Story ID: 080SurfAirAINMar13MarkedUp
Subscription-based Airline to Launch in Los Angeles
By: Matt Thurber
Caption: 
Word Count: 1094
The offices of startup Surf Air look more like those of a new software developer, with laptop-wielding engineers tapping away on keyboards, whiteboards sprawling with multi-colored to-do lists and, of course, surf boards hanging on a back wall. These are not decorations, according to co-founder Wade Eyerly; employees are welcome to grab a board and haul it to the nearby beach in Santa Monica, Calif., for some relaxing and perhaps inspiring wave-riding action.

Eyerly and crew, including his brother David, are not carving out a new niche in the software world but are designing software, processes and a safety infrastructure to make their nascent airline take off. Surf Air is targeting what its founders see as an unserved niche, the desire for travelers to move swiftly and efficiently between cities in California, not on a typical airline jet or charter airplane, but in Pilatus PC-12s flown by two pilots on a regular schedule.

This unusual setup–an airline using single-engine turboprops flying on a schedule–requires cooperation from the FAA, in the form of approval of a Part 135 charter certificate in the commuter category. Surf Air has applied for the 135 certificate and is awaiting FAA approval to begin flying customers. Three PC-12s are ready and waiting at Burbank Airport, and flight crews are ready to train and start flying.

Surf Air got its genesis when Eyerly, an intelligence officer and former aide to vice president Dick Cheney who traveled 27 days out of every month, and his brother began brainstorming business ideas in 2005, eventually coming up with the idea of a small airline. They spent weekends and spare time picking apart the concept, analyzing data and figuring out what might work. Finally, in June 2011, they put a placeholder website online to see if it would attract any attention. Six weeks later, 12,000 people had signed up.

On Nov. 11, 2011, the brothers pitched the idea to friends, family, entrepreneurs, data scientists, lawyers and accountants at a two-day event. “We laid out all of our data and the response we had online,” Eyerly recalled, “and asked, ‘Are we nuts?’ Four or five of the folks who were there said, ‘Not only are you onto something, we’ll leave our jobs to help you do it.’” Eyerly, his brother and other new Surf Air partners moved to California to bring the airline to life. MuckerLab, a Los Angeles start-up company accelerator, is helping launch Surf Air, along with other investors.

What the research showed is that there are 53 routes where Surf Air could fly profitably in the U.S.; these routes duplicate the Obama administration’s plans for high-speed rail city pairs. Most non-commercial airports in the U.S. are highly underutilized, Eyerly said, with 90 percent at only 25 percent of capacity. Part 121 airlines can’t fly into non-Part 139 airports, but a Part 135 commuter airline flying airplanes weighing less than 12,500 pounds can fly almost anywhere. “That was our first epiphany,” he said.

Airline business models haven’t changed much, but the level of service has. “Now you fly because you have to,” he explained, “not because it’s any great privilege.” Buying an airline ticket is just a one-off purchase, and while airline frequent-flier programs do try to create loyalty, there is no compelling reason for a passenger to be faithful to a particular airline. It’s more profitable for the airlines to fly their hub-and-spoke system, regardless of the fact that passengers want to go from one specific location to another without having to fly somewhere else first. “It’s inefficient, it’s not good for the environment, there’s a host of negatives, but it’s the way the airlines figured out how to make it all work,” he said.

Dude, Where’s My Plane?

What the Surf Air team has conceived is an all-you-can-fly model for any destination in a region that Surf Air serves. There are many possible trips that people need to make that would be a 2.5- to six-hour drive. “And those are the only places we fly to,” Eyerly said. “By narrowing our focus we’re able to build an airline that’s optimized for that. We can use underutilized airports, we can get you in and out more quickly and we can simplify your whole flight experience.”

That experience begins with the reservation process, which allows members to book or cancel a flight (with no penalty!) in 30 seconds or less. Members will be able to use a mobile device app, pull up a map, draw a finger from one city to another (say, Los Angeles to San Francisco), pick a date and a flight, and that’s it. There are three membership tiers, beginning at $790 a month, according to a Surf Air release. Eyerly compares membership to the Netflix video rental service, where there is no limit on the number of movies a member can watch, but there is a limit on the number of movies that a member can hold at any time. Surf Air’s mid-tier membership, for example, will allow a member to hold up to four reservations at a time. “That keeps any one user from boxing anyone else out,” he said. There is no penalty for canceling a flight, but if a member fails to cancel and the seat flies empty, that member will be able to book only two out of the four flights during the following week.

Surf Air had hoped to launch service last summer, starting at airports in the San Francisco Bay Area, Los Angeles, Santa Barbara and Monterey. While Eyerly says he and his crew have been diligent about making sure that the application to the FAA is done properly and that safety is the number-one priority, the FAA had yet (as of mid-February) to grant Surf Air its Part 135 certificate. “Things continue to move forward,” Eyerly told AIN on February 8, the day after holding another meeting with officials at the Los Angeles FSDO.

Eyerly believes that Surf Air could upend the short-haul travel market and that there is an opportunity to grow into other regions already identified as hoped-for high-speed rail routes. “This isn’t a technology change,” he said, “this is leveraging an infrastructure and a business model change, and we think the time is right. If we can catch that wave just right, our investors are going to see an incredible return on what is a relatively small bet they’ve placed on us.”