All Aviation Articles By Allen Howell

Is the market for new business jets really on the upswing?

Molly McMillin of the Wichita Eagle recently reported  that the market for new business jets “appears poised for a new growth spurt, although it’s coming from a severely depressed base”.

 

She is not kidding about the severely depressed base. Wichita has experienced something closer to the great depression than a severe recession. Who could have predicted in mid 2008 what has happened to the business jet market in the past two and a half years. Production of new aircraft has fallen though the floor and hit the basement. In the mean time competition from down south in Brazil is not going to go away.

 

Will this upturn continue up if jet fuel goes up another dollar a gallon this year? What happens if we get into an inflationary cycle that slows the economy down?  And what will happen to the economy when the states and the feds realize they cant keep spending like they have in the past two years. Most honest economists will say that curtailing government spending in a serious way will at least temporarily slow the economy down, especially when the money being spent is borrowed and will not come back to the private sector.

 

I don’t get the same warm fuzzy these analysts get about the upturn in business jet demand in the US.

Our industry has been operating on the same old business models for a couple decades now.

 

The last real innovation in business aviation was the fractional concept pioneered by NetJets and successfully copied by others. That concept brought in a whole new market of business jet travelers (fractional owners) because it disaggregated the costs of owning a jet. It was brilliant and it kept the manufacturers and others in the supply chain alive throughout the 2000’s. Fractional operations have a permanent place in business aviation but they won’t save us in the next 10 years.

 

If we as an industry want to grow the market, I would suggest that we can’t count on the US economy, or quantitative easing monetary policy, or bonus depreciation to do it for us.

 

We have to innovate and come up with new ways to reach the market of travelers with what we sell.  Travelers really want what private aviation has to offer which is hassle free, time saving, user friendly,  and socially productive travel. The limiting factor has always been price, especially when compared against airline ticket prices. 

 

The airline experience has not improved in the last year. In some ways it has deteriorated, as load factors have climbed to all time highs causing most flights to be packed. My  three recent experiences in the airline system have all involved delays, lost baggage, rerouting of flights, and full cramped flights. As you walk through airline terminals you can see the fatigue and frustration on the faces of the road warriors.    

 

Can Social Technology be a part of the next innovative breakthrough in how people buy private aviation? I would suggest that it can by facilitating people to aggregate around their travel intentions and buy flights as a group but pay by the seat, thus breaking through the price barrier that has limited our ability to reach a larger market.

Air Travel: A Target For Social Innovation



An industry in crisis is an industry ripe for transformation.

America’s air travel system is in crisis. In response to rising fuel prices, air-space congestion and industry losses during the recession, airlines have cut capacity and raised rates. These challenges follow on the heels of delays and hassles that have cost the nation almost $33 billion in the past year alone, according to a recent study commissioned by the FAA / DOT.

Some blame the problems on government regulations over airlines and the lack of modernized air traffic control infrastucture. Others see the problem as dysfunctional management of the airline system.

Could it be that “the system of air travel” is being re-engineered before our eyes and all the current problems are part of the process?

I remember when airline travel used to be a social experience. Today it is anything but social, with the majority of passengers frustrated by the experience and loss of productivity.  Yet air travel is necessary for both leisure and business purposes.

How big is air travel and its impact on the economy here in the US?

 

Research from the US Travel Association says:

 

1.          About 42 percent of U.S. adults reported traveling by air for leisure trips.  The percentage of air travelers increases to 48 percent among U.S. adults who traveled for business purposes in the past year.

2.          A study by the U.S. Travel Association revealed a deep frustration among air travelers that caused them to avoid an estimated 41 million trips over the past 12 months at a cost of more than $26 billion to the U.S. economy.

3.          Business travel in the U.S. is responsible for $246 billion in spending and 2.3 million American jobs; $100 billion of this spending and 1 million American jobs are linked directly to meetings and events. For every dollar invested in business travel, businesses experience an average $12.50 in increased revenue and $3.80 in new profits.

4.          The Internet was used by approximately 90 million American adults to plan travel during the past year with 76 percent of online travelers planning leisure trips online.

 

The Social Market of Travel Is Hot Every other day or two, you hear about a new travel app, a travel related company, or a mega travel player partnering, acquiring, or developing the next industry killer app. Consider some of the recent developments in the travel space over the last year:

 

1.          Tripit acquired for 120M

2.          Google’s purchase of ITA

3.          Facebook buys Nextstop

4.          Google managed to get the folks behind Ruba – a travel site – to join its organization

5.          Hotwire, Kayak, Orbitz and Farecast, are now part of Microsoft’s Bing

6.          Plancast launches a site enabling people to post and share events they are attending

7.          Gowalla Offers Trips & Travel Guides with USA TODAY

8.          Dopplr makes your travel planning smarter. Share travel plans with the people you trust.

9.          Facebook now drives 12%, and growing, of the airline’s traffic compared with Google 17.6%, and Yahoo 10%.

10.      Mobile travel apps are flooding into the market in numbers too large to follow.

 

The list goes on, but by now you should conclude that “social” and “travel” are hot and competition between Google and Facebook will continue to rage. Will Facebook trump Google as the most important travel site?

Time will tell but none of these applications or developments really do anything to improve the efficiency of the travel experience.

 

What Will Improve the Travel Experience?

Providing social technology to travelers may help people find things faster, get recommendations and collaborate with friends and associates, but it still doesn’t improve the existing system of travel. Will social technology reduce delays, hassles and loss of productivity? Not likely, but then again it could if applied to a different travel system.

Private Aviation represents $8 Billion in annual revenue, just a small fraction of the entire travel spend,  but little has been done to bring innovation to the industry, and it lags way behind all markets in use of social technology.

Private Aviation offers a superior experience for travelers. If social technology was applied innovatively just maybe the cost of flying private could be reduced. Just maybe, friends could form “travel tribes” and buy seats on private aircraft. Just maybe, brands would sponsor flights to reach this new market of travelers and thus bring down the cost.

 

Consider the possibilities.

 

Travel Is Going Social, Will Business Aviation Follow?

Many of us who work in business aviation wonder if people would be willing to share their travel plans, share a flight together, let others know what they are up to, so they can meet up on trips, share rides from the airport to the hotel and so forth.

In other words, will business aviation travel go social?

One of the terms used for the aircraft we operate is “private” which does not exactly line up with “social” in a public sense.  We fly “private jets.” Private sounds like I don’t want the public to know what I am doing, where I am going and I most likely do not want to share my private ride.

Sharing is already happening in the world of airline travel and the events that drive travel; maybe to ease the pain inflicted on travelers by the airline system.

As I have looked around on the internet for social media platforms related to travel some really interesting ones have started showing up.

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·         Planely allows airline travelers to share their flight itinerary with the hope of connecting with others on the same flight. If this builds critical mass it could become a valuable tool.

·         IMGuest allows travelers to share their hotel location and plans in order to meet up face to face with others at the same or close by hotels, and expand their network.

·         Plancast is a site that is really done well, allowing people to post their plans for attending conventions, local events, music events, etc. and easily see who else is attending. A great way to make connections both locally and at away events.

·         TripIt, which just announced its acquisition by Concur (Nasdaq: CNQR), was one of the first travel sites allowing travelers to share their itineraries that gained a mass adoption. Concur is a leading provider of integrated travel and expense management solutions and apparently thinks TripIt is on to something based on the acquisition price.

These sites allow you to sign up and use them for free, and in some cases check in through your Facebook or Twitter accounts. The Facebook check-in creates an instant profile for fellow travelers to see plus it gives the site access to your Facebook information.

So the question asked again: Are travelers willing to share their travel plans in the hope of making the experience more social? The answer seems to be yes, as travelers are signing up to these social technology platforms in droves.

What about personal and business travel in private chartered aircraft?

What is the value in sharing travel plans with others you don’t know too well? Is it too risky?  Most of these sites tout the value proposition of networking and meeting up with people you would not otherwise meet.

The value of each of us knowing where others are going can go beyond just networking.

If you and I find out we are going to the same places, we can get together and come up with new solutions for getting there more efficiently by sharing costs and buying travel collaboratively. Eventually we may even be able to drive the market to offer better solutions that fit our needs, versus what suppliers of air mass transportation offer us today.

It would great if we could go when and where we really want to go in the most efficient manner as opposed to being pushed and shoved through a system that is not designed to really meet our intentions.

When that happens can the private aircraft, and the industry that supports it, be a possible solution?

Find aircraft for sale listings and pilot resources for U.S. airports on GlobalAir.com.

GENERAL AVIATION NEEDS A ZIPCAR OF THE AIR

Where does the general aviation industry go from here? Well, this looks to be a year of transition, from the old economy that we knew prior to 2008 to the new economy that should start to really see growth in 2012. Growth will come with a different look than it has in the past, driven by technology innovation in the market and increased globalization. The United States will no longer be alone in the drivers seat. Traditional market general aviation growth will happen in China, India and other developing economies.

Growth here in the U.S. has to come from market innovation. We need to do more than get used to it. We need to adapt and embrace it, and determine where the opportunities are for those of us in general aviation in the U.S. and in Europe.

Our company finished 2010 with a strong run to the end of December, and the first few months of 2011 look strong in aircraft charter and FBO fuel sales. Is this a sustainable trend? I hope so. My major concern is the volatility of fuel prices. We don’t know if the economy, let alone the aviation industry, can stand oil prices 30% to 50% higher than they are today.

Setting concerns aside, when I look out to 2011 and beyond, I see opportunities for general aviation to capture the traveler in a new way. The number one reason more people don’t fly general aviation aircraft is price. I have written a lot about this over the past 18 months. I’ve thought about this problem (opportunity) for many years prior, as I talk with people who use or want to use our service almost every day for the past 28 years. There are some ideas worth considering in a good book I’m reading right now called “What’s Mine is Yours: The Rise of Collaborative Consumption” by Rachel Botsman and Roo Rogers.

Wikipedia says the following about this term I had not heard of until recently:

The term collaborative consumption is used to describe the cultural and economic force away from ‘hyper-consumption’ to re-invented economic models of sharing, swapping, bartering, trading or renting that have been enabled by advances in social media and peer-to-peer online platforms

The authors propose that in order for “Collaborative Consumption” to work, four underlying principles must be present:

* Critical Mass
* Idling Capacity
* Belief in the Commons
* Trust Between Strangers

Conditions one and two definitely exist in General Aviation and the subset of Business Aviation. We sit on a fleet of underutilized aircraft (idling capacity) , many parked and not flying at all, and even the active aircraft are not used anywhere near optimum levels. Critical mass is present but not properly managed and accounted for. In the U.S. there are 17,000 aircraft available for hire in charter service. Many more aircraft could be available if demand was sufficient to put them to work. Where are they and how do they work together as a synergistic fleet to serve the market? Today the fleet doesn’t work in a synergistic way.

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The charter industry is fragmented and not optimized, but technology companies like Charter X / Avinode are making strides in providing a global distribution system for supply of aircraft availability across the fleet. The bigger problem seems to be finding the customer.

That customer is currently being pushed and shoved around by the airlines in a system that seems to become profitable only at the expense of efficiency, comfort and happiness of the traveler (the customer).  If Zappos is in the business of delivering happiness I sometimes wonder if the airline system is in the business of delivering misery.

On conditions three and four, we don’t know if there is a belief in the commons and trust between strangers in General Aviation. Are we willing to share a ride or flight, and do we trust who we are sharing with to sit next to them? The defining technology that will push us through these hurdles will be social media. I can see a day when we share a flight with others to a destination of common interest and long before we board the aircraft we know who we are flying with because we know them online. We see their Facebook profile and we are connected to them on LinkedIn. We have tweeted and texted them and maybe even used email (outdated) to connect to them, to discuss our common travel intentions.

And so our belief in the commons and trust between strangers centers on sharing a flight in a private aircraft together to safely and efficiently travel. And more than that, it will be enjoyable travel because the travel itself will have a social component to it that we don’t get when we travel on the airlines today. Traveling with old and newfound friends and business associates and family will be the new order of travel.

This is not going to happen on a large scale in 2011, but it will begin this year. By 2015 it will absolutely change travel by air in ways that most people cannot even imagine today.

Early adopters from the supply side will be those charter companies (new and established) who are not afraid to adopt new technologies and business processes to meet the new economy. As the critical mass increases and more travelers find this way of air travel, more suppliers will fill the demand.

From the demand side, those who are fed up with the current system of air travel are hungry, maybe even begging for a better solution to meet their need to travel. Social technology may discover that demand for what we have to offer far outpaces our ability to meet it with the supply where it sits today.

Eventually the airlines will have to reorder their business model when they discover that travelers don’t want to go when and where they are being forced to through the current system. It will take them a while to realize what is happening and some airlines that do understand innovation will figure it out. Many will not, due to their inflexible business models.

The next few years will be an exciting time in our industry as disruptive technology changes the way we travel. I look forward to seeing it happen and hopefully being in the midst of it.

Change of guard in Washington, D.C. should be good for aviation in the U.S.

The elections should be good not only for business aviation, but also for the overall aviation industry in the United States. Less government meddling and more free-market forces will ultimately lead to a more efficient system.

 

A significant change has taken place with the defeat of Rep. James Oberstar, D-Minnesota, who was the powerful chair of the House Transportation Committee.

 

Even had he not been defeated, with the change in party control, Rep. John Mica, R-Florida would still take the leadership position on this committee. Josh Mitchell, writing for the Wall Street Journal in a Nov. 5 article, talks about this in more detail.

 

If you have tracked Congress’s work (or lack thereof) in passing the FAA Funding Reauthorization Bill, you know that this bill has been held up from final passage due to non-related issues being attached to it regarding unionization of FedEx drivers. Mr. Oberstar was a friend of the unions, but his tenure in Congress is over.

 

Could it be that the gamesmanship might finally be over? Maybe we will get funding of NextGen and the FAA can take a long-term view of the development of the infrastructure this country needs to have an efficient air transportation system.  


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Another post-election article in Bloomberg discusses the major airlines gaining allies with the new Republican House on outsourcing and anti-trust issues.

 

Quoting from that article:
“The current Congress has been anti-airline,” said William Swelbar, a research engineer specializing in air transport at the Massachusetts Institute of Technology in Cambridge. “There will be a new set of ears to listen to the industry.”  

 

The consensus seems to be that the new guard will be less intrusive into the affairs of the airlines and general aviation, letting the market work things out.

 

This is good news for the air transportation system and, ultimately, good news for the business and general aviation segments. Less interference will allow us to demonstrate our value without legislation unbalancing the system towards unions or big business interests.

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