with not enough demand for larger planes. For the convenience of flying non-stop, One Jet charges a couple of hundred dollars more but saves the passenger time. Founder and CEO Matt Maguire says:
“What we did last year was really a pilot of the product. We knew that offering non-stop services from regional bases would be com- pelling. The biggest question we had was: could you really get mainstream corporate travellers and corporate travel programmes to buy into seven-seat light aircraft, flying for 45 minutes to an hour? We were a new brand in the marketplace.” The airline got 50 per cent of its traffic in
the first nine months from travel manage- ment companies (TMCs) such as Amex, BCD and CWT, and signed ten contracts with Fortune 500 companies such as Fed Ex and PNC. “We ran the initial pilot and we are now about optimising profitability,” says Maguire. “Airlines are notorious for losing money – and we don’t want to lose money. It turns out the revenue management equa- tion is very simple. You don’t need to do anything complicated.” Crucially, the airline has now received commuter authority, which means it can operate any schedule and any route it wants. Now the airline is focused on operating a more traditional revenue management model – but with the smaller planes. All of the airline’s Pittsburgh services achieved profitability in the summer. “Every route is making money and we
started a service to Cincinnati in October,” says Maguire. “The opportunity for us is to provide non-stop services in medium-sized regional markets in the revised airline world that no other airline can service.”
UNLIMITED PASSES Another option that is growing in popu- larity is subscription-based air travel, such as Surf Air (see box) and SAS’s Travel Pass. Travel Pass now accounts for around 4
per cent of SAS’s traffic in Scandinavia and comes in pay-as-you-fly and unlimited va- rieties. For the pay-as-you-fly variant, called Travel Pass Corporate, companies receive a non-negotiable 6 per cent discount on fares. The unlimited version of Travel Pass costs a fixed amount each month and is best suited for those who travel at least twice a week. Travel Pass products are mainly used on domestic and intra-Scandinavia routes. “A significant amount of our corporate
travel is booked through Travel Pass every month. Corporate clients value the efficiency, and frequent flyers appreciate the flexibility
64 BBT November/December 2016
and convenience,” says Catharina Törnemo- Fecko, SAS head of concepts and ancillary. Ole Mortensen of Danish travel manage-
ment consultancy AMM Consulting, which acts as an outsourced buyer for companies and advises on change management and strategic development, says the Travel Pass provides “serious advantages”. “SAS discounts heavily on its flexible fares
through the scheme and it has integrated the booking with Amadeus so the TMC can invoice and do duty-of-care. They even show it in the Amadeus e-Travel Management
the world who want to implement a sim- ilar business model. Braathens IT has just signed up its first North American airline, the Cape Cod-based Cape Air, and is also talking to other American carriers. “We are seeing a lot of interest around
the Middle East and also in the Far East,” says David Taylor, senior vice-president at Braathens IT. He says the unlimited pass is particularly popular with high-end consul- tancy firms and architect practices. “Those sort of companies want to be able to organise their travel for the whole year and pay in
“The unlimited pass is popular with the sort of companies who want to pay in one go without the need to worry about expense claims”
online booking tool, but the booking is made in the SAS system rather than Amadeus,” he says, adding that the system is simple for buyers. “You agree to a set of corporate fares both
with a percentage saving or fixed amounts. SAS provides direct debit if the buyer wishes and also the ability to use a lodge card.” Mortensen says the subscription model
works well in Scandinavia because of SAS’s dominance in the market, at least until the rise of Norwegian. But with SAS facing threats to its survival, he says few companies choose the prepaid version of Travel Pass.
GLOBAL INTEREST SAS Travel Pass was developed by a com- pany called Braathens IT, which is now selling the idea to other airlines around
one go without the need to worry about expense claims.” He says there are benefits for all parties.
Airlines get their money upfront and it also reduces GDS fees. From the corporate view- point, it encourages travellers to use direct rather than indirect channels and removes the financial transaction from bookings. It remains to be seen whether airlines
like Surf Air and One Jet can make it work where other innovative carriers have failed. As John Strickland says, the success or failure may depend on external factors that entre- preneurs cannot control. What is certain is that, rather like the
queue of rich oligarchs buying football clubs, there will never be a shortage of people wanting to give it a shot.
Surf ’s up
SURF AIR LAUNCHED IN CALIFORNIA IN 2013 and allows members to fly as many times as they wish for a monthly subscription fee. The airline uses small executive aircraft flying from private terminals at airports such as Oakland for San Francisco, San Carlos for Silicon Valley and Hawthorne for Los Angeles. It now serves 12 destinations in the US state and operates up to 90 flights every day. In June, the airline said it had passed the 3,000-member mark. Surf Air is now launching in Europe with regular services from London Luton,
Cannes, Geneva and Zurich. Dublin, Paris, Amsterdam and Barcelona are expected to follow in 2017. European membership will cost £1,950 (Ð2,350) a month with a £1,000 (Ð1,250) initiation fee. Simon Talling-Smith, ex-British Airways, is Surf Air’s CEO for Europe. He says, “We see our model as the future of air travel, and we look forward to expanding our club and delivering a distinctive travel experience to Europe’s top destinations.”
BUYINGBUSINESSTRAVEL.COM
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