In the travel marketplace there have been a number of start-ups disrupting the norm. AirBnB came from nowhere. There had been peer to peer accommodation services for many years, but AirBNB came and made renting a room easy for a global audience and within a few years has become one of the market leaders.
Uber have done the same, challenging the norm for taxi services. Recently, talking to an uber driver, he expected his local taxi firm to close, and for their to only be the likes of Uber and Lyft in the near future.
These companies have formed as a startup and disrupted the norm, so whats to stop the next startup from doing the same in the airline industry?
Before I start a warning: This post is blue sky thinking. Regulations exist today in the airline industry which make it hard for a start up to provide worldwide air travel from anywhere to anywhere.
Fuel, staff, taxes, maintenance, airport management all impact the bottom line, and to make money you need large planes with lots of filled seats to be economical, and ancillary revenue plays a big part in that.
But what if..
Peer-to-Peer (the AirBnB/Uber model) is a supplier-consumer relationship skipping the people in the middle, a technology partner charging to use their booking service.
Your uber driver could be a registered taxi from anywhere in the UK, or almost anyone overseas, you don’t know whether they will be a Ford or a Mercedes, its a car for x people most of the time.
So what if Google created a virtual airline, an airline who outsources its infrastructure as much as possible (an Uber model)? Google is trusted and has influence over the control of search traffic. Wouldn’t that disrupt today’s airline business? Potentially. Google could create an airline, and could publish a schedule but it would be an large investment with risk. Personally I think each carrier has tailored itself to its customers, and built a brand identity. Customer relate and feel confident in what is right for each market. A one-size fits all model may not work. But maybe I’m thinking as a Gen X consumer.
Could you crowd source a whole airline network?
I’m suggesting crowdfunding, because its a peer to peer arrangement mostly, its a customer agreeing to a contract using technology that links a supplier with the customer. Its viral.
Texas Start-Up, Rise, attempted this with small planes.
KLM did an experiment to crowd fund requests for flights.
What if a virtual airline allowed people to determine their point of origin and destination (and date), and asked the crowd funding community to commit to buying a seat (once the target is reached – to note: lets ignore the complexities of one way vs return for this moment !).
Obviously the demand would need to exist but it would be an interesting experiment. I can’t imagine there’s a surplus amount of planes available even to make this work on a disruption scale (available on-demand), but if there were, I can imagine with enough market attention, a crowd funded airline could disrupt the norm long-haul.
I personally doubt this would work short haul, for LCC the margin is low, pricing is already low and competitive, but it could drive demand for flights to destinations when people want to go, an experiment on this scale could open up a whole different route network.
What if planes were no longer leased or owned, but available per minute ?
A fair amount of planes are leased to airlines to allow them to manage their cashflow on an opex model.
In some respect this model of ownership/rental isn’t that dissimilar to the way businesses used to operate hardware (pc/server) infrastructure . You would purchase or lease hardware which was retained for term . But more recently cloud computing has taken away the responsibility of maintenance, upgrades and performance. Amazon disrupted server hardware no doubt impacting existing players (Dell,HP,IBM,etc) with offering ad-hoc contracts with per minute billing.
Planes move (making this slightly complex), but what if BA could rent a plane to LAX, then AA could fly it from LAX to JFK, then Lufthansa back to FRA ? That would introduce a new dynamic.
Who’s disrupting today?
in March 2017, Level, AIG’s low-cost airline launched, with a low cost model and within 1 month achieved 100,000 bookings flying long-haul. Considering you can’t even find Level’s web site on google that easily, this is impressive.
At this price point an impulse buy isn’t out of possibility, but we could say that those 100,000 flights were being considered for another airline, but they were intercepted, and booked on Level instead.
Airlines today have an identity, a brand, where quality, values and service matters.
Airline’s are not equal. People are easily upset upset and disappointed if items such as personal entertainment isn’t available.
Would a de-branded virtual service work? AIG’s Level is perhaps a step closer, clearly targeted at millennials, but its a start in changing the norm and personalising the product to a user-group.
Regulations exist today which make much of this quite impossible, But uber hasn’t been afraid of challenging laws, but a plane isn’t the same as a 4 room house, or a 4 seater car, I suspect we have some way to go!
For me I hope airlines don’t just become a seat, although flying is often just a means to arrive at a destination, I like that I have a choice, and I know what I’m getting, but maybe thats just me getting older !