Sharing Economy Knocks, Private Aviation AnswersFri, 12/01/2017 - 09:18
There is little doubt that the sharing economy has been a disruptive force across business sectors, influencing markets from cars and houses to crowdfunding. Private aviation expert Redwings believes the same principles can be applied to air travel.
“The sharing economy is growing so much that it is now knocking on our door,” says Bernardo Moreno, CEO of Redwings, which also operates an FBO and a maintenance base in Queretaro. “It has altered the way we view transportation and housing during travel. We are expanding the principles of the sharing economy into private aviation.” The sharing economy is defined as the preference to pay for assets or services on demand instead of owning or subscribing to long-term contracts.
Redwings’ project takes the idea of fractional aircraft ownership one step further. In this model, several users share the costs of buying and operating an aircraft. Moreno’s goal is to provide on-demand flights through an app the company developed. “The private aviation market is changing,” says Moreno. “It is now taking an entirely new shape.”
Using the app, clients subscribe to a program that will allow them to book a number of seats in a private aircraft flying to a predetermined location. The program will launch with operations between Mexico City and Queretaro in July 2017. More flights will be opened depending on demand, Moreno says. “With this program, we are trying to democratize the use of private jets,” he says. “We do not know the outlook of this new market. As a company, our goal is to innovate how we market and sell our product.”
In an industry that ebbs and flows with economic fluctuations, the ability to adapt can determine winners and losers. “Aviation is a very elastic industry. Once cashflow shrinks, the first thing that managers will cut is what they perceive as a luxury, thus reducing or stopping the use of private aircraft,” says Moreno.
Since late 2016, Mexico’s economy has faced internal and external challenges that have caused a slowdown across many sectors. “The main challenge we faced in 2016 was the peso devaluation at the end of the year, which caused a market contraction and a reduction in demand for our services,” says Moreno. While demand shrunk, the company’s responsibilities remained constant. “We have several leases valued in dollars that we had to continue paying so our operational costs rose by 35 percent for the year.”
To address this, Redwings is turning to novel ideas. Other projects it is developing along similar principles include a membership program for regional flights that will allow individuals to use business aircraft to fly as much as they want within a set of business and leisure destinations. “In this model, clients do not buy a single aircraft but access an entire fleet,” says Moreno.
The company also is strengthening other business divisions. “Considering the market’s behavior, we might increase our focus on tourism. Helitour, our tourism arm, has enjoyed significant growth because Mexicans are traveling much more within Mexico,” says Moreno. “We have been successful in promoting the brand and in increasing our market share for tourism in Mexico City.” The success of this product led Redwings to begin offering the service in Queretaro in June and the company expects to include San Miguel de Allende, Guanajuato by the end of 2017. “Helitour was born from the need to fill unoccupied helicopter seats. We have gradually increased our focus on this program and now we dedicate one helicopter exclusively to it.”
While the company has many projects in store, it is still facing challenges. “The main problem the sector is facing is ‘pirate’ aviation services,” says Moreno, referring to operators flying without the necessary certifications. “The regulatory authorities must make a stronger effort to stop this practice for public safety,” he says. “The existing regulations are good but they are not properly enforced, especially in the case of foreign aircraft.” Other challenges are political in nature. “The Mexican market will continue growing at least until the first quarter of 2018 when the country’s presidential election campaign will be in full swing,” Moreno says.