Our guest on the Subscribed Podcast is Jeff Potter, CEO of Surf Air, an innovative, subscription based airline. Started in 2013, Surf Air flies to 12 destinations within California and operates 90 flights a day. Members can fly as much as they want for a fixed, monthly fee.
We spoke to Jeff about the disruption the subscription business model is causing in the traditional aviation industry, the difference between loyalty programs and memberships, the challenges of pricing for a new model and lots more! Listen to the episode below or scroll down for select excerpts!
You’ve really disrupted what’s not traditionally been everyone’s favorite industry. What exactly are you guys doing and trying to change about aviation?
I think in the simplest form when you look at it, when we’re traveling from Point A to Point B on business, I don’t think we get up in the morning and are very excited about heading to the airport. You’re spending more time in the airports than you are actually on the airplane. I think we can all agree that it’s a fairly stressful experience. Surf Air offers a calming experience. We only operate out of private terminals at airports. You are met by the concierge at each one of the airports. We do background checks on each one of our members before they can actually fly so you avoid the long security lines. You avoid the parking dynamics. You can arrive truly 15 minutes prior to departure and relax.
What we are doing is giving back each one of our members’ time. We all value our time in different ways but we all value our time. Whether we want to give it back to our families or to our business, we typically will save on each round trip 2 to 3 hours for each one of our members. It adds up very, very quickly! We really value what our members have to say to us and it’s a product and offering that not only the employees but the members themselves are very, very passionate about.
Is Surf Air entirely about a better customer experience or is it also about a different kind of business model?
I manage the business along with the entire team here. And because we are subscription based, we have revenue clarity that I never found while I ran Frontier. We are also different in how we operate which is that we are on a schedule because our members want a schedule. It’s not ad-hoc, it’s not on demand. When you run a schedule, you know how many hours you are going to fly on the aircraft, you know what it takes to fly and maintain those aircrafts. You know what it takes from a cost perspective. You don’t find too many companies with that kind of clarity on managing the business from an economic standpoint.
How do you think about customer retention and attrition risk? And how much of it can you control?
Member retention for us is critical for a variety of reasons. I think it’s the best gauge, the most important gauge of your product delivery. We rely heavily on data to understand our number churn. The single biggest reason that we do have churn is either a lifestyle change or a career change or moving out of state -those are obviously beyond our control. We take very seriously the areas which we do control and follow it closely. Member retention is so important for us that we exert as much or more effort on it than we do on new sales.
In the airline business right now, they are running 90% load factors. The fact of the matter is if I get upset with an airline, they really don’t care if I don’t show up the next time. They might care if hundreds or thousands of us don’t share but they don’t care about Jeff Potter not showing up next time. We care about each individual member that chooses not to fly with us. We manage our business to fill the average number of members on our aircraft to 60% as opposed to the 90% you see on their model. Unlike the airline business where Tuesday and Wednesday’s are off peak, our members will actually move meetings so they can fly on Surf Air. Our Monday through Friday load factor is almost straight across the board. There is no peak/ off peak. People and members, they will actually balance out their schedules so they can utilize the service.