With home sharing platforms, people can book unique accommodations that are more homey and comfortable than a hotel when they visit a city, capitalizing on space that is already available and is not being utilized by the owner.
JetSmarter applies the same social, sharing economy approach to air travel, enabling travelers to capitalize on available seats on existing flights — or create a flight of their own and crowdsource the seats they don’t need to the rest of the JetSmarter community. At least, that’s the idea. But the platform faces a bit of a catch-22 at this stage: Until JetSmarter can drastically increase its density and liquidity in the market, its appeal will remain limited, yet it needs to reach consumers and grow its user base to achieve that density and liquidity.
That’s part of why JetSmarter has opened up the platform to the public with a “pay as you go” option, announced on June 12. Initially, JetSmarter functioned on a members-only model where users had to pay an annual fee in addition to the cost of flights.
In an interview with Karen Webster, JetSmarter CEO and Founder Sergey Petrossov explained how inviting more users into the system — even though they won’t all sign up for memberships — will improve pricing and availability for everyone, and why letting people try the platform without committing to the membership could ultimately help the company sign on more members in the long run.
The Pricing Problem
In social, sharing-based businesses, pricing is all subject to supply and demand. That’s why there’s surge pricing for Uber and Lyft at 2:00 a.m. when all the clubs close; it’s why ski condos can rent for thousands on Airbnb during the winter, but go for much less in the summer. It’s why, even in commercial aviation, the cost of a seat varies widely based on the point of origin, destination and number of people interested in flying there. And, according to Petrossov, it’s why, in a sharing-based model, those elements of supply and demand become even more impactful.
In some cases, travelers can charter a flight on JetSmarter for $2,000, which nets them three or four dedicated seats on the craft. In other cases, for longer-distance flights or less-traveled routes, they may have to shell out as much as $14,000 to secure the same. Notably, this pricing applies to the flight initiator and not necessarily to each passenger signing on to a flight once it has been created. Still, such a steep price tag could be a big deterrent and discourage many from ever trying the service.
With Uber and Lyft, it’s simple for users to pop open an app, request a car and be on their way within five minutes. The price is slightly higher than the user would have paid for a taxi, but the value exists in the convenience. Although this is JetSmarter’s ultimate vision for air travel, the platform can’t yet offer a similar experience, except in a very limited number of convenient, popular locations.
When It Works, It Works
On the flip side of the supply and demand coin, Petrossov said shorter flights and more popular routes can be much cheaper on JetSmarter than they would be on a commercial flight.
Flying from Boston to New York, for instance, could cost around $300 — and again, travelers get to skip the airport and arrive just 10 to 15 minutes prior to takeoff. For $300, that’s a pretty good deal, though it does hinge on where in New York the traveler wants to go. A $300 trip to Long Island isn’t such a good deal, after all, if the customer needs to get to Manhattan. The best deal anywhere on JetSmarter right now is $33 for a one-hour flight from Las Vegas to Lake Tahoe. This deal is available regularly, demonstrating that the length and popularity of a route can have a drastic impact on pricing and availability.
Petrossov said that just goes to show what JetSmarter is hoping to achieve by opening up its platform to the public. As non-members increase demand for flights, the supply will naturally increase, he said. As the audience of flight creators and initiators grows, prices will go down. Greater frequency of flights means greater availability and lower pricing across the board, for members and non-members alike.
The further in advance a flight is chartered, the less it will cost because there will be more time to crowdsource available seats. Flight initiators will also have the option to pay for just one seat and try to crowdsource the rest, with the understanding that, if they can’t fill the flight, the trip is not guaranteed.
“With any social network, the value increases the more people use it,” Petrossov summarized.
Who Are The Flight Creators?
A key part of the company’s value proposition is that customers can travel on their own schedule and skip all those lines at the airport, which can negatively impact productivity for traveling businesspeople.
“The biggest problem with commercial air travel is time,” said Petrossov. “With this, you can show up 15 minutes or 10 minutes before the flight. And the customer can create their own flight on their own schedule. We’ll fly out of Boston at 9:00 a.m. just for you.”
Even for business travelers accustomed to luxury, initiating a flight from Boston to San Francisco may not be worth $14,000, although there is a niche market of wealthy consumers willing to pay top dollar for a flight that leaves when and where they want it, without all the hassle of going through an airport. Those people, said Petrossov, are the flight creators. They want to fly from their airport on their time, and they can afford to pay for that convenience. Even if they have invested in their own private jet, people in this demographic may not always want to take their own plane, especially if they are the only one riding in it. A private plane with 10 empty seats is a bad investment, he said.
JetSmarter, said Petrossov, gives them an alternative to that. That’s how the marketplace is siphoning market share from two sides of the air travel market: from private aviation on the one hand and, on the other, business-class flyers who may be able to get more fly time for their dollar by switching to a socially-sourced platform.
Petrossov believes that allowing non-members into the system will ultimately encourage more people to make the commitment move of shelling out for a membership. Membership fees are $4,950 annually for an individual and $9,950 annually for a family. Perks include priority pricing, first dibs on flights, and various lifestyle benefits from partner brands, said Petrossov.
Still, that’s a big commitment, and it’s understandable that many would balk at paying so much for a service they haven’t verified with their own experience. With the “pay as you go” option, no fees are due up front and customers can try before they buy to determine if the membership is right for them. That alone may generate new memberships, just by allowing prospects to see what they’re in for. But Petrossov believes it’s more compelling than that, comparing the membership to Amazon Prime.
“You can go on Amazon and buy things without a membership,” he said, “but if you do it more than a couple of times, you want to be a Prime member.”