Linear Charter Marketplace Aiming For Nationwide Branding

 - July 5, 2014, 3:35 AM
Linear Air’s three Eclipse 500s operate as part of the company’s sharing network. The Linear Connect Digital Marketplace includes 15 other airplanes operated by six partners, with more interested in joining.

For new customers who might enjoy the benefits of flying from quieter airports, with fewer security hassles and on a more convenient schedule, the charter market can appear somewhat incomprehensible, especially when using smaller aircraft. William Herp, CEO of Concord, Mass.-based charter operator Linear Air, has what he sees as a solution to help bring lower-cost charter flying to a much larger audience: a nationwide charter market called the Linear Connect Digital Marketplace.

The idea is that instead of trying to expand Linear Air, which flies Eclipse 500 very light jets, into a huge air-taxi business with aircraft located all over the U.S., why not bring together other small charter operators into a sharing network that any customer can tap into? The charter landscape is littered with attempts to build nationwide brands, notably the ambitious yet failed DayJet, JetDirect’s rapid purchase and merging of more than a dozen charter operators and the Virgin Charter marketplace, all of which ran out of money. There are survivors, however, in a variety of forms, including charter brokers such as Sentient Jet, charter operators that own all their aircraft (XOJet, VistaJet) and national charter/management brands such as Executive Jet Management. There is also a new breed, Wheels Up, which owns its aircraft and contracts out the flying side of the operation.

Embracing the Sharing Economy

What Linear’s marketplace is attempting to do is tap into the increasingly popular sharing economy, which hasn’t made inroads into aviation mostly because of regulatory constraints. Companies such as Uber, Lyft and Sidecar have grown rapidly–and not without controversy–by making drivers without taxi licenses available to pick up people seeking transportation. And Airbnb has upended the hospitality business by helping people rent out empty rooms in their homes. Yet there is no regulatory framework in aviation that would allow the owner of an aircraft to offer to fly a member of the public in exchange for enough money to cover the entire cost of the flight. At the very least, Linear’s marketplace brings greater visibility of available charter flights to the general public, and visibility of under-utilized assets is what the sharing economy is all about.

“One thing we know, especially about these smaller operators,” Herp said, “is that they’re significantly under-utilized. They’re flying only about half [the trips] that they could.” The market that Herp is targeting is mostly piston charter airplanes, of which there are more than 1,600 in the U.S., flown by about 800 operators. Just by doubling the small number of charter flights that these airplanes complete, Herp calculated, a $500 million market ought to be achievable. Adding turboprops and small jets could expand the market even further.

Linear began testing the system last year with charter operator Hopscotch, which flies Cirrus SR22 piston singles from its headquarters in Farmingdale, N.Y. “We doubled their revenue,” he said, “by connecting our booking platform to travel search [websites].”

The Linear marketplace doesn’t revolve around a mobile device app–unlike typical sharing economy apps–but can be used on any Web-connected device. It also allows participating operators to be visible on travel websites where consumers typically shop for air travel. Currently, searchers using Kayak and Hipmunk for some trips will see charter flights by Linear Air, Hopscotch and other companies listed as options. The Linear marketplace had six partners as of early last month, operating 18 airplanes (including Linear’s three Eclipse 500s). Seven more operators were interested in joining the marketplace, according to Alanna Vallee, Linear’s v-p of marketing.

Introduction to Charter

“We’re hoping to give people a taste of air-taxi and see how much better the experience is,” Vallee explained. The marketplace currently serves the northeast U.S., and participating charter operators have completed trips as far as the Washington, D.C. area, Chicago, Maine and Canada. While the flights are branded as Linear Air on the travel websites, the list of results shows the name of the charter operator that will fulfill the trip. “We’re educating people about air taxi and at the same time showing them a solution alongside the commercial flight,” she said.

Getting the public to try charter is just the first step for the Linear marketplace. Herp sees opportunities to provide many more services, both for passengers and for charter operator participants. Passengers, for example, might need information about how to get to the FBO at airports served by Linear marketplace operators and also will need to be educated about what to expect. They also might need help with arranging ground transportation, which another partner could provide for the marketplace. “We can source that,” Herp said.

The marketplace could also develop and promote standards that all participating companies would have to follow, such as for pilot hiring, training, flight operations and so on. This would make certification much easier, Herp said, because, theoretically at least, once FAA inspectors are familiar with Linear marketplace operators and the high standards under which they operate, they might be more willing to accept regulatory compliance documents that are part of those standards. Insurance, maintenance and financial accounting and reporting could all be centralized, too, easing the burden on operators and, hopefully, making insurance and operating costs more reasonable. “We could provide professional employer outsourcing,” he added, “where pilots are employed by the professional employer organization and leased to the operators, as a means of putting together a group of employees with benefits.”

The entire charter industry could benefit from the Linear marketplace, according to Vallee, because once passengers try charter they tend to return for more. Many begin with a short trip in a Cirrus then move up to the Eclipse jet. They are being introduced to charter without the shock of a quote for $10,000 to $15,000 in a larger jet, which is typical of the available charter fleet. “It’s great to have multiple options,” she said.

The Linear marketplace should appeal to younger generations used to searching for and buying products on their mobile devices. “This generation is online and controls these decisions,” she said, “and they’re willing to use a model that is new and disruptive, like Airbnb, Lyft or Uber. It’s about putting all of the control of the experience in the hands of the consumer. That is what was missing in the past.”

The next steps for the Linear marketplace are to keep adding charter operator partners, expand throughout the U.S. and add travel buying platforms while continuing to educate the public about the charter option. “There’s a small group that knows about [charter],” she said, “but a huge portion of the traveling market doesn’t know it’s an option.” If all goes well, further growth of the Linear marketplace will be supported by investment capital, which the company is seeking to fund its bid for nationwide expansion.