It’s remarkably easy to go broke in the airline business. So Roger Jewett, a Calgary accountant who was working as an airline CFO, took a different approach: The plane doesn’t leave unless the seats get sold.
Mr. Jewett is the founder of Jump On Flyaways, a Calgary-based venture that uses idle airliners to offer discount charter flights and social media to market them – but the flights only go if enough people sign up to make it viable. With five charters under its belt, it’s still a small venture – but it’s gotten off the ground.
To make this happen, Jump On takes advantage of the employment boom in the Alberta oil sands, which is seeing workers ferried by the plane-load up to Fort McMurray from Calgary and Edmonton, often on one-or two-week shifts. But workforce charters primarily work from Monday to Thursday, leaving the planes that fly them mostly idle over the weekend – including at EnerJet, the corporate-charter airlines where Jewett was working as a CFO.
“I was looking at our fleet, saying, these planes sit every weekend? These things are worth $30-million.”
But the numbers for a conventional tourist-charter operation didn’t add up, until Mr. Jewett took a cue from Groupon: “What if they flights only go if we fill the plane?”
So he struck out on his own, formed a partnership with his former employer, and set about using social media to market the flights, each of which has a green Groupon-style thermometer, indicating how close it is to reaching its goal.
Of course, the concept doesn’t eliminate the risk involved: it relies on the airline’s weekday flights to pay the overhead. But using the excess weekend capacity is a win-win proposition so long as the airline doesn’t have anything better to do with the aircraft, and it incurs no opportunity cost by keeping it reserved.
Starting in March 2013, the company has flown five charters to destinations like Kelowna and Las Vegas. On average, Mr. Jewett says, tickets have been from 30 to 55 per cent cheaper than competing airline rates. The company aims for destinations that fall between two and three hours’ flight time – just enough for a weekend getaway.
Today, Mr. Jewett says he’s negotiating with five other carriers, with a variety of airliners, large and small. The company is looking at expanding into excursions like wine-themed getaways, as well as making use of planes that are being ferried (usually empty) from one destination to another for maintenance or scheduling purposes.
Unlike Groupon, where the participation threshold thermometer soon became a vestigial appendage on a site that dealt heavily in loss-leader deals, Mr. Jewett’s model requires actually selling seats for a fair price. Reaching Jump On’s “Jumping Point” meter isn’t a foregone conclusion. (In fact, one putative flight to the Grey Cup didn’t attract enough flyers after the Calgary Stampeders got knocked out of the competition.)
But Mr. Jewett noticed another phenomenon at play. On another flight, he and his team found themselves stalled at 80 passengers – still shy of their threshold – with just a few days left before the cutoff. They tried lowering the price a bit, but only another six signed up.
So Mr. Jewett did something counterintuitive: He e-mailed his list, and asked his customers if they’d be willing to pay more, just to make the flight go. It was a non-trivial ask – he won’t say exactly how much – but customers stepped up to make the flight happen: It was still cheaper than flying on mainstream airlines. (Jump On also offered credits on future flights.)
And as for the customers? Mr. Jewitt was on board the flight to face the music, and says that, far from being disgruntled, the passengers who pitched in extra to make the flight go actually felt rewarded by the experience.
“At the end of the day, they were the happiest passengers we’ve had to date.”