Frequent travellers between Sydney and Melbourne face several frustrations: traffic to and from the airport, long security lines, regular ground delays and often the need to circle the congested air space before landing. It can turn what should be a one-hour flight into more than four hours door to door.
Enter the disruptors, Luke Hampshire, 28, and Alexander Robinson, 32. The young pair, both of whom have aviation experience, are looking to take a business model proven by the successful start-up Surf Air in California and transplant it to Australia, albeit with a few modifications.
The idea is as follows. Several hundred members will pay a $1000 joining fee and a $2550 monthly fee for effectively unlimited flights between Sydney (Bankstown Airport), Melbourne (Essendon Airport) and Canberra on an eight-seater King Air 350 turboprop. The company, Airly, will offer an initial 54 flights a week between those centres, with plans to expand to Adelaide and Brisbane at a later date.
"The several hundred we are looking for are keen as mustard to save time," Hampshire says. "It is going to save them about two hours per round trip. We are working off a membership number. We have a lot of people showing significant interest in it now. Once we reach that break-even number we launch."
Airly is just beginning its marketing campaign, but the idea has been in the works for more than six months, with Surf Air founder Wade Eyerly involved in one of the earlier guises. Robinson, a former Royal Australian Air Force pilot who will serve as Airly’s chief executive, left a job at Caterpillar to focus on the new aviation start-up.
"I’m on full-time and Luke is on it as well," Robinson says. "Between us we are putting in some of our capital. It shows we are serious about this."
‘Sales and experience service’
The majority of the start-up funds will be raised from the $1000 joining fees, with the remainder coming from the founders and potential "angel" sources. Airly, which won’t own the aircraft, calls itself a "sales and experience service" rather than an airline.
The first of three King Air 350s has already been ordered from the US through an aircraft management company. They will be added to the air operator’s certificate (AOC) of an Australian company licensed for regular public transport (RPT) and then dry leased.
"The company in question will have no issue adding these aircraft to the AOC," Hampshire says, adding it already flies other King Air models.
The name of the AOC holder remains confidential, but Hampshire says Airly chose an operator with an RPT licence rather than just a charter licence to ensure it could remain flying even if regulations on charter aircraft are tightened.
Essendon Airport is closer to the Melbourne central business district than the Tullamarine facility used by the commercial carriers, but in Sydney, Bankstown Airport is farther from the CBD than Kingsford-Smith.
Robinson says he doesn’t believe the use of Bankstown will be a deterrent in attracting travellers to Airly because many potential members live outside the eastern suburbs of Sydney, and even those who don’t will appreciate that less air congestion will help lower the flying time.
"There is really no holding at Essendon or Bankstown," he says, adding that members can check in just 15 minutes before departure.
More limited schedule
Canberra was added to the initial destination list after the Airly founders discovered how expensive last-minute flights were from those markets, as well as the more limited schedule of the commercial airlines.
Challenges for luring frequent travellers to Airly will include their attachment to the lounges and other perks offered by Qantas and Virgin Australia, as well as the high frequency of commercial flights between Sydney and Melbourne.
Robinson says Airly will be complementary to Qantas and Virgin rather than a true competitor. "We still see or expect [members] to be using commercial travel for the majority of their flights," he says. "Frequent travellers will still fly commercial for their status and frequent flyer points."
Hampshire says the feedback from corporate travel agents is that there will be a place for Airly as a supplement to the larger carriers. Corporate memberships, good for flights for more than one member, will be available, perhaps used to reward highly valued executives.
"There is no price surging or last-minute change fee or baggage fee," Hampshire says of the service. "We fly whether there is one person or eight people on the plane. If we have one person on the plane it is not that we are losing money. We have that base membership."
Hampshire, who once worked at Regional Express, says he knows it can be inconvenient for business passengers with meetings scheduled when a half-empty flight is cancelled and combined with another one to cut costs.
He says there will also be advantages in having a bespoke service where the concierge on the ground knows the passenger’s name and favourite drink and snack orders.
In the air, the hope is there will be a club atmosphere where like-minded executives are able to chat.
"We are looking at an office in the sky, networking benefits for members," Robinson says. "We are trying to build a community of like-minded CEOs and entrepreneurs. Down the track we will look at Wi-Fi."
Another team member, Ivan Vysotskiy, has a technology background and is developing an easy-booking platform and mobile application to make the service even more convenient.
In California, Surf Air, which launched in early 2013 has more than 1000 members, has raised a $US65 million ($93.5 million) credit facility and expanded its list of destinations now its business model has been proven. Eyerly has since moved to the east coast of the US to found a new company called Beacon to offer unlimited flights between New York and Boston.
Airly has modified the Surf Air model by choosing not to own its own aircraft, in part to lower the capital intensity. And while Hampshire is well aware the business model is unproven in the Australian market, the young entrepreneur is confident it can be successful.
"It is still something we have to explain to people," he says. "They can’t believe it is that monthly fee and you can get as much access to the planes as you need. We are so excited to get planes in the air in the second quarter."
Business Insider Emails & Alerts
Site highlights each day to your inbox.