Starting an airline is tough, but Surf Air just might have what it takes.
The airline business is a tough one. Most start-ups fail to take off, and even many of the established companies have gone through bankruptcies. But brothers Wade and Dave Eyerly just might have a shot.
Their start-up, Surf Air, is a members-only airline that offers unlimited flights for a flat, monthly rate. Since it was founded in January, the company has raised $4 million from VCs and angel investors. The Eyerlys's plan to offer short routes in California before the end of the year, pending approval by the Federal Aviation Administration.
Surf Air, says Wade, the company's CEO, has tackled a few of the challenges new airlines often face, such as high fuel costs, empty seats, and intense competition from major airlines. For starters, Surf Air will fly only between regional airports, so it won't have to compete for gates at major airports, a huge barrier to entry for starter airlines. Second, all flights will be short--about the distance of a three- to six-hour drive. So, Surf Air can use small, eight-passenger planes, which are cheaper and guzzle less fuel than do larger jets. Finally, Surf Air is getting rid of tickets and instead selling unlimited monthly memberships for about $1,000. Selling memberships provides Surf Air with a steady stream of revenue, so it won't have to worry about filling seats. "We don't sell seats for a living," Wade says. "Is Gold's Gym worried if a weight bench is empty? No--they sell access to the gym."
Dave Eyerly got the idea to start his own airline while attending flight school at Utah Valley University in 2007. He enlisted the help of his older brother Wade, then an intelligence officer for the Department of Defense, and the two of them spent the next several years researching the market. The brothers eventually launched a simple website last year, to test the demand for an all-you-can-fly airline. Within six weeks, 12,000 people had signed up to receive more information.
To start, the company is accepting only 500 members and owns just three planes. Surf Air will fly to small airports in or near Palo Alto, Monterey, Santa Barbara, and Los Angeles. There are some 2,800 people on the waitlist. Wade wants to assess how frequently members fly before buying more planes and launching new routes. He has his eye on another 50 or so short-haul routes in the U.S.
Surf Air's sweet spot will be business travelers--specifically business travelers who already shell out around $200 for round-trip flights several times a month. But are there enough of them for Surf Air to be successful? Nima Samadi, an industry analyst with the market research firm IBISWorld, thinks it has promise. "The L.A.-to-San Francisco route is pretty popular right now, so I think it's a good target market," he says. "Surf Air is targeting a very narrow demographic of people who fly a certain route consistently and want a higher-value experience than flying commercial. Because of that, I think it will be more successful than some of the other airline start-ups we've seen."
The challenge will be making sure there are available flights when members want them. "They need a certain number of subscribers to be profitable," says Samadi, "but if there aren't enough flights, they could lose a lot of members."
That's one reason Surf Air is limiting its members. "If you can't get on a plane, you're going to hate us," says Wade. "It's critical for us to make sure customers are happy, because our revenue isn't tied to how often you fly. It's tied to whether, at the end of the month, customers say, 'I'm happy with that experience. I want to do it again.'"
Surf Air at a Glance
Monthly fee: About $1,000
How often members can fly: Unlimited
Where it flies: Palo Alto, Monterey, Santa Barbara, and Los Angeles