Uber of the air: All-you-can-fly airline model takes flight in Canada

Surf Air was the first all-you-can-fly (Supplied/Yahoo Finance)

Can’t afford your own private jet? Travel constantly for business, but hate the long waits and lack of legroom provided by traditional commercial airlines? Then all-you-can-fly may be for you.

This latest trend to hit private air travel allows individuals or entire corporate teams to fly wherever an airline does, as many times as they want for a monthly fee. Started by Santa Monica, Calif.-based Surf Air in 2013, private airlines offering monthly all-you-can fly subscriptions have been slowly expanding their routes from home-bases in the U.S. to Europe, Asia and even Canada.

FlyGTA flies out of Toronto’s Billy Bishop Airport offering short-hop flights between Toronto and Niagara. Three more destinations were just announced in October 2017: Barrie, Kitchener-Waterloo and London, Ont.

“First our focus will be Southern Ontario and as we expand our services from the different cities and increase the catchment area we will absolutely be looking at other provinces, so I expect to see that with FlyGTA within the next year or so,” says FlyGTA CEO Chris Nowrouzi.

FlyGTA also offers two tiers of its all-you-can-fly membership. Individuals can travel with the airline as much as they want on either a single route for $2,950 per month plus HST or on every route for $3,450 plus HST per month. However, the unlimited plan has a cap on the number of concurrently booked flights.

There’s also a customized corporate membership designed for large corporations who wish to give their employees a way to fly together to frequent destinations. Though Nowrouzi didn’t disclose the price for corporate memberships he did say it’s significantly higher than the individual options and it includes a $40 document processing fee for every individual on the flights. Still, regardless of the price, the model is catching on.

“Transportation by car is becoming increasingly more difficult with the traffic and infrastructure that we have. The U.S. is quite a bit ahead of us in all the different things that they have, but for us we have very basic highways, very basic transit systems and if you’re inter-city connecting, the prices are actually not very reasonable.” says Nowrouzi.

“What we’re trying to do is avoid all the time people are spending on the highways in between cities or the price they have to pay for a train and still drive to their destination or sitting on a bus where they’re just wasting their time. We’re doing these short-hop flights to fight against the conventional way people travel to adjacent cities.”

Democratizing Air Travel

All-You-Can-Fly began when the six founders of Surf Air – professionals who accumulated millions of miles in commercial flights over decades of building businesses – wanted to bridge the gap between the elites who jet around in private planes and the rest of us who must suffer through the stresses of commercial air travel.

“They thought there had to be a way to give people access to the benefits of private planes without the astronomical cost,” says Angela Vargo, Surf Air director of communications.

“All-You-Can-Fly was born from the idea that if there was recurring monthly revenue stream targeted at people who fly frequently, so they can justify the economics of it, then the founders would be on to something and that turned out to be the case,” she says.

It has worked so well that Surf Air now boasts over 5,000 subscribers and two home-bases, one in California offering 12 routes across the state and one in Texas after acquiring the seven routes of former rival Rise Air in June 2017. They’ve also expanded to Europe, flying London to Cannes and, in November 2017, London to Zurich.

If they come, we will build it”

Not everyone in the all-you-can-fly space has been so successful. Beacon Air – a Surf Air clone serving a North Eastern route from Boston to New York that’s already very well served by commercial competitors – closed shop in April 2016, even though it was started by three of the six Surf Air founders. BlackJet, an all-you-can-fly subscription service founded by early Uber investor Shervin Pishevar and co-founder Garrett Camp folded the next month despite celebrity backing from Ashton Kutcher, Tim Ferriss, Marc Benioff and Jay-Z’s Roc Nation.

Surf Air attributes their success to the specifics of their model. They don’t own the aircraft. They work with operators and then build the schedules and route networks on top of that, which allows them to scale quickly based on demand and seasonality.

Mimicking the sharing economy in the air, Surf Air also doesn’t give you a private plane all to yourself; you will be riding with eight other Surf Air members when you book your flight, saving even more costs. Other companies like Jet Smarter have found success providing members with seats on pre-scheduled charter flights already taking off.

“It’s the opposite of if we build it, they will come. If they come, we will build it,” says Vargo. “We’ve spent a lot of time and effort to attract people who are potential candidates to this type of travel. There’s a lot of costs associated with flying an aircraft, so you have to make sure you have the membership to sustain that and because we scale our business to meet that demand, we’ve been able to be successful in that regard.”

Breaking New Ground

In the U.S. all-you-can-fly has proven to be viable, with at least three working examples in Surf Air, Jet Smarter and Wheels Up. But in Canada, FlyGTA is breaking new ground and has its own unique challenges that are specific to operating a private flight subscription service north of the border.

“In the U.S., everywhere you look there’s an airport, but we don’t have the same airport infrastructure in Canada, so we have to pick and choose cities where the airport can accommodate us in terms of runway length and the facilities that they offer, so we’re limited in where we can fly,” says Nowrouzi.

“Our costs are much higher in Canada than they are in the United States. This is due to the labour involving the aircraft being much cheaper in the U.S. and fuel being very expensive in Canada. We pay almost double for fuel than they do in the U.S. for fuel.”

To overcome these challenges, FlyGTA works on a slightly different model in that they own their aircraft outright, which means they don’t have to deal with the costly overhead of leasing aircraft every month, which allows them to be more stable from a cash flow perspective, as they can’t support large airliner leases.

“We just have to be smart about every step that we take. Our challenge is being the first one to do something like this. There’s a lot of bureaucracy that we have to go through to prove this to the Government, the public and the clients. But so far the feedback from clients has been great,” says Nowrouzi.

Uber of the Air”

The all-you-can-fly membership model works for these private airlines because it brings stability to their overhead structure.

“Business aircraft are by many measures notoriously underutilized — average utilization is about 1 hour per aircraft per day — so these membership business models are one way to increase utilization and, hopefully, bring down the unit costs of flying – thus adding to the pool of customers who can afford to fly this way,” says Rollie Vincent of Rolland Vincent Associates, an aviation consultancy with over 30 years in aviation market research.

But don’t expect an all-you-can-fly membership structure to ever come to traditional commercial airlines. Both Nowrouzi and Vargo agree that it wouldn’t work there — a fact basically proven when JetBlue tried it with its all-you-can-jet promotion that was halted it soon after launch.

“I’m not sure it would work at all with traditional commercial airliners. Generally, the people attracted to these services are professional travellers who are looking for time-saving solutions and are a little bit more well-off. With a large airline model, all you’re getting is the same service at a reduced price or at an inflated price depending on what the airline actually offers the customer,” says Nowrouzi.

“It would be very difficult for commercial air travel to adopt this,” agrees Vargo. “The flexibility of this model is what makes it work and I do think commercial airlines would have difficulty scaling properly to make it profitable for them. I’m not saying it’s not possible, I’m just saying it would be very difficult.”

Meanwhile, the framework exists within the all-you-can-fly model to develop something really special in the future.

The promise of an “Uber of the air” looms. This could be a remarkable development to broaden the customer base and lower the costs of access – although there are many practical, operational, and regulatory constraints and hurdles still to overcome,” says Vincent.

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