Tuesday, April 10, 2012
Interview with Wade Eyerly, SurfAir
Story by Benjamin F. Kuo
One of the most original, subscription startups to come out of Southern California's tech accelerator boom emerged last week, looking to disrupt not just another retail sector or e-commerce category, but something else entirely: the airline industry. Surf Air (www.surfair.com), launching out of the Muckerlab startup accelerator in Santa Monica, is looking to create a new way of flying, taking aviation and combining it with the subscription model. We caught up with Wade Eyerly, co-founder of the company, who told us the story behind the company, and how it hopes to bring unlimited flights from local regional airports, via a subscription model, to the market.
What's the idea behind SurfAir?
Wade Eyerly: Basically, it's a flat fee, subscription, all-you-can fly private plane service. We shuttle primarily between Palo Alto and Los Angeles.
How did this all start?
Wade Eyerly: I was spending 27 days a month on the road about seven years ago, and learned very intimately that there's something wrong with the way we fly in America. Since 2006, I have been spending the last six years working on different models on how to make this work. Ultimately, we hit on three key innovations. One, is we use a subscription model, which makes a lot more sense than a ticket, because an airline flight is not a privilege anymore, it's a requirement. Tickets are for concerts, ballgames, and events, but you don't use it for going to a gym. You get a membership to a gym, because you need to go to the gym all the time. That's the same with flying. We're using smaller executive aircraft, because private aircraft have very different rules governing them, and which improves the experience dramatically over commercial flights. Checking eight people onto a plane safety is far different than checking in 208, and making sure they're safe and secure. It dramatically improves the experience. We're also using executive, regional airports. It's a little known fact that 50 percent of airports operate at only 10 percent of capacity. We've hugely overbuilt infrastructure here, which we are leveraging for our service. When you drive to the quote "airport", you likely are passing two or three other airports on the way. By bringing our service to regional airports, you're much closer to home. We don't need 280 people to fly somewhere, we only need eight near your airport to go somewhere. Those are the three innovations we've brought together to build this business.
Can you tell us how those unlimited flights work?
Wade Eyerly: The way it works, is you apply on our website, Surfair.com. We take your application and review it. We're starting with 500 subscriptions, and it depends someone on those 500 early adopters. They'll get access to our very first two planes, and our earliest routes. What we'll do with those early adopters, is learn about their travel habbits, and what happens with per-flight costs. Think of it like Netflix. You get unlimited views, but you can only hold two or three DVDs at home. For us, for $1,000 a month, you get four boarding passes, and can hold four slots. When you fly one of them, get you get another. It's all you can fly, but what you can't do is you can't just book every day and box everyone else out.
What's your background and how did you get into this?
Wade Eyerly: I spent a couple of years working on presidential campaigns, and then spent the last five years in intelligence, working for the U.S. government. I spent lots of time making really important things happen with little resources, which is exactly the skill set to build a business. I'm excited to apply those skills in a new way.
We understand you have a relationship with Muckerlab?
Wade Eyerly: They are incredible. The startup incubator actually found us. We sat down and chatted with them, had a frank discussion with them, and they made an offer to us, even though we're not a technology company like the others are. They sat down, told them how they know how to build businesses and grow them, and that they think they could help. Since we started the program in January, they have made countless introductions to people we otherwise would never have known. Those mentors and others have given us really tangible advice. Mentors have told us -- here what your social coefficient looks like, how to make the sharing dynamic work for your business, and then they'll spend an hour or and hour and a half with us, and give us a little more specific information we can apply. It's enabled our team to et together, figure out what we can do to leverage that, and apply it immediately. It's a little like going to an impactful business school lecture, where you get to apply what you learn in the next 24 hours, and where you learn more because you can. It has just been an incredible learning experience. The four partners at Muckerlab, Greg Bettinelli, Yanda Erlich, Will Hsu, and Erik Rannala just have incredible backgrounds, and an incredible ability to mentor companies. I've never been around anything like that, and I feel incredible lucky to be part of that.
So your first route is going to be Los Angeles to Palo Alto?
Wade Eyerly: We will also have a couple of recreational runs, to Santa Barbara and Monterey. Our primary route is designed to let us see how users will use it in the first few months, so that we can do lots of learning and interacting. The neat thing about the subscription model, is that instead of 10,000 one-off purchases, we have a committed set of 500 folks, the same folks every day. We'll learn what those folks want, are looking for in an airline, and will be able to respond more directly. A silly example, is if we learn that 50 folks of our 500 are planning on going to Coachella or Burning Man, we can move some planes around and do a shuttle back and forth for the weekend, and then go back to our regular service. That's just an example I pulled out of the air, but we think we'll be more responsive to our customers than a traditional airline.
There have been similar efforts in the industry, and the questions of how to deal with the high costs of pilots and fuel always come up. How do you handle those issues?
Wade Eyerly: One of the neat things, is we provide a very flat, consistent level of service. We don't peak and valley with demand. As a result, we can project into the future what our future fuel costs will be, and we can get fuel on contract at today's price, and just execute on that contract rather than try to hedge costs. We aren't going to capture fuel profit, instead we're just there to minimize our risk. That strips out the volatility, and just helps us lock in the price of fuel at the day's rate. Similarly, pilots seem to love us. We'll be flying with two pilots, one senior and junior officer. Usually, the senior pilot will be former military, experienced pilots. We're the only airline where our pilots will be able to sleep in their own beds at night. That's a significant advantage for a pilot, and it's likely something they can't get elsewhere. The very senior pilots still want to be part of the came, but they're also at the point where they want to be home in time to tuck their kids in for bed. Military pilots are gone long enough in their career, and want to be home, and are happy to be there. Our junior pilots will be younger, relatively, and will be looking to build hours and time, getting constant tutelage from pilots. Plus, airplanes on the ground don't make anyone money, and because we'll be flying all the time the junior pilots will be getting lots of flight hours on aircraft, because of the ton of flight hours we'll be generating. I think some of those younger pilots will eventually go on to fly larger aircraft, but we're excited to be able to help them do that.
When do you think people will start being able to take flights on your airline?
Wade Eyerly: We anticipate launching mid-summer, on approval from the FAA. The FAA has a mandate to make sure that everyone who flies is safe, so we're working with them to demonstrate our process. But, we not only know how to run an airline, we have brought lots of experts in to help us do it very well. We're just going through that process now. We have no exact date, but we anticipate mid-summer. We are doing some preview flights, where we're chartering someone else to operate us as a demo experience, starting April 24th and 28th, the two days on both sides of Demo Day at Mucker Lab. It will give a little bit of the experience and help us work with a focus group and show things off to folks. We do hope to have ourselves operating by mid summer.
Thanks, and good luck!