Ad Astra – The Renaissance of Private Aviation

Opportunists were waiting in the wings, however, and in 2004 European entrepreneur Thomas Flohr founded VistaJet. Taking advantage of post-9/11 low jet prices and appealing to the risk and capital cost aversion of the subsequent global financial crisis, VistaJet introduced a new “pay for hours flown” business model. By 2016, VistaJets’ fleet was comprised of 77 aircraft.

If this period, from 2000 to 2016, represents the golden age of business aviation, we are now in its renaissance. The last five years have seen a dizzying and escalating rate of market entrants, new business models, industry consolidation, and mergers and acquisitions in private aviation alone. In July, industry avant-garde Wheels Up reached new heights in being the first private aviation company to undertake an IPO, using the relatively new trend of listing via a special purpose acquisition company, while also posting initial positive returns following its IPO.

Surf Air, founded in California in 2012, introduced a novel ‘all you can fly’ subscription business model and operated an extremely lean business through wet-leasing aircraft from dedicated operators, a first for the industry, rather than owning or operating aircraft itself.

What about Australia?

“The problem with the Australian market is that it’s big enough for probably one-and-a-half airlines,” remarked Geoff Dixon, Qantas’ former CEO, in 2001. This rather prehistoric attitude is more of an arrogant half-truth. Yes, Australia’s market is small; but it is also underserved and inefficient.

When we founded Airly in 2015, we analysed what was working in the US and considered it for Australia. We recognised the opportunity for accessible private aviation but were constrained by lack of capital and sought to replicate Surf Air’s capital-lite subscription model, including the lease of Pilatus PC-12s or King Airs for flights between eastern capital cities. We quickly learned a few lessons – we were not in Silicon Valley. Almost every prospective investor told us that for them to even consider investment we needed 1) experience, 2) revenue, and 3) traction; along with the caveat that aviation was not their target industry, and/or that it was destined to lose money. We found that turboprop aircraft were not ideal for the Sydney-Melbourne-Brisbane triangle, as the range was just beyond optimal efficiency. We also discovered a general antipathy to turboprop aircraft, which we suspect is due to the turboprop experience most travelling Australians have had on antiquated and noisy regional Dash 8s.

Over six years we have examined, cherry-picked, and trialled elements of different business models that we have seen work overseas. The outcome has led to Airly being able to offer an evolving spectrum of private aviation experiences – from the newly-acquired EmptyJets, enabling affordable repositioning flights, to shared membership-based flights, accessible per hour plans, and domestic and international full-service charters.

Australia does not have the scale – in aircraft volume, travelling demographic, or population centre perspective – to directly copy and succeed with a US model.

If we cannot directly transfer a business model to our industry, we need to innovate and develop an improved one that works for us but that can also scale beyond our relatively small market. The acceleration of change seen throughout private aviation presents an opportune time to disrupt, evolve, and introduce new business models. Similarly, COVID has turned the aviation industry on its head, highlighting inefficiencies and systemic problems.

With domestic travel dominated by commercial airlines, and a monopoly in that domain, Australian aviation is an opportune industry for positive disruption.