A new startup set to shake up the airline industry is “incredibly risky” and probably won’t survive against the big local carriers, an expert says.
Australian company Airly is new on the travel scene and offers unlimited flights on a small eight-seater plane between Melbourne, Canberra and Sydney for members who pay a monthly fee.
The trio of founders said the new service aimed to cut travel time by up to two hours per round trip and encourage business networking.
Airly could be the next big thing to disrupt yet another sector using new technology, following the Uber passenger service which is challenging traditional taxi services, and Airbnb taking on the hotel industry by offering people private, cheap home rental accommodation.
But University of Canberra director of the centre for labour market research Phil Lewis told The New Daily that the Airly business model could not compete with the major domestic airlines Qantas and Virgin.
Professor Lewis said it was “incredibly risky” and unless it was able to completely match the quality, service and costs of the big airlines, then it might fail.
“The only people this service is going to be really viable for is people who travel regularly on business,” he said.
“But for a lot of these people, it’s not their money that’s paying for the trip.
“Then you have the frequent flyer programs, the business lounges, which are very important for people conducting business, and connecting flights [within the large airlines].”
However, Airly co-founders Ivan Vysotskiy, Alexander Robinson, 32, and Luke Hampshire, 28, said they were going to turn air travel on its head for regular commuters.
They hoped about several hundred members would 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.
They will offer an initial 54 flights per week between those centres, with plans to expand to Adelaide and Brisbane at a later date.
There is a basic, business and enterprise price structure.
Mr Hampshire said he hoped to launch the private jet service later in 2016.
“We are giving our members access to eight-seat private planes flying between Australia’s busiest air routes for a flat monthly fee,” he said.
“We are going to save them two hours per round trip, time usually spent in transit, looking for a car park, in a security line holding, trying to get into Sydney or waiting to depart Sydney as well with all the congestion.
“We really think we are going to turn air travel on its head for the regular commuters.”
Professor Lewis said the experience for commuters using Airly, who might save time on quick check-ins, could be soured when they had to travel further from smaller outlying airports.
“I think it comes down to reliability [of the big airlines], and knowing you can jump on a scheduled plane from Sydney to Melbourne every hour or half-an-hour,” he said.
Airly must match big airlines to be successful
Professor Lewis said industry disruptors Uber and Airbnb were so successful because they had matched the quality, price and service – or provided an even better service – than their long-standing competitors.
He said the larger domestic airlines like Qantas and Virgin ran on a “very sophisticated” business model and if Airly was to succeed, they would have to do the same.
Airly was based on a similar product and proven business-model based in the US called Surf Air.
“The thing with Uber and Airbnb was, the current services were unsatisfactory and they were very expensive and somebody found a way of offering almost the same service, in fact a better service, but cheaper,” Professor Lewis said.
“As soon as Qantas and Virgin offer cheap prices, that’s going to be incredibly difficult indeed.
“I wish them well … but I would be very surprised if they make a success of it.”
Mr Hampshire said Airly already had chief executives, managing directors and entrepreneurs onto its books – high flyers who were keen to network in the air.
He said the company was not looking for “once-a-year travellers”.
“The fuel price is getting better, that benefits us, the Aussie dollar is improving, which also benefits us, but those who are looking for a really personalised service, a very efficient and streamlined way to commute on a regular basis, we think we are the perfect fit,” Mr Hampshire said.
– with ABC