For a monthly fee of $1,750 (plus $1,000 signup fee), members are able to enjoy an “all you can fly” ticket. With 90 daily flights to 12 destinations [a], their business model is to “keep the price closer to commercial flights but the experience on par with private jets.” [e]
What’s the Angle of Attack?
“Membership currently stands at 1,500 members and is carefully limited, so as not to overwhelm the service and guarantee quality for all members.” [b] This ensures there are always empty seats to allow for last minute bookings (aside from peak travel times). There is a waiting list of potential customers.
Surf Air Customers travel often within the geographic areas operated in (between business locations or to vacation homes). Surf Air offers an alternative to “commuters who spend between two to six hours on the road each day, or those who work in the city but drive to a weekend escape every Friday.” [b] Customers are “are wealthy, but not so rich they can commit to the cost of locking in fractional ownership on a private jet. At the same time, they are traveling for business and for them, time is money.” [c]
Time savings is one of the biggest advantages to Surf Air. Customers avoid the wait at a traditional airport, are able to use private air terminals with free parking and free Wi-Fi, enjoy free checked baggage, free snacks and beverages and no fee for changing travel arrangements or last minute booking. This creates a unique customer culture.
Competition includes commercial airlines as well as business aviation operators. Commercial airlines are able to offer a more affordable option, but require the hassle of a traditional airport (waiting, security, parking, etc.). Business aviation operators offer a more luxurious and customizable experience (pickup, flexible times, flexible destinations, etc.) but at a much more premium price. Surf Air bridges the gap between the two: offering the luxury and convenience of business aviation, sacrificing only on flexibility, choosing to operate on a fixed schedule.
What’s the Ops Tempo?
Surf Air operates much like a traditional airline, but under differing boundary conditions. The company owns its fleet of airplanes (Pilatus PC-12) which needs to be operated and maintained. Pilots, on-wing maintenance, ground crew and fuel are all expenses needed to keep the planes operational. In order to keep operating costs low, they run propeller airplanes since they fly a maximum range of 2 hours. A turbojet would complete the journey 15-20% faster, but consume much more fuel. Fuel price is a main cost driver as for any airline.
Surf Air wishes to remain differentiated from commercial airlines and operates in high volume markets in need of short-hop flights. They also focus on using under-utilized airports, reducing airport rental costs. “Ninety percent of American airports fly less than a third of their capacity, while 50% run on less than 10% of their capacity”. [g]
“Because of subscriptions, we know exactly how much revenue we’re going to generate at the beginning of every month. So we can scale our operation effectively, because we know exactly how much flying we’re able to execute.” [d] This allows for the business to produce predictive revenue on a regular basis. Operating costs are fixed since the airline operates on a schedule and Surf Air is able to control its utilization (under 100%) in order to maximize revenue as well as maintain the culture and “feel” that the customer desires.
In order to cultivate the service culture that they are known for Surf Air has to train and maintain a devoted staff that is able to tend to all of their customer’s needs and concerns. This also includes the IT investment that has made the last minute, online booking option possible. Staff are encouraged to make the customer experience as memorable as possible often going over and above their job descriptions to call ahead for flowers or chocolates. This service culture results in low customer turnover.
Machbusting or creaming the bird?
Surf Air struggled after launch, signing just 225 members. Members initially complained that the flights they wanted were always booked, and that flights were delayed or cancelled. [e] New management brought major airline experience to the company, effectively aligning the business and operational models. Surf Air has more frequent flights and new routes between existing destinations and foresees itself on an hourly basis in the coming years. Currently, markets outside of California are being looked at, and to accommodate growth, Surf Air is aiming to have 65 planes in operation by 2020.