subscription flying

Jan 11, 2016

Would you pay $2550 month for unlimited Sydney-Melbourne flights?

The 'disruptive' potential of subscription 'all you can fly' airline operations in Australia is very high, despite the barriers to success. Airly, a proposed new Sydney-Melbourne se

Ben Sandilands — Editor of Plane Talking

Ben Sandilands

Editor of Plane Talking

[caption id="attachment_58999" align="aligncenter" width="610"]From the Surf Air web site, note the single engined Pilatus prop From the Surf Air web site, note the single engined Pilatus prop[/caption] The 'disruptive' potential of subscription 'all you can fly' airline operations in Australia is very high, despite the barriers to success. Airly, a proposed new Sydney-Melbourne service reported by Fairfax  today, comes with some very strong pros and cons. At the outset a monthly fee of $2550 for unlimited flights between both cities in a fast twin engined small executive turbo-prop may seem daunting. That's the equivalent of around two business class return trips a month on Australia's major domestic route before corporate account discounts kick in, or around seven to eight return economy class flights on full service Qantas or Virgin Australia jets at readily available fares. If you are really flying eight return trips every month between both cities you need help, or a life. Although one of the great attractions of the Airly model is that the frustrations of using the Sydney and Melbourne main airports would be replaced by the often surreal sense of dislocation that the alternatives of the Bankstown and Essendon airports offer. Cut out both dysfunctional major city airports and you may get your life back. (Or think you are about to lose it these days if you have cause to meet or use a private light aircraft charter at Bankstown.) But there are of course obstacles to success for Airly. One is the nature of the customer, which will usually be the managed corporate account, not an individual exercising choice. The frequent flying top yielding customer in Australia flies on a corporate, government or institutional account, which is why Qantas and Virgin compete so vigorously to win contracts from those travel generators. These inducements include bulk discounts, free lounge memberships and often, invitations to join the select Chairmans Lounge, or the ultra discreet The Club, not to the users of the accounts, but the various CEOs or heads of departments that sign those contracts. If you have control over the choices made by a lot of executive flyers, you are probably going to be in a lounge they may never see. These special lounges, as well as those used by the working-flying classes, are also often the destinations, rather than the city in which they are located. They are used as exceedingly well appointed venues for meetings or interviews by Qantas and Virgin loyalists who thus save a trip into town at the other end. Airly has to crack the power of the clubs. Or maybe not. If the eight seat turbo-props to be used on services actually flew full on every sector, they wouldn't cause much of an overall effect on the established carriers. The US experience of the Surf Air model, as reported by Fairfax, has been successful. An opinion sought from  independent and highly regarded US airline and aviation analyst Robert Mann, makes the point that despite a lack of some financial clarity, the value of Surf Air has risen, its network has expanded, and it is being imitated. This is his analysis:
As a three-year old (in operation) private, California firm that files no financials or operating statistics, it is hard to say against what quantitative  measure Surf Air might be termed a 'success.' It is unclear how many memberships of what average duration Surf Air has sold, how many flights, seats, passengers Surf Air has operated/carried, or how much venture capital Surf Air has raised, or whether it continues to rely on VC subsidy, or whether it is cash flow positive or net profitable, or when it projects to be so. That is has lasted this long, and grown, suggests some measure of success to its venture capital backers, even if the many of the founding team moved on a number of years ago. In its initial three years of operation, Surf Air has grown its fleet to thirteen Pilatus PC-12 aircraft from three, and their network from three destinations to eleven, which suggests they have been able to convert a good number of what they claimed pre-startup to be 'thousands' of customers interested in paying their $1950 (and up, based on service level) monthly subscription prices (three months minimum commitment, plus a $1000 initiation fee). The offer term sheet now comprises individual, family and corporate memberships. (From personal experience with American's AAirpass product, 'pass-around' subscriptions are a huge draw for corporate travel buyers.) The Surf Air offer is styled as 'unlimited service' (the proverbial 'all you can eat' buffet) but what the fine print establishes is several levels of service, dependent on how many (2, 4 or 6 -- representing 1, 2, or 3 round-trips) reservations/boarding passes a customer wishes to hold at any one-time. Guests may fly with the member at a flat fee of $1000 per round-trip flight; on these stage lengths, not inexpensive, especially compared with the 'unlimited' monthly charge. The Surf Air network comprises eleven destinations in the California network, including Burbank, Hawthorne, San Carlos, Oakland, Santa Barbara, Truckee, Carlsbad, Napa, Monterey, Sacramento, and Palm Springs, California. A twelfth destination outside California (Las Vegas, Nevada) is marketed by Surf Air but operated via a code-share arrangement. Although originally intent on becoming a U.S. DOT-regulated (national) Part 121 scheduled/large aircraft air carrier (despite operating the Pilatus PC-12, an under 12,500 lb MTOW turboprop), Surf ultimately conceded to operate solely intrastate (California) service under an FAA Part 135 Commuter certificate. In summary, it appears Surf Air has endured in part by pivoting from purely individual membership sales to incorporate more of a corporate subscription model. While still limited to California operations, they are an actual airline, operating their own fleet, and have dramatically expanded their intra-state network. Also evident of success, the Surf Air business model has been replicated in the Dallas, Boston and New York areas, in at least one case by a member of the original Surf Air founding team, with several other 'look alike' marketing platforms (as distinct from actual air carriers) offering similar services.
The Surf Air network uses single engined high performance Pilatus PC-12s, while Airly will use twin prop King Air's already on the operating certificate of the regional carrier that will provide the pilots, the aircraft, the recurrent training and the maintenance. That choice makes regulatory sense in Australia, although there may be an issue with Bankstown Airport from insurance companies and CASA given its at times somewhat concentrated and variable experiences with privately owned light planes and flying school circuits . King Air's have confined seating, and a tiny toilet in which passengers can anticipate having a dump with their knees beside their ears and a risk of injuries from efforts to shut the door on a facility your fellow passengers will wish is never used in their proximity. But the windows are good sized ovals, and the whirr of the rotating knives as you plow through the lower more turbulent altitudes generally inhabited by turbo-props should take your mind off any other distractions. Who needs the boring predictability of a jet when you can take something with propellers through the middle layers of a cloud deck? If flying is strictly about time saving between nearer city pairs, the Airly model delivers, if it gets half a chance to gain traction.

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14 thoughts on “Would you pay $2550 month for unlimited Sydney-Melbourne flights?

  1. George Glass

    I have personally had an engine failure in a PT6 powered aircraft. Might be rare but it happens. RPT,IFR,single pilot in all weather is plain nuts.

  2. joe airline pilot

    Hmm. Single pilot, props, at half the speed of a jet and twice the noise, in more cramped seats, a chemical toilet and being bashed around in mid levels. Good luck with that.

  3. jukebox

    If there’s a silver lining, it may well be that “taking a dump with your knees beside your ears” is the medical fraternity’s anatomically preferred position…

  4. comet

    Ha! Jukebox is right. Humans are built to use a squat position. All the ‘piping’ straightens out.

    I quite enjoy flying through the cloud layers. It’s more exciting than being at 37,000 feet. I take some dramatic photos out the window.

    We may all go back to propellor aircraft in the future if alternative fuel sources take hold. Maybe we’ll also go back to using squat position too, if it’s deemed healthier.

  5. Dusty

    Good idea, wrong type. PC12 PT6 failure statistics are impressive – but emotion gets in the way of rational argument. Airly shouldn’t limit themselves to just two airports. Needs to be more like Uber. In any event I hope the business case is thoroughly well thought out.

  6. Dusty

    ‘PlaneSense’ is a fractional ownership model which I believe could work on the east coast instead of the one proposed. Vastly different population and airport network however in US.

  7. George Glass

    I wonder,Dusty,whether or not you have actually operated as pilot in command in single pilot,IFR,operations in single engine aircraft?I you had you would be far less sanguine.Or are you an accountant?

  8. Dusty

    Not an accountant. All I am saying is that there appears to be very successful fractional ownership models which offer a service on a single engine aircraft. I don’t need to be sanguine about it, ask those companies that do it.

  9. Ben Sandilands

    Let’s not confuse what Surf Air does in he US with a single engined single pilot aircraft and Airly will do with a two pilot twin engined turboprop operated by an established regional carrier in this country.

    I think Airly has been very smart, and no doubt well advised as to how the operation would be set up in this country. The issues are business success, relevance, and the power of the loyalty programs in their less well known operations in the Australian market. It’s good to see the pursuit of an interesting air transport model in this country but success isn’t assured.

  10. George Glass

    It will last as long as it takes for the first major incident.Those of us who grew up in general aviation have seen this all before.This is just the latest iteration.Cant wait to see how the regulators handle the number of mickey-mouse operators that will jump on this opportunity.Crazy.

  11. comet

    Remember OzJet, which brought historic first-generation Boeing 737s out of the museum to run an all-business-class service around Australia?

    It aimed for the luxury market, but couldn’t pry those folks away from airport lounges and the more numerous flights of the incumbent airlines.

    Then there were the two iterations of Compass Airlines, which failed in the discount market.

    I wonder what Airly can offer, apart from stunning cloud views. You have to fly more than eight economy flights per month to make it worthwhile. The only ones doing that would be business customers, especially small businesses that don’t want to pay for business class. And those who live in a different state to where they work.

    But Bankstown Airport doesn’t have the transport links, and you’d lose all your savings in long taxi commutes on the notoriously congested M5 motorway.

    It’s hard to think of a business case for Airly. But maybe the small aircraft means that Airly won’t break guitars, like United Airlines and now Virgin Australia do.

  12. Cat on a PC©

    The only good thing that will come from this is the convenience and stress-free option of flying out of Essendon, which does have good transport links – even a tram – if you don’t mind a stroll to the terminal. Bankstown? Hmmm . . .

    This might work well if they can slot one of KA350s into KSA instead of Bankstown.

    Good luck to them, nonetheless.

  13. Mike Smith

    Imagine further. A Uber model for flying.

  14. john grier

    both SYD & MEL are ugly disaster areas, which consume vast amounts of time.

    THink there are lots of sales reps who don’t want to go anywhere near SYD CBD, who could use these services.

    A corporate type a/c where anyone could use in that month, at a higher fee than a single user would definitely work.

    Many sales reps are now banned from lounges as they are a complete waste of time (paid time)

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