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  • 02.10.15

A Netflix For Private Flights: Surf Air Founders Take Off With Rival Members-Only Airline

A sequel to the West Coast’s Surf Air, Beacon launches with unlimited flights every hour between NYC and Boston for $2,000 per month.

A Netflix For Private Flights: Surf Air Founders Take Off With Rival Members-Only Airline
[PC-12 photos: by Pilatus Aircraft Ltd]

If Netflix lets you watch unlimited movies with a monthly subscription, why not follow the same model for air travel? Such was the genesis of Surf Air, a subscription-based airline that launched in 2013 and ferries frequent fliers along the busy San Francisco-Los Angeles corridor. Now, the cofounders of Surf Air, who left the startup last year, have made their way east to launch Beacon, a new plane service traversing the New York to Boston route.

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Beacon cofounder Wade Eyerly

Like Surf Air, Beacon will serve a very particular clientele: frequent fliers for whom a price tag of $2,000 per month for unlimited flights is a bargain. Think the upper echelons of the business world, people who take to the air many times a month–and often with little notice. There’s plenty of room for major airline mishaps in such arrangements.

So that’s where Beacon comes in: starting small and building relationships with members. Putting the onus of responsibility on Beacon’s shoulders engenders a personalized back-and-forth unheard of in the major airline game. (New members would likely get one of the founders on the phone if they called today for a membership.) There’s a reason airlines rank dead last in customer satisfaction, even behind health care and cable companies.

“Airlines are 97% perfect, but when they screw up, you feel it deeply,” says Beacon cofounder Wade Eyerly.

For $2,000 a month, Beacon lets you avoid the last-minute price hike guilt and turns the 10-minute booking process into a 30-second questionnaire. All you do is tell the company who you are, where you want to go, and when–Beacon won’t even ask for your credit card each time you book. That, the company’s founders say, is part of building a relationship.

Amidst a management shake-up in early 2014, Eyerly and fellow Surf Air cofounders Cory Cozzens and Reed Farnsworth left the company with no intention of starting another airline. A year later, Beacon is off the ground. Eyerly thinks this second round of subscription airline is poised for even greater success, now that the trio has picked up a few valuable (and painful) lessons from their first go-around.

What You Learn By Starting An Airline

The biggest change for the Beacon boys this time: They’re not buying planes. Since nobody had done subscription flying before, Surf Air wanted to control the experience end-to-end, so they bought a small fleet of single-engined turboprop Pilatus PC-12 9-seat planes. Surf Air has maintained flights with three planes thus far (and just placed orders for 15 more), but keeping three planes in tip-top shape to muscle through multiple flights per day is an expensive ordeal.

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PC-12 NG

“It boils down to fleet reliability,” Eyerly says. “You’ve undoubtedly driven a car with a ‘check engine’ light on. You just don’t do that on an airplane.”

So Beacon is avoiding that headache by simply not buying planes. Instead, it’ll partner with individual operators who own their aircraft, thus chartering the charter planes. There are 1,500 charter operators in the U.S., according to Eyerly. According to third-party safety agency ARGUS, there are 126 operators with a platinum safety rating–the highest offered–which Beacon will whittle down by ruling out planes they don’t want to use. (They’ll go for single-engine planes like Surf Air’s Pilatus PC-12).

Like Surf Air, Beacon won’t use jets: Turboprops are more efficient, and the 10% speed gain is negligible on a 37-minute flight from NYC to Boston. For such a short flight, there’s no need for in-cabin Wi-Fi, which can only be used for the 10 minutes the plane rises above 10,000 feet. Beacon also won’t charter planes seating more than 10 passengers, which would put them under additional scrutiny from the Federal Aviation Administration and the Transportation Safety Administration—regulators that Eyerly and his cofounders are well acquainted with after their experience launching Surf Air.

With such few passengers, Beacon is opting not to have flight attendants. Eyerly says that’s a good thing: “We’re very much a Pass Me The Coke environment. One of the things we learned is to empower the customer. Instead of the measure and proportion the stewardesses pour for you, when you grab a drink yourself you’re actually happier about the experience.”

Regardless of the plane chartered, however, Beacon has one requirement: a co-pilot. That redundancy is the most important investment in safety, according to Eyerly. Filling both pilot seats also reassures customers, many of whom are new to small flights and might be alarmed at a half-empty cockpit.

PC-12 Swagger Cabin

Getting the planes is one thing; getting them to fly on time is another. Surf Air opened in three cities, and even though one of their airfields was 100 yards from a prominent corporation’s headquarters, Surf Air couldn’t score a deal. They just had too many kinks in the system to promise reliably timed flights. “We couldn’t sell them a corporate membership–if a guy loses a flight and can’t make it, it’s not worth it to them. So it taught us the importance of frequency,” says Eyerly.

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Beacon will start more conservatively, with just the single route from NYC to Boston and nine flights each way for 18 daily flights at launch. Hourly departures will leave room for even last-minute bookings. The first flights will travel from the Westchester/White Plains airfield to Boston’s Logan Airport and back; flights are envisioned for the Nantucket and East Hampton routes, serving those that might fly business during the week and retreat to New England during the weekend. Every monthly subscription plan is truly unlimited but limited by booking: the $2,000 base fare lets customers book four boarding passes in advance. Six boarding passes costs $3,200 per month, while a family of four might want 10 boarding passes for $5,600 per month, and so on.

“Think of Netflix back when you got DVDs—it’s all you can watch, but you get four DVDs at once,” says Eyerly. “As soon as you fly or cancel a flight, you get another boarding pass slot back. So with that first plan, you can only box out four seats at a time.”

Since Surf Air owned their fleet, they had a hard limit on how many customers they could serve, so they capped the membership limits. They had to study the usage curve and see how much demand they could meet. All Beacon has to do is charter more planes if memberships increase.

Memberships start selling today, and Beacon plans to begin flying in June. But if someone theoretically bought 500 memberships right now, they could get Beacon up and running in eight weeks.

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PC-12 NG Modern Cockpit

How To Expand On The Startup Model

The company’s careful decision to begin with the Boston-NYC route reflects the importance of location to the success of a small airline venture. Where will Beacon fly next? Washington, D.C. is almost certainly next on the list: It’s in the hour-plus flight time sweet spot for Beacon’s niche market, and Eyerly has spoken to enough people to get a sense of the demand.

“Boston to DC is a great run: Register with us today because it won’t take long for us to get there. If there’s 500 people who want to move, we’ll talk,” says Eyerly.

But not Chicago. The Windy City is a little over two hours away, but only with a larger twin-engined jet, and the flight length would slash available flights unless Beacon radically expanded its charter fleet–in which case, it would encroach on territory already dominated by regional carriers.

“The market certainly has a size–it’s not Coca Cola where everyone can consume it,” says Eyerly. “I’m very confident that we can find 500, 1,000, or 2,000 customers from NYC to Boston. But 30,000 to 100,000? I don’t know.”

That doesn’t mean Beacon is stranded in the Northeast, or worried about competition. They’ve made enough of a footprint already, and there’s plenty of green fields where Beacon and Surf Air don’t operate. But the beauty of a charter-only plan lies in the potential for expansion and partnerships—not taxi-app style price wars: Instead of invading a market and trying to bump off mom-and-pop planes that can’t compete with its prices, Beacon could potentially partner with local charter operations as an expansion of its service. Everybody wins.

After leaving Surf Air, Eyerly, Cozzens, and Farnsworth were haunted by the old adage that “innovators get the credit, but imitators get the money.” Beacon, they hope, will see them get their due in the nascent subscription airline market, which only Surf Air has attempted to exploit. Meanwhile, other companies in the U.S. are struggling against regulators as they seek to cater to frequent business travelers through on-demand flight-sharing. But before settling on the Northeast, the Beacon boys drew interest from all over the globe on how to create a hyperlocal subscription airline.

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“The interesting thing about aviation is it’s a hobbyist thing—people have jet fuel in their veins,” says Eyerly. “There are folks trying to clone the model and rebuild our success. We’re working with some and giving advice to several, but in my view, it’s in the doing where the real value is made.”

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