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The world of aviation is filled with the carcasses of ventures large and small, entrepreneurs and investors alike attracted to an industry which at best has had spotty returns in its century of existence. After a stretch of rough weather, Surf Air’s chairman and CEO is hoping that the company’s troubles of last year are behind it.
Sudhin Shahani says his optimism is based on having settled a lawsuit with the former operator of its California network and getting back its entire fleet of Pilatus PC-12 aircraft, some of which Encompass Aviation LLC had kept in its possession after the breakup. He also placed its short-lived operation in Europe into liquidation in December, ending its folly there, and says the company worked out a payment plan with the IRS after facing a lien for unpaid back taxes.
“I think we are at the last page of a turnaround plan,” he says, adding, “We’re profitable on unit economics, and we’re working on getting the company profitable,” something he believes will happen by the end of the year.
To get through its challenges, Shahani says inside investors “stepped up” with enough capital “stabilize the business.” Over the next couple of months, the plan is to raise at least $20 million via a new round that would bring on additional investors.
Founded in 2011, Surf Air is one of the many entries into the market that has been referred to at one time or another as an incarnation of Uber in the skies or a magical way to democratize private air travel beyond the very rich.
Its core has always been a fly as much as you can Netflix style model requiring a monthly membership payment. The current offer is priced at $1,950 and you can even make your booking via an iPhone app.
On the surface, the business concept makes sense. By using private aviation facilities and smaller airports, customers show up 15 minutes before departure, avoid the crowds of big terminals, and its planes taxi from the ramp to the runway in minutes. On its relatively short hops, where a large part of the flight is either climbing out or descending, its slower turboprops don’t lose much time against faster jets. Door-to-door, instead of four hours via the airlines, using Surf Air can cut travel time by more than half.
A new focus, however, will be Surf Air Express, designed for the less frequent flier. Despite the name, which sounds a bit like a second airline, it’s the same aircraft and schedules. You pay $2,500 once per year and then purchase single seats starting at $500 per flight on a pay-as-you-go basis.
To test the waters for the new product, Surf Air ran an Indiegogo campaign last fall raising $131,600, 230% of its goal. Expect more in the future.
There’s also a bulk option for groups giving you 10 tickets per month for multiple users, priced at $5,000.
To help win back customers it lost, until the end of the month there is a promotion where it will match the price of a commercial airline flight you’ve already booked with a Surf Air credit as well as a referral bonus providing a $1,000 credit.
“We had a difficult 2018, and we got through it. We’re coming out of that process, and focusing on the strongest routes with really robust schedules,” says the affable Shahani during a telephone interview.
The focus will be on routes from the Bay Area, San Carlos or Oakland, to Los Angeles, using Hawthorne Airport, Santa Barbara and Tahoe. In Texas, key routes are from Dallas to Houston and Austin.
The goal is for the current schedule of three flights on most weekdays to eventually more than double, something Sudhani says can be accomplished with its current fleet of 10 PC-12s.
He says by honing in on a few routes it makes its operation more efficient and more dependable, something that’s necessary to win back its target market of business travelers. Most of its customers come from Southwest Airlines or other commercial airlines plying intra-California and Lone Star routes.
“Every month we bring back old customers. We brought back a third of what we had before,” Sudhani says, although he says it’s hard to provide comparisons with true insight because of the new membership types.
For its pay-as-you-go members, they will find seats now on all flights, instead of just off-peak times. Weekend schedules will include Napa, Monterrey and Palm Springs.
As of 2017 Surf Air no longer operates its aircraft. In California, its flights are being flown by Advanced Air, LLC, an IS-BAO and Argus Platinum operator, which has both a management arm and operates shuttle services in Arizona and New Mexico. Boomerang Air Charter operates Surf’s Texas flights that date from its 2017 acquisition of Rise.
Sans actually flying planes, Surf Air is now a membership marketing company, and Sudhani believes the yield management and pricing technology it developed is something he can bring to other similar enterprises.
First, he will have to prove Surf Air has flown out of the storm.
April 15, 2019 at 08:59AM
Forbes – Entrepreneurs