Aviation Marketing Intelligence

The Survival of Part 135 Companies in a Fractional Market

Adam was helping me understand a client file the other day, when something odd struck me:

Fractional ownership of jets has eclipsed private air charter.

The funny thing about this trend is that despite the lack of scalability or profitability within many fractional firms, the reality is that many customers seem to prefer to consume their private aircraft experience one of three ways:

a) JetCard: Let me prepay upfront in exchange for something like guaranteed access, better pricing, etc. While the viability of this option is up for debate, one fact remains: it is a popular and a growing phenomena.

b) Fractional Jet Ownership: The economics of buying and using a fractional jet share simply don’t make sense when compared with charter, yet this variety of air transport has now eclipsed charter. NetJets alone recently recorded sales in excess of $1BB USD, which is more than charter industry was in size in 2000.

c) The Charter Broker: Whether this broker is actually any good for the client’s bottom line or not is arguable. There are many brokers who work hard to build a reputation for their brand and deliver value for their commission earned. Then there are the 5000 + “brokers” out there with a cell phone, a wireless connection, and some rich friends (Scott and Adam once surmised that our “friends who charter” are good for 300 hours per year if you know how to tap your network hard enough. Breaking that 300 hour mark is what kills most initial charter / brokerage efforts).

Now let’s look at the landscape. NetJets isn’t hemorrhaging money anymore. They may not ever make big profits, but with expansion into India, China on the horizon, and development plans at home ($200 million worth of expansion in Columbus, OH and over 750 aircraft in operation worldwide), these guys clearly aren’t going anywhere anytime soon -nor is their marketing effort.

The buggy whip story is relevant here if only because with the advent of the automobile, the buggy whip manufacturers had to find a way out of their obvious (and imminent) mass extinction. While I am not saying that Part 135 is going extinct, I can easily point to some blatant evidence: They don’t want to call anyone they find and they want to attach themselves to a brand, a story, a trusted company that clearly does not make them feel like “Mr. Mom and Pop Air Taxi.”

The evidence, at this point, is self evident: Brokers, JetCards, and Fractionals control this industry. The question is:

WHY?…. and What Can I Do About It?

Marketing is step one. (You can also bug Adam for data on what works vs. what doesn’t.)

Advertising that you Fly safer, better, or more efficiently is wonderful, but an old story that everyone tells, whether they actually do it or not. That approach will ultimately come up short against the massive marketing campaigns being waged in the current market.

How can a small, independent operator compete against the marketing mastery of “the coming wave”? It doesn’t matter that you offer better service, better planes, and better costs if the buying public doesn’t hear about you. How can you get the global press coverage and presence to outperform NetJets efforts?

The answer lies in the magical yet bizarre world of insects: Swarm. When a mammalian predator- smarter, stronger, and deadlier - invades a termite nest, the weaker individuals swarm together and skeletonize the poor creature in seconds. By grouping together, the solitary, independent termites can take on exponentially superior enemies with little effort.

While it will seem obviously self serving to explain it this way, allow me a self serving moment: RSVPair’s directory structure (think of it as a hive) was built for the masses, be they operators or passengers. By updating your professional status aircraft, changing your listing information, and in general being a good net citizen (whether it is on your rsvpair built and hosted site or in the directory itself) you are actually using the democratic power of the web to tilt the balance your way.

Here are some cool examples: Googlefight.com, is a site that displays inconsistent results but it is a fun place to play around. Take a look at this snapshot from April 4th, 2008 and see how little effort on a collective part (the swarm!) goes toe to toe with a $250MM marketing budget. To be part of the trend, simply think about distinguishing yourself as a professional member, and, voila, you are riding the back of a very large animal into battle and not just paddling by yourself, upstream, upwind, in a leaky boat.
A swarm has the appearance of being a unified group and it moves towards a collective goal, but each individual makes its own decisions and promotes its own interests. As such, the individual termite doesn’t attack a predator with the intent of destroying it, it merely takes a part of the invader and focuses on that spot while the rest of the swarming insects find and focus on another part. It is random and chaotic, but the end result is that the predator is neutralized while each insect in the swarm keeps its autonomy.
Another way of seeing this is realizing that just one of NetJets customers can subsidize your entire operations need for fleet acquisitions, hangar construction, etc. In the air charter industry, it has come down to this battle - if you could just get one new customer per day, per week, or per month.. your business would be transformed.

There is a limited client pool from which we are all feeding. NetJets’ strategy is to work under one mind, give up your individual control, and take over the market. Sadly, a private, individual company cannot survive against this behemoth. If the individuals swarm, however, they can maintain their independence and still hold the market.

How do we swarm? The greatest marketing tool in history is readily available for our manipulation. The internet, and more specifically search engines such as Google, Yahoo, etc., bring the clients to whoever makes it to the top of the list. The fact is that most customers now use the internet as their primary, if not their only, source for chartering air service. Statistically, when they Google in that search for air charter, they will choose from the first results page and look no further. Since it involves a tremendous amount of time, energy, and resources to secure that first page status given the number of charter companies scrambling for the same spot, the individual company is faced with a herculean task. However, if the individuals swarm under a collective website, the work of being number one decreases.

Websites like RSVPAir spend their time and expertise on being on that first page, to be seen before NetJets. By being part of the RSVPAir swarm, the website makes your company be seen as the whole from a marketing perspective, but you still operate 100% independently, taking no orders from anyone but yourselves. If we swarm together, we can break the myth of fractional ownership and preserve our independent ownership, and maintain a market where quality, real value, and healthy competition benefit everyone. And lets face it, who doesn’t want to be part of a swarm that skeletonizes NetJets in a quick and painful feeding frenzy?

– Your English Major Who Doesn’t Fly Much Friend… Dan

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