As the aviation sector evolves and cheaper airfares make flying more affordable, more passengers around the globe are boarding planes as a preferred choice of travel. Californian-based Surf Air, launched in 2013, leveraged on trends in the domestic airline industry in the United States  – consolidation of airlines, operational discipline and cost-cutting, and an unbundling of services to create ancillary revenue streams – to provide frequent business travellers an option of unlimited flight service through a fixed monthly subscription.

In Surf Air’s CEO Eyerly’s words, the benefits that Surf Air brought to its customers were multifold: “Surf Air will allow busy travellers to book a stress-free trip without price-comparison shopping–maybe even an hour before departure. We are fulfilling a real need in the marketplace, a professional and affordable service between very popular regions. Our service can be substantially cheaper than first-class tickets, and we offer a better and less crowded experience. We foresee our members forming personal and business bonds on our flights as they experience the benefits of this exclusive travel club. With Surf Air, you can arrive at your aircraft minutes before your flight, receive a warm welcome from the captain and concierge, and then be quickly on your way to your destination in the company of your fellow Surf Air members.”

Surf Air aimed to offer first class flights for both business and leisure travel, which were not only affordable, but also allowed its clients to avoid queuing through tedious baggage checks and boarding procedures. The company planned to achieve this through its private jet membership programme, which flew point-to-point to local mid-sized airports in major cities, as opposed to the hub-and-spoke model adopted by mainline carriers.

Focusing on the frequent flyers who made up 85 percent of the US business travel industry, Surf Air’s target market were CEOs and individuals earning at least US$300,000 annually. In this segment, Surf Air competed against fractional and charter planes, and traditional airlines.

One month after its launch in June 2013, Surf Air had 150 members, and a waitlist of 4,000 people who were eager to sign up for new routes due to be opened by the airline. From July 2013, when the airline added Santa Barbara as a third location, Surf Air members had unlimited access to 16 daily flights from the three airports in California. The average one-way economy flight cost between any two of Surf Air’s locations was US$200 per trip, while a one-way business class flight booked the day before flying would cost on average US$420.54.

The months leading up to the launch of Surf Air saw high expectations from investors and the media. Would the all-you-can-fly model of Surf Air prove to be sustainable? Where could Surf Air expand to next?

Written by Srinivas K. Reddy, Professor of Marketing, SMU Lee Kong Chian School of Business, Joyce Low, Senior Lecturer of Operations Management at SMU Lee Kong Chian School of Business and Adina Wong, Senior Assistant Director at The Centre for Management Practice (CMP) at SMU, this case evaluates the viability of a new, innovative business model that is introduced in a traditional industry with established business models.

To read the case in full, please visit The Centre for Management Practice website by clicking here.