Jet Charter App Special
Every week it seems a new app is launched declaring itself ‘Uber for private jets’. P1 asks if we really need that kind of business model in business aviation, and who the main players are in this fast-changing market.
Full or fractional ownership of an aircraft can be a significant investment and, in harder economic times, it’s no surprise to see savvy startups and established charter companies cashing in on the Uber and AirBnB disruptive business models.
By allowing private jet charter at the click of an app icon, and flights available in less than an hour, with no (or low) membership fees, it’s no wonder these “Uber for private jets” apps are gaining in number and popularity. But can success shown in the taxi and lettings markets be replicated for private aviation?
Chartering a private jet can be a complex and confusing process, which lacks transparency. But as new technology is creating a world where almost anything can be done with the tap of an app, companies such as Victor and PrivateFly are aiming to use smartphones to shake up the market.
Smartphone apps hit the transportation industry most famously with the US startup Uber. The taxi booking app quickly went global and was able to completely transform the cab booking market by making getting from point A to point B more convenient and efficient than ever. By putting the consumers in control, Uber disrupted and now dominates – much like accommodation marketplace AirBnB has done for property rentals.
It’s now common knowledge that the world’s largest taxi firm, Uber, owns no taxis. Likewise, AirBnB is the world’s largest accommodation provider yet owns no property. Both companies make millions from the transactions encouraged by their user-friendly, easily accessible interfaces – a smartphone app or click-friendly website.
A slew of taxi booking apps followed in Uber’s wake and just three years after it went into operation, smartphone booking apps have become commonplace. It was not just the taxi market to take notice of Uber’s phenomenal success either, both new and established private jet charter companies saw potential in apps to modernise the outdated charter model and to introduce more choice, transparency and speed. With the relatively high costs associated with chartering a private aircraft, some tech companies are understandably eyeing their percentage of these
The UK-based start-up, Victor, launched in 2011 after CEO and founder Clive Jackson believed there was a gap in the market for a company that simplified the chartering process and gave customers a clear understanding of pricing. He designed the company around the mantra of enabling customers to get more hours out of their day through flexibility and built an online service with the ability to easily search for and book a private jet without the requirement of a ‘middle man’.
“Booking a private jet has traditionally been a complex, opaque and inefficient process,” explains Jackson. “Consumers have been at the mercy of brokers who seldom share important information such as the details of the aircraft, provider, or even their own profit margin.”
Identifying that gap in the market proved to be a major success for Jackson and his company as Victor has seen a three years’ average sales growth of 142.93% and mainstream media in the UK have quickly named it ‘Uber of private jets’.
“Victor introduced a completely new, transparent service to better service jet charterers,” Jackson continues. “Victor allows our customers to bypass these traditional brokers to compare and choose multiple quotes direct from the providers themselves. Our customers can view the exact operator, plane and crew prior to booking with complete disclosure of cost and booking fee. The launch of our iOS mobile app earlier this year made this access to information and the booking process even quicker and clearer.”
Victor’s iOS app launched in April 2015 and, like the company’s website, provides fliers with the ability to search, compare, book and board more than 7,000 jets at 40,000 airports worldwide. In just six months, 50% of the company’s customer bookings have originated from the app, ranging from £5,000 (US$7,500) to £150,000 (US$225,000) per flight.
Meanwhile, long-running charter company, PrivateFly, sees the addition of an app and the transition to an online service as a natural evolution of the chartering business. Rather than basing their business around the online market, they are making it a tool that compliments their established operations. The company’s CEO, Adam Twidell says they launched their first app back in 2010 and it was the first to provide clear pricing.
“We could see that apps were transforming the way consumers booked other forms of travel, making it faster and easier to research and book from their phones or tablets – without having to log on to a PC,” explains Twidell. “We already offered price comparison and booking for private jet charter via our web platform, so the PrivateFly app was the natural next step.”
Unlike Victor and other startups such as JetSmarter, which have been built around the emergence of the online marketplace, Twidell emphasises that the success of the PrivateFly mobile app has been due to the company’s already established reputation and overall offering.
“There is a lot of noise in the media about Uber-style apps in private charter,” he says. “But we never lose sight of the fact that the technology is there to facilitate the customer experience, not just to be a gimmick. For us, the app has to be of genuine value and it has to work seamlessly with our other communication channels – so the customer can choose how to interact.”
Despite the positivity surrounding charter apps and customers appreciating a new and convenient method of booking, analysts say that private jet charter is still yet to see a truly disruptive “Uber for private jets” app.
The reason is a combination of the complexities and costs of aircraft operation and the correspondingly niche market. In order to penetrate it and be transformative in the way that Uber was, app developers and charters must develop business models which solve both of these issues. Richard Koe, managing director of aviation analysis company, WINGX Advance, thinks that despite the wide range of offerings, smartphone apps have not achieved this.
“Although it´s true that people are familiar with mobile internet for browsing and shopping in all other spheres of travel and so appreciate having them for bizav, they´re not really ready to use a mobile platform to purchase jet charters, says Koe. “In fact even desktop online bookings – including payment – of charters are rare, in terms of end-to-end commerce.”
The problem, Koe believes, is that neither the operators nor the intermediaries have yet worked out how to facilitate online jet charter transactions. He believes that while smartphone apps may look like they simulate a mobile ecommerce platform, in reality they probably do no more than register interest. “Overall our estimate is that ´online brokers´ may have 5-10% of the jet charter market and of their bookings, less than 10% are end-to-end online bookings,”
Brian Foley, CEO of aviation analysis firm Brian Foley Associates is also sceptical about the impact of smartphone apps. He says that the addition of apps is needed but they are, “no more relevant than adding a toll-free number in the 1980s, a website in the 1990s and e-mail and online requests in the 2000s”. Despite claims to the contrary, Foley says the private jet charter market is not the same as the taxi industry.
“Booking a jet is not instantaneous,” he explains.
“It is a very fragmented fleet, and still requires human intervention. There are many constituents in a transaction, and can include the aircraft owner, aircraft operator, broker, flight crew, scheduling. This is further complicated by the need for passenger lists, FBO and catering logistics, ground transportation, etc. There are simply more moving parts than hailing a taxi cab.
“Perhaps the future will encourage better centralisation to the private jet fleet, but for now an app is nothing more than a customer convenience in lieu of picking up the phone. Comparisons to Uber are tiring – I’ve lost count of the number of app hopefuls that all claim to be ‘Uber of jets’. Research into the past will show that the actual co-founder of Uber tried the jet charter model and had to suspend operations shortly thereafter due to financial issues.”
Also casting doubts on the chances of true charter transformation is the need for standardisation. This is seen as impossible because private aviation is such a fragmented market, it is difficult to audit and there are hundreds of different types of aircraft available. Each one comes with its own unique operating costs and each airport has its own cost requirements.
However, Twidell remains positive about the future of smartphone apps and considering how challenging it may be to disrupt the industry, PrivateFly’s model of using the app as a tool to compliment an established business may prove to be the best approach.
“There’s no doubt that private charter is a more complex product, with more supply chain variables than many other travel sectors,” he said. “But I do think there was an outdated perception that private jet customers would not be willing to book via new technology, until quite recently. This is something that we set out to disprove and I’m pleased to say we succeeded!”
Whether charter apps in private aviation are capable of emulating Uber’s success or are just a passing trend as companies embrace new technology, there is no doubt that for the time being they are here to stay. And for many consumers, that is good news, and should also provide a welcome fillip for the industry as a whole. Making private jets more accessible, and importantly, making the use (and ownership) of a private jet seem more cost efficient, has got to be good news for a business tool that is so often earmarked as indulgent.
AirBnB provided a marketplace for existing property rentals, and also encouraged owners to place their homes for hire. Guests and owners both benefitted, and a similar story in bizav could prove a catalyst for wider demand for jets, too.