fee that let them fly as often as they wanted. And rather than use main terminals at international airports, it flew to smaller destinations, with easier passenger parking and no queues. Members underwent security screening at the time of joining, thus simplifying airport checks and allowing them to arrive at the terminal 15 minutes before take off.

After a slow start, the airline picked up speed. Today its 12 aircraft operate 90 flights a day, connecting 12 Californian cities. It has 3,000 members, each paying $1,950 per month, and hopes to turn its first profit in the next quarter. Its success has inspired others including Texas-based Rise, which launched in 2014 and runs 60 flights a week using King Air 350 turboprops.

And now, the membership airline is coming to Europe. Surf Air set up a London office in January and is currently recruiting members. In October it plans to begin flights between London, Zurich, Geneva, Cannes and Dublin, using four aircraft, adding Paris soon after. Meanwhile a UK-based start-up, Fly Club Air, plans to launch flights between London, Edinburgh and Manchester in January 2017, and to extend into Europe the following month. An Australian version, Airly, is due to launch later this year.

“Our view is that the model is much more attractive in Europe than California because there are a large number of cities relatively close together and a high degree of frustration with the existing airlines and airports,” says Simon Talling-Smith, chief executive of Surf Air Europe. “If you wanted to fly 20 times a month you could do that — in fact we had one member in California who flew 26 times in a month — but probably more important to our members is that we are taking away the pain of big airports and big airplanes.”

Unlike the numerous private jet companies, all of which offer ways of booking flights on planes whose owners don’t need them at that moment, most membership airlines own their planes in the same way a major carrier would. Busy schedules — with each aircraft flying up to six times day — mean using other people’s planes would be impossible to co-ordinate. “We’re not a charter company, we’re not a private jet company, we’re an airline,” says Talling-Smith, who worked for British Airways for 22 years, latterly as chief executive for the Americas. Surf Air Europe’s chief operations officer is Peter Evans, formerly head of flight operations for Virgin Atlantic. “[Nevertheless], you have to take everything you know about airlines and forget it,” says Talling-Smith. “Unlike almost every other carrier, our goal is not to fill as many seats as possible.”

In order to keep subscribers happy, membership airlines need to ensure enough free seats that users can hop on the flights they want, even at short notice. Fly Club Air calculates it needs 120 members for a route to break even. Above that it becomes increasingly profitable, but if memberships hit 180 it will need to put a separate plane on the route. Surf Air sets a maximum of 200 members per aircraft.

Fly Club Air plans to fly from Blackbushe airport in Hampshire, 30 miles west of central London, charging £1,495 per month (plus a £595 joining fee) and using two Beechcraft King Air 250 aircraft with seven passenger seats. (“There is a loo too, but I’d try not to use it,” says Andrew Golding, chief marketing officer.) Surf Air will begin with four eight-seater planes (jets rather than turboprops because of the longer distances in Europe), initially flying from the private terminal at Luton but expanding to Biggin Hill, 15 miles south of central London, next year. It will charge £2,500 per month, with a £1,000 joining fee. Those fees only allow members to hold two flights in advance, but members on higher tariffs can hold up to six.

The model helps remove some of the risk in launching an airline — a certain income is guaranteed even before the first flight takes off — but new technology has also played a key role, cutting the need for booking and ticketing staff. Surf Air Europe, operating from a shared office in Mayfair, will only have 20 directly employed staff by the time of launch. Low fuel prices have helped too, as has the rise in the number of people who work and live in different cities, and the fact that conventional airlines have cut back business class perks.

However success remains far from guaranteed. Beacon, a New York membership airline that launched in 2015, lasted just eight months. Take Air stopped its scheduled flights between Antwerp and Zurich in January after less than a year; it will now be incorporated into Fly Club Air.

Such examples have done little to temper ambitions. Talling-Smith says by 2021 he anticipates flying 60-70 aircraft in the US, 50 in Europe, 20 in the Middle East and 20 in India. “We’re not just an alternative to private jets for high net worths,” says Golding. “We’re for the regular business traveller who wants to avoid queues, stop wasting time and get home for tea.”

Original article can be found here:

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