A month after launching its first flights, subscription-based airline Surf Air has added service to Santa Barbara as its third destination, joining Los Angeles and the San Francisco Bay Area.
Surf Air attracted significant interest when it announced its all-you-can-fly membership model last year. To join, members pay a $500 “initiation fee” and then subscribe for $1,650 per month. It’s a different model from BlackJet, which went live late last year, though it’s bound to compete for the same class of customers.
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Trying to form an airline is already a complicated enough, but Surf Air founder and CEO Wade Eyerly is taking it a step further by trying to unseat the traditional ticketing model.
Eyerly commented in an interview that the aviation industry has historically been resistant to change. In his view, there have been just four major innovative figures since Howard Hughes: Virgin’s Richard Branson, NetJets’ Richard Santulli, Southwest’s Herb Kelleher and Jet Blue’s David Neeleman. With Surf Air, he’s aiming to earn a spot on that list.
Surf Air, a graduate of LA’s MuckerLab accelerator, doesn’t view itself as a tech-focused startup, but it does draw inspiration from tech innovations. Eyerly described it as taking “what everyone from Netflix on down” does and applying it to aviation. He credits Netflix’s DVD subscription rules for some of the ideas that went into Surf Air’s boarding pass policies.
When we caught up with Eyerly, the airline had run for three weeks with a total of 156 flights. He said operations had been “fantastic” so far, with one member flying as much as 14 times. The company owns three aircraft and has a wait list of 5,500 people.
LA and the tech community have been “incredibly good” to the Surf Air team, according to Eyerly. He mentioned an example where entrepreneur Adam Nash came to MuckerLab to teach companies how to create virality with their products. Nash went on to help Surf Air create a sharing option, which allows members to bring someone along on a flight by locking up their boarding passes for two weeks.
“There are literally zero venture firms out there asking how they can invest in more airlines. We’re always sort of the unwanted kid. The LA tech community has never treated us like that,” Eyerly said.
The complexity of scaling up Surf Air’s fleet and available destinations is going to pose a difficult problem for the company, but Eyerly remains optimistic. The firm plans to triple its fleet by the end of the year, and Eyerly was quick to remind that members will enjoy the additional value proposition of an economy of scale as the company adds new flights and airports.
Building an airline takes capital, and Surf Air has raised over $10 million, including a recent $7 million Series B round. It also took on debt to purchase its fleet. Investors include Velos Partners, Base Ventures, Anthem Venture Partners, NEA, Structure Capital, Jared Leto, TriplePoint Capital, Siemer Ventures, Baroda Ventures, Gilad and Eytan Elbaz, Rick Caruso, Jeffrey Stibel and Jonathan Schreiber.
Subscription flying isn’t something that most of us can afford at the moment, but Eyerly believes that this is just the start of fixing the broken ticketing model.
“I hope that ten years from now, you look back and think, “Remember when we used to buy tickets?”,” he said.
In his view, consumers purchase tickets for things that are a privilege. Flying was at once a privilege, but demand has risen enough to make it an expectation.
“There is no industry more hated. It’s the only industry that ranks below cable companies….You absolutely hate this thing but you can’t stop buying it,” he said of today’s airlines.
Eyerly isn’t planning on keeping Surf Air as a boutique airline for executives.
“We’re a big airline that’s about to happen,” he said.
The startup has identified 53 markets in the US that it believes would work for its current price point. Expanding to all those regions would put Surf Air at roughly $2-3 billion in annual revenue, by Eyerly’s calculations. It could also potentially license its operational expertise to international markets that are interested in the model.
“We locked arms and jumped off a cliff together. The great unknown here is what happens to your demand for travel when your per flight cost goes to zero. No one’s ever been able to find out…We have [a month] of real data.”
Upcoming expansions for Surf Air include service to Monterey, Palm Springs, San Diego, Sacramento, Lake Tahoe, and the Sonoma/ Napa area. Las Vegas would be a natural fit for a lot of customers, but the company is currently only licensed to fly in California.
Surf Air quite literally just got off the ground, but if it picks up momentum, the airline industry will never be the same.
Image credit: iStockphoto