Story ID: 473 Stellar Labs
Charter Marketplace Promises ‘Stellar’ Service
By: James Wynbrandt
Caption: The company’s program seeks to make charter pricing adapt to the conditions of the marketplace.
Word Count: 632
Stellar Labs of Palo Alto, Calif., is launching its air charter marketplace platform and app today here at the NBAA show (4 p.m., Booth N1535). Stellar aims to bring to air charter the same ease of online business-to-consumer commerce seen in the hotel and commercial air travel industries. Stellar’s platform is a backend system for Part 135 operators that enables automated scheduling, real-time pricing, route optimization, online booking and revenue management tools that allow automated pricing adjustments based on supply and demand.

Stellar founder, CEO and chairman Paul Touw–who also founded XOJet and Ariba, a business-to-business platform sold to SAP for $4.3 billion in 2012–said the backend systems most charter operators and management companies use today were designed to support Part 91 operations and don’t have tools to optimize charter operations. “The commercial side is an afterthought,” he said, whereas Stellar is “designed for revenue management. The pricing policies are exactly what airlines do, so [rates] will be higher on Friday and lower on Saturdays. No [current] tool can do that. That will have a profound impact on the industry.”

The platform is free to operators and doesn’t require their participation in the Stellar aircraft pool, though they can still take advantage of Stellar’s tools. “Operation and revenue management is a goldmine,” Touw said. Stellar generates revenue by taking a cut–“well under one percent,” according to Touw–of charter transactions conducted via the platform. Stellar also incorporates a secure payment app that uses a fingerprint for transaction authorization, and Touw said processing fees are “cheaper than credit cards” charge for such transactions, another incentive for operators to switch to Stellar.

The changeover takes about three to six weeks. Stellar dispatches a team to install the system, conduct testing and provide training. Each system is customized to the pricing rules the operator wishes to establish, “given that technology is no longer the barrier,” said Touw. “We gather all those pricing policies and imbed them in system.” The process also requires getting multiple high-quality photos of each airplane in the operator’s charter fleet “so we can represent their aircraft in the best way possible,” he said.

Stellar is not compatible with current backend systems, or with services designed to work with operators to share inventory data, such as Avinode, brokers’ favored platform for sourcing available lift. Asked if Stellar aims to supplant or complement Avinode, Touw said, “I hate to say we’ll supplant, but when flash drives supplanted disk drives, that’s reality. Avinode is a [business-to-business] system. Their primary customer is a broker, so they’re restricted on revenue sources for delivering a product that an end consumer would want.”

The Stellar platform will launch with a fleet of 510 aircraft; Touw said he believes 500 aircraft is the critical mass needed to launch the service. He declined to provide the names or number of operators, but said 93 percent of those pitched have signed on. Here at the show the company hopes to meet with operators seeking to enhance the efficiency and profitability of charter operations.

Several similar efforts since the rise and demise in 2009 of Virgin Charter have faltered but Touw told AIN that Stellar has identified and resolved all key issues. Many industry veterans maintain that charter customers won’t book online–if it is technologically feasible–because of the complexity of the transactions and the sums involved. “I fundamentally disagree with that view,” Touw said, noting the growth in online auto sales and luxury home rentals, which initially aroused similar skepticism. Stellar has raised about $10 million, $7 million in September from venture capital firms. Startup costs are low, Touw said, because developers are foregoing large paychecks they would otherwise command in favor of equity.