Potter Takes Over As CEO of Surf Air

 - April 4, 2014, 4:10 AM

Wade and Dave Eyerly, the founders of Surf Air, an all-you-can-fly Part 135 membership service that operates Pilatus PC-12s on West Coast routes, have left the company. The brothers started Surf Air in 2011, and flight operations began in June last year. In February the company hired Jeff Potter as the new CEO.

As CEO of Frontier Airlines, Potter helped expand that company from five to 60 airplanes and more than $1 billion in revenues. After leaving Frontier in 2007 (he remained on the board of directors until 2010), Potter ran the private vacation club Exclusive Resorts. The job at Surf Air wasn’t on Potter’s radar. “They contacted me,” he said. “I wasn’t particularly looking and was keeping myself busy in other areas when the board reached out.” He was attracted to Surf Air’s membership model, he said, “and having that as an umbrella over the aviation component. For me it’s the perfect place to find myself.”

While he wouldn’t comment about what led the Eyerly brothers to leave the firm they founded (Wade remains an owner), Potter explained that their departure was just part of a company’s “natural progression and evolution. I give all credit in the world to the founders. They had a strong vision. I think their model is extraordinarily sound.”

The Surf Air business model remains the same: a monthly fee gives members the opportunity fly as much as they want on Surf Air’s scheduled flights between the San Francisco Bay Area (San Carlos airport), Santa Barbara, Burbank and Hawthorne. There are no cancellation fees, and members can book a flight at short notice, as few as 15 minutes before a flight is scheduled to depart.

Until March 21, the lowest membership tier cost $1,350 per month, but that was raised to $1,599. At the same time, Surf Air launched service to McCarran Airport in Las Vegas. The next planned destination is Truckee Airport near Lake Tahoe, and service there is slated to begin next month. The lowest tier allows members to hold up to four flight reservations, while higher tiers allow a member to hold more bookings at one time.

“Can it work?” Potter asked. “Yes. Does it? Yes. But it’s an early-stage company. Like any company, you have that stage where you’re growing into your wheelhouse or where you want to be financially. We have made some adjustments on the schedule, on cost-containment initiatives at the same time as revenue enhancements. We’re taking the steps necessary to improve the economics.”

Surf Air had 434 members, three airplanes and 65 employees as of early March, but Potter wants to see the company grow. “I didn’t come here to manage three airplanes,” he said, “so I think there’s a terrific growth opportunity. It’s exciting times, a great little company and a committed group of employees.”

Single Engine Gets Customer Approval

Potter has not seen any member reluctance to fly in a single-engine airplane. Although the PC-12 is a single-pilot Part 23-certified turboprop, Surf Air flies with two pilots. “The Pilatus is a terrific airplane,” he said. “It’s got a great record, and we’ve never had any pushback. Pilots love it, members love it and the reliability is outstanding.” There are plans to add to the Surf Air fleet, but Potter could not provide any details. “We’re going through that internal process now.”

The PC-12s are equipped with seven passenger seats. While Potter didn’t provide any statistics on load factors, he said that balancing the demand for trips with the bookings and the fixed schedule that the aircraft fly is a challenge. “Currently each of the markets is performing well,” he said. “But unlike a lot of airlines, we don’t want to run 90-percent load factors. We want the convenience factor and the comfort factor [as part of] the overall experience.”

For now at least, Surf Air remains focused on the southwest U.S. “There’s no shortage of good ideas on new markets,” Potter said. “I look at it more as a matter of prioritization, and that’s a great position to be in. The opportunity for us is how we prioritize the markets. We have more than 400 members who have taken pride in ownership in what we do. We also have a list of prospective members who have said, ‘When you fly to [such a location], we’ll join.’ It’s almost a pre-sell opportunity.”