One of the most interesting companies in the corporate world today is Jetsmarter. The new private jet company claims to be changing the game for private aviation, but there are some reasons to doubt the validity of their claims. While Jetsmarter has made a big splash, the market fundamentals behind their opportunity are not as strong as one might seem. Their marketing has been direct and aggressive, but it may be covering up bigger issues with the company’s environment that the company appears to be aware of at this point in time. Jetsmarter’s behavior will be studied in the course of this marketing case study and operational analysis.
Jetsmarter is a company that seeks to link people to affordable private jet opportunities through a phone-based app. Likewise, it uses technology to find empty legs and other opportunities for people to fly on planes that would have otherwise been out of use. Jetsmarter does not own any planes, so the company is more like a charter broker, but it does use technology to both provide value to consumers and potentially provide value to plane owners and operators who would not have otherwise had as much business.
The environmental forces that made Jetsmarter think it could take the market were multi-fold. For one, the company operated under the belief that people were tired of having to spend time talking on the phone with traditional charter brokers. There was no disruptive technology in the market, and Jetsmarter saw a chance to be the “Uber of jets” in comparison to traditional brokers, who would have been the taxi companies in that particular scenario. On top of that, the company saw a fundamental issue with the way jets were used in the industry.
Jets often have to fly empty from destination to destination in order to pick people up or go back to a hangar. When these jets fly empty, one of two things happens. Either the person who last used the plane has to pay a repositioning fee or the company has to take an operating loss to use the plane. Neither of these is a good option for companies in aviation because it leaves a net loss. Jetsmarter’s goal, at least in part, was to use technology to offer people opportunities to fly for less on these jets that were only going one way. The so-called “empty leg” offerings are designed to make private flying more accessible for the average rich person rather than just being the purview of the richest people on earth.
There have been some things that have happened to the target market of Jetsmarter, depending on how one defines the company’s target market. One might define the market on the basis of very rich consumers, who are more likely to fly on private jets. Jetsmarter wants to attract more people who are not at the very top of the food chain, though, so one has to expand their market when making an analysis. Critically, Jetsmarter’s primary market—the very rich—have begun to fly private more often over the last five years or so. Private aviation is still a luxury, but many are willing to spend on this because they believe they will save time and because they can do work while on the plane. Critically, the airlines have helped to make this possible. Commercial airlines have gotten so bad that more people are willing to spend up to avoid them. On top of that, because Jetsmarter is an app, and apps are more likely to be used by younger people, one can say Jetsmarter is going after younger people for the most part. This is not necessarily a good thing for them because young people are more saddled with debt today than ever in history. They are cutting back on spending rather than ramping it up.
In terms of social trends, there are a few things the company needs to recognize. More people utilize apps, but there has been a resurgence in people’s willingness to deal in person. While the Internet has certainly become a major force in low-level consumer sales, some items, like cars, diamond rings, and the like, are still attracting in-person shoppers. Economically speaking, the economy is coming back, and the stock market is roaring. Even though the economy may have offered a sluggish recovery for the lower level workers, it has been quite good for the very rich.
Given that private jets are always a product made for the very rich, private jet companies actually stand to gain from growing income inequality. However, there are some industries that have struggled. Oil and gas professionals are more likely to use private jets than almost any other category of employee. This is easy to understand. Many oil fields and other businesses in the oil industry are in remote places like North Dakota. These places do not have major airports closeby, so private jets are much more attractive. There are upsides and downsides on the economy for companies like Jetsmarter.
Technologically speaking, things are working in Jetsmarter’s favor. Today’s app-based software is getting better and more secure, making their business model more attractive to consumers. From a competitiveness standpoint, things are not improving for Jetsmarter. Not only are companies able to copycat some of their technology at this point, but traditional brokers have been resurgent. These brokers have low overhead and thus can be more competitive on price than bigger companies like Jetsmarter. From a regulatory perspective, the trends are in favor of jet companies. Regulations are decreasing, while regulations for commercial travel are increasing. This benefits the jet companies.
If Jetsmarter is going to bring customers to its side, it is going to have to differentiate on the issue of price. Currently the company is trying to compete on issues like ease of booking, but this is a poor approach in the jet industry. People with enough money to fly private often have assistants who handle the booking of these flights for them in the first place. They are often older people, as well, who are less comfortable spending $20,000 on an app. Likewise, they are people who may be able to wire money rather than paying with a credit card. Instead of trying to be a convenience option, Jetsmarter should streamline its technology to make itself even more competitive on price. This is the way to win over consumers, especially those young consumers who may be more price conscious today even if they are still very wealthy and capable of flying in a private jet.
One of the things Jetsmarter can learn from the Geek Squad is to always be aware of the real needs of the customer. Geek Squad has success because the company realized that at their core, consumers need people to keep their newly connected lives up and running. Geek Squad then set out to establish a service to make that easier for people. Jetsmarter must get down to its core customers to figure out how they are behaving. Trying to get rich CEOs to book private jets through an app might not be the best approach. Using technology to save those CEOs money on their private flights, which can be facilitated through an app, is a much better approach that could lead to long-term success.
