Surf Air Takes Flight: Case Analysis of the Airline Startup

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The Surf Air Takes Flight – A Case Analysis

About The Surf Air Team (Dann et al., 2014)

The Surf Air was founded by The Eyerly Brothers, Wade and Dave, who grew up in an entrepreneurial household and thus, had entrepreneurial acumen like their father, since childhood. Whereas Wade had a varied set of experiences, including a degree in cross-cultural studies and international economic public policy, followed by a Master’s degree in Public Policy and had spent a significant amount of time in government and politics that gradually made him acquire the knowledge and skills related to the ins and outs of air travel, Dave, on the other hand had a dream to become a pilot, to be in the clouds, to be completely free. However, the downsizing of the airline sector made it difficult for Dave to grab the job of a pilot but he took a position in the Administration department of the US Transport security. His Operations job at the airport, connections with the pilots, and a part-time job of being a pilot with a skydiving business in Texas, gave him sound knowledge of the aviation industry. Thus, with the knowledge of flying and a penchant for entrepreneurship, it was inevitable for the Eyerly brothers to have a business idea surrounding aviation. As evident from the feasibility funnel of a start-up venture (Figure 1), The Eyerlys had the required knowledge and concepts that are required the most in starting a new venture. 

Formation of the Executive Team

Figure 1: Venture Feasibility Funnel

The Washington Summit held in 2011 brought over 25 people that were grouped into the domains of finance, marketing, operations and human resource. From the lot, Eyerly brothers offered six people a spot on their executive team, of which five had accepted. These people from different domains, thus brought together their experience, skills and knowledge about the field to venture into their start-up, The Surf Air. Thus, the team comprised of people from varied background, including human resource, operations, marketing, branding, legal and finance domains that together worked towards their common goal of ‘The Surf Air to take flight’.

Recent trends in Air travel, Transportation and the Economy that might affect Surf Air

Recent Trends in Air Travel, Transportation and the Economy that Might Affect Surf Air

Air Travel

Forbes’ Kelleher (2021) reports that the ongoing Covid-19 Pandemic has erased the growth of air travel by two decades. The Passengers numbers have declined sharply and the airlines are still trying to figure out the new rules (Reed, 2020). Such ongoing trends have fiercely hit the aviation industry and so would affect Surf Air. 

Transportation

Surf Air initially posed the risk of noise restrictions, limited runways and an assortment of other FAA regulations. Besides these, other posed risks included increased traffic congestions and petitions filed against them. Such restrictions need to be overcome strategically by Surf Air. 

Economy

The impact of Covid – 19 on the aviation industry is severe. 2020 was the worst year in the history of aviation industry with a net loss of $84.3 billion and they are expected to continue in 2021, albeit with a lesser impact compared to 2020 (IATA, 2020). Such instances have affected the aviation industry, including Surf Air. 

Risks posed by Surf Air

Market Risks 

Surf Air targeted market included people who were frequent commuters rather than those who were frequent fliers. This market thus, lacks the list of people who are frequent fliers. Also, the market customers of Surf Air fall in two main categories, namely, those who want to fly around quickly as driving is a hassle for them and the other groups include the people who need a private plane experience. Although, the targeted market for them is elite group of people, they must also focus on the other sects of people for a wider array of business. 

Additionally, the team initially faced branding risks as they initially had named their airlines “Plane Red”, that was a potential marketing nightmare as the red connotes fire, debt, emergencies, economy taking, to name a few. However, gradually, the team agreed to keep the name of their aviation venture simple and sober as “Surf Air.”

Distribution Risks

Surf Air initially got an online push through the website and online subscribers that they had made a data of. The data of thousands of subscribers helped in understanding marketing concepts, distribution methods and price points. They got to know about the spending habits, preferences, hobbies and interests of their subscribers. They got to know that 70% of people showing interest in their airlines were males between 31 to 60 years age and over 50% earned above $300,000 per year. However, besides online medium, reaching out to customers was difficult for the team. It is thus, a risk that must be overcome to 

Benefits

Some of the benefits of the Surf Air model attracted many business travelers. For instance, short routes, and boarding procedures like those of private-plane boarding features would not only save passengers’ time, would simplify the airport process and provide passengers with the convenience they look out for while flying. They would also feel comfort and exclusivity that comes with flying private. The three core values of Surf Air; Value proposition, brand positioning and service model and the three core values of Safety, Simplicity and Community have served to be beneficial for both the clients and to the company itself.

Location

The first planned route for Surf Air was to connect four California cities only. The political issues plagued the decision of extending the services to Los Angeles. Although, Santa Monica was a good proposition for them as it would connect Silicon Beach community with the Silicon Valley. However, the limited options pose a risk for Surf Air and they should put in efforts to expand their business horizon. They should launch more marketing plans and set more flying routes. 

Government or Regulation Risks

In the initial years of its business, Surf Air posed risk of a shut down by the Federal Government as FAA (Federal Aviation Administration) found some paper work missing from the Surf Air company. The FAA caught wind of its nascent operations and found that Surf Air had not completed many of the processes that were required to launch the airline business in the US. The risk posed by the company was that they had to start everything from the scratch and had to complete its full procedure to gain government approval. The new changing rules of FAA are thus, a risk for Surf Air. 

Financial Risks

Initially, the company faced a lot of financial risks, such as, the leasing prices were set at a cost of $60,000 per month per plane and was supposed to sign on for a different lease amount higher than this amount. Farnsworth, a member of the team estimated that Surf Air would spend $800,000 per year before the planes took to the air. The risk posed by the company is the decline in air travel due to the Pandemic and bearing the huge costs of the lease amount for the planes is a liability. 

Works Cited

Dann, Jeremy, B., Mednick. Steven & Sutherland, Rachel. “Surf Air Takes Flight.” Surf Air 2014.

Iata.Org, 2021, https://www.iata.org/en/iata-repository/publications/economic-reports/airline-industry-economic-performance-june-2020-report. Accessed 9 June 2021

Kelleher, Suzanne. "The Last 10 Months Wiped Out 21 Years of Air Travel Growth". Forbes, 2021, https://www.forbes.com/sites/suzannerowankelleher/2021/01/04/poof-the-last-10-months-wiped-out-21-years-of-air-travel-growth/?sh=72be29bc4d3f. Accessed 9 June 2021.

Reed, Ted. "These Are the Top Six Issues Facing The Revamped Airline Industry". Forbes, 2021, https://www.forbes.com/sites/tedreed/2020/05/18/top-six-trends-as-crisis-reshapes-the-airline-industry/?sh=40f410b05658. Accessed 9 June 2021.