Great question Max. I think they use their tiered pricing to fish out those who want more flight availability. For the lowest subscription price, you can only book one roundtrip flight at a time. For the highest, you can book two at a time. The other way is by offering multiple frequent flights so the effective capacity is higher and mitigates the first come first serve problem. Another way is adding more capacity – they are bringing in planes that can seat 9 people on board soon and I can forsee them start to operate multiple flights at once.
I do agree that none of these will completely resolve the partner flying from London to Frankfurt on a friday evening at short notice, he will likely not be able to get a flight because that is a very popular time. One thought, could be to have members trade their flight for something valuable, like prority or a guest pass so that if the partner really wants to fly that friday he can exchange with someone who has more flexibility and values the compensation (whatever it is) being offered.
Yes I think you are right, they probably aren’t too many of these routes available. It is interesting to note the founders did something similar on the West Coast with SurfAir (which owned the planes) so they might expand back into that market. Eventually though, Europe is perhaps where the most money is to be made especially with work authorizations in the EU being quite flexible
Beacon only does short flights where they can compete with rail and driving. So I would imagine routes like BOS-DC or Cincinnati-Chicago. I agree that flights between BOS-NYC are already frequent and cheap, but I think Beacon is trying to monetize the value it offers by not having to arrive an hr to 30 minutes before a flight and go through TSA. It is a fair question to ask if TSA Pre-Check and frequent flyer programs mitigate most if not all of these items. However, Beacon’s customer service is not matched by even JetBlue or Southwest.
On price point, I think it does. There are already three tiers and they are willing to customize pricing and offerings for corporate customers who are not as price sensitive. Perhaps these companies will pay a little more to have 2 people under the same subscription.
Great article. The sufficient profit really caught my attention. One would think that you need to maximize all avenues of profits so that your competition does not slowly beat you out of the market. However I can see the other side, where in other to keep sufficient profits, the three governing bodies are alert to any threat and will act accordingly.
Great article, Ahn. One interesting thing to note is that are now robots with cool end effectors that can put disparate objects into a box. I think Amazon itself is also working on that.
The other interesting thing is how Amazon is forcing (maybe that’s too strong a word, but anyway) to change their operating models. For example, most people buy one unit of quanity at a time e.g. one bottle of tide. However P&G does not ship one bottle of tide in one brown box (which is what Amazon wants). They ship 6-8 bottles in a box and many boxes on a pallet. As Amazon becomes more important, companies like P&G are retooling their operations to be able to supply smaller case counts. So there is this interesting reverbation effect across multiple industries
Now I want those boots. I do think the stockouts are primarily a failure of supply to keep up with demand. The unintended benefit is that the scarcity makes them even more desirable akin to what Hermes does with its Birkins or Louboutin with the pigalles in my opinion.
In any case, I think the fairly labour intensive operations model is the right model for a faddish business like this.This will allow them to scale up and down with demand fairly flexible. CapEx of $1M USD compared to sales of $1.6B USD is quite reasonable to me and they should continue to invest in molding machines to meet demand. The only watchout would be leaving money on the table by not responding to back orders in a timely fashion.