The dawn of Uber for the Skies

Private jets are by most accounts a prohibitively expensive solution for travelling from A to B. One company, however, has been quietly operating under the radar for three years to democratise access to the jet charter industry. We’re at the dawn of Uber for the skies.

Why the aircraft charter marketplace hasn’t evolved

Over the last decade, the procurement of products and services, ranging from consumer goods to professional services, have transitioned into the online era in the form of marketplaces.. The aircraft charter industry, however, is one notably large exception that has remained largely offline and inefficient due to technical difficulties in costing out journey legs.

Here’s how the journey costing works today. A consumer reaches out to a private jet broker whose job is to procure and book aircraft for the desired journey. To to do so, the broker requests quotes from several charter companies who must account for 15 separate variable fees including aircraft procurement fees, landing fees, airway charges, out of hour penalties, airfield handling agents, and pilot hire fees. While some of these variables can be obtained rather easily, others are much more nuanced and multifactorial in nature. What’s more, it’s key to ensure these variables are up to date and relevant to the particulars of the specific journey. Efficiently and accurately piecing all of this together for multiple customers at a time is no small task, as you might imagine. The solution is to develop a suite of self-learning algorithms and advanced computational processing to return real-time definitive prices and live inventory back to the user to enable instantaneous booking. Because of this complexity and opacity in pricing and costing, private jets remain one of today’s needlessly expensive and underutilised modes of transport and asset classes.

An additional factor holding back the proliferation of private jet travel into broader society are “hidden fees” that are levied as a result of structural inefficiencies. For example, a dizzying 40% of all private jet flights are actually empty legs. Why is this the case, you ask? Well, because of the antiquated management systems jet operators employ to coordinate their fleet, it’s become necessary to fly a plane around simply to reposition it for a productive journey a client has booked. An unfortunately natural consequence of this is that passengers end up paying more for the journey they’ve booked because the broker defers the cost of aircraft repositioning to the end client. How thoughtful of them.

Are there more needlessly levied fees? You guessed it! Traditional brokers charge an average fee of 10% on the value of the flight while they bring questionably little value-add to the consumer. Indeed, herein lies a classic example where middlemen introduce unnecessarily (expensive and inefficient) bottlenecks into a purchasing process that could otherwise be streamlined by machines. Today, the consumer is held captive, but I’ll now explain how that’s about to change.

The company that has been working in stealth mode to crack this problem

An average private aircraft worth millions of dollars is airborne less than 5% of its life. In a $90bn global industry, the lost economic value at play here is vast. As a result, this is one of the last major global marketplaces to embrace and evolve with next-generation software.

Fortunately, one company has been working hard in stealth mode for the past couple of years to create the first ever aircraft charter marketplace. Founded by former army jet pilot, Jonathan Nicol, Stratajet have steadily engineered the plumbing and supply to power a drastically more efficient Uber-style marketplace for aircraft charter.

A key question to answer when building any software business is whether you can create breakthrough technology instead of incremental improvements over the status quo. As we ran through earlier, the problem at hand is real-time accurate pricing and aircraft availability. To access the requisite variables (most of which are determined by airfields) to compute these outputs, Stratajet plugged into every airfield in Europe. Using it’s own piping and data processing, Stratajet’s technology can normalise incoming information in order to calculate the exact cost for any aircraft undertaking any movement at any time. Stratajet’s Airfield Pricing Engine marks the first system in the industry that does not rely on estimates and instead provides a definitive output a consumer can rely on. Armed with this powerful technology and data advantage, Stratajet has quickly onboarded close to half of the top jet operators in Europe.

The Stratajet booking platform is not dissimilar to the experience perfected by Uber. Customers enter their journey details from departure postcode to destination postcode. Stratajet’s backend then computes the optimal outcome from thousands of possible journey routes including many of the smaller and closer airfields that are usually inaccessible by commercial airlines. The system also takes into account empty legs to find the most cost efficient options. Bookings can subsequently be computed on the spot. A screenshot of the service is provided above.

What does this mean for aircraft travel?

By removing structural inefficiencies with software, we expect prices for private aircraft bookings to fall for the end customers. The improved accessibility afforded by an Uber-type user flow and real-time booking will encourage a steady uplift in the volume of charter bookings. While the pace and magnitude of this acceleration will not match what we have witnessed in the taxi market, I believe there are clear commonalities at play. Gross margins for aircraft operators will also increase due to increased utilisation of their jets and the reduction in the cost to provide their services via middlemen. All in all, a win-win for everyone except traditional brokers who will be disintermediated and rendered obsolete by software.

Customers are provided with all necessary information to be able to make an informed decision on the most suitable aircraft and airfields. In democratising access to the industry, we’re opening this mode of travel to a far broader audience than has previously been the case. When comparing the cost of booking 4 business class seats on a commercial airliner to a private jet on Stratajet, the former option becomes considerably more expensive than hiring a private jet.

Beware of the cowboys who shout loudly

The existing and potential market size of the private jet charter market has attracted its fair share of cowboys who’ve set out to carve out their share of the pie. A number of companies have popped up in the last couple of years claiming to offer online jet bookings by giving users the impression they can book in real-time on their platforms. The truth is that these are sadly just offering ballpark quotes with no ability to book on the spot. Stratajet is the first and only real marketplace that supplies the largest pool of bookable and priced aircraft inventory in real time.

Why did Playfair back Stratajet?

Our ethos at Playfair Capital is to invest in fundamental innovation that will change the way we live and work for the better. We back companies that re-write the playbook, not ones that deliver incremental efficiency gains within the confines of existing frameworks. Besides their world-class team and leadership, Stratajet’s focus from the beginning has been on developing technology that reached into every aspect of the industry. Their aim has always squarely been to control all of the moving parts and to own the data on every single input variable that affects the output price for a trip. It’s this focus on the data network effect that is extremely powerful as it creates a large barrier to entry to other companies that try to build competing marketplaces.

We see a massive opportunity ahead, not just for private jet travel but for all aircraft travel. In the same way that Uber has disrupted and come to dominate taxi travel, we believe Stratajet can do the same for aircraft travel.

Whilst Stratajet has already proved its capabilities in the private jet charter marketplace, we believe in time this can be expanded to other forms of aircraft such as helicopters and propelled aircraft. In fact, Stratajet already have a fair few King Airs on their platform, which have the benefit of being able to land at smaller airfields with smaller runways than jets.

Another exciting new aviation company that has emerged in the last few years is Aeromobil, which have produced a flying car. Once a model with more seats exists, this could prove to be more efficient than currently popular forms of transport such as trains, both in terms of time and cost on medium range journeys. I’d like to think that even such flying cars could be chartered on the Stratajet marketplace in the future.

We think that a platform should exist that combines commercial airline seat availability (like Skyscanner) but also private jets, propelled aircraft, helicopters, taxis, buses, trains and even flying cars! At the end of the day, different customers have different priorities in how to get from A to B. For most, cost is the most important factor but for others its journey time, comfort, safety, booking time or privacy.

Uber may have conquered the roads but Stratajet is set to conquer the skies. In an ideal world, both would exist harmoniously in the same integrated marketplace.

One clap, two clap, three clap, forty?

By clapping more or less, you can signal to us which stories really stand out.