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Avinode

How to disrupt the bizav market

When Avinode was founded back in August 2001, we were a small tech company seeking investment just months after the dot-com bubble had burst – a time when interest in the Internet, and what it could do for consumers, had taken a nose-dive. Despite this inauspicious start, we secured $150,000 funding, and set out to make it as easy to book a private jet online as a commercial airline ticket.

Seventeen years later, we’re still not quite there, but Avinode has succeeded in fundamentally changing how the charter industry works online. In July this year, the peak travel season in Europe, almost 1 million charter requests were exchanged with operators through Avinode. This compares to the monthly average across the year of 600,000, the equivalent of around 20,000 requests made by brokers to operators every day.

As a technology provider, Avinode is an enabler, giving charter businesses the tools to disrupt and shape the future of the industry. And, with business aviation on the rise, the time has never been better to bring about serious change.

With an expanding industry comes start-ups, eager to bring the innovations of other travel segments to business aviation. One idea that keeps returning to the fore is that of creating the ‘Uber for private jets’.

Uber brought a new customer experience to the travel market. Planning, booking and payment is all, to the app user, contained within a single interface. While the reality behind the app’s separate processes is more complex, this ease of use for the customer was revolutionary – and it’s become a benchmark for other travel segments, regardless of whether the sector in question could realistically be ‘Uberized’.

Take private jet charter – in our industry, there are a number of issues that prevent ‘Uberization’.

First of all, there’s a supply challenge. While there are innumerable drivers out there with their own cars, ready to become taxis, there’s a well-documented shortage of pilots, which impacts the number of aircraft available for charter. Even if you have a pilot and crew ready, the process of asking an owner to approve a particular trip in their jet can take days, further limiting the charter supply.

Supply matters because availability can affect pricing. For instance, Uber applies ‘surcharges’ during busy periods, when there is a dearth of cars available; then drops pricing to make the service more competitive in quiet periods. There’s no supplemental capacity in business aviation to help mimic this approach to pricing, which can limit profits.

Secondly, there’s an obvious customer service challenge. When Uber users want a premium experience, they tap the ‘Uber Lux’ option, and anything from a Mercedes to a Jaguar could arrive. Private jet charter requires another level of service, with customers able to stipulate their aircraft type, model, interior, the food and specific wine served on board, even the soap used in the bathroom prior to their trip. This is why the bespoke service of high-end brokers will never be fully replaced by digital processes – the human, in these highly individualized purchases, is an essential part of the experience.

Then you have the regulatory bodies. Uber disrupted the industry by just ignoring them, and customer demand for the service forced through fast changes. Aviation regulations change very slowly, and any company that goes up against EASA or the FAA will swiftly falter.

Luckily, there are other megatrends shaping the industry besides attempts at ‘Uberization’. These emerging areas are ripe for development and disruption.

1. Industry-wide consolidation

Consolidation is driving efficiency in the industry. Larger brokers are becoming operators and building up their own fleets, and mergers and acquisitions are increasingly common – most recently, with Directional Aviation acquiring PrivateFly – bringing this historically fragmented industry closer together.

The fleets themselves are also undergoing consolidation. Today, operators are offering fewer models to choose from, to improve their operating efficiency and profitability.

2. Investment in back-end tech

Consolidation gives us larger, more streamlined data sets from fewer sources. This aids the development of processes driven by AI and machine learning, which require extensive data.

Specifically, these processes can then be built into back-end business aviation technology, which is another point at which we’re seeing development. In July 2018, some operators received almost 1,000 requests a day through Avinode – this would be impossible to manage without automating repetitive tasks and streamlining workflows. Having a technological backbone gives you a strong foundation on which to build a disruptive business plan, as well as being able to manage the growing demands of the charter market.

3. Customers expect digital

Driven by the expanding API universe, digitization of the industry is happening apace, which will result in more technological advances over the next three years than we’ve seen during the last 10.

Business air charter is far from being fully digitized – and probably never will be, given the high level of bespoke customer service required. But the major changes that have disrupted consumer travel, from booking places to stay on Airbnb, to leaving reviews on TripAdvisor, will filter into business aviation because these digital experiences are now expected by the customer. These new expectations are fed back to businesses, built into their business plans, and result in improved apps, new booking processes and better service for the customer.

Ultimately, however, disruption will not come from the technology itself: technology is merely an enabler. If you have a disruptive business plan, technology will help you implement it – and with the charter market undergoing rapid evolution, the shape of the industry has never been more open to change.

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