Airbnb changed the hotel industry. Uber changed ground transportation. So why can’t the same change happen for air travel?
Airlines are ready for disruption. With only four large airlines controlling more than 80 percent of domestic air travel, the industry is a classic oligopoly. Even the government, which is currently investigating airlines for collusion, seems to agree.
Air travelers, who complain of higher prices and fewer choices, say they’re ready for the next Uber to take flight. And now Congress is in a good position to actually encourage competition through smarter regulation. The latest Federal Aviation Administration reauthorization bill, now being drafted by lawmakers, could pave the way for a more competitive airline industry.
“Competition is a great thing for consumers,” says ride-hailing-industry expert Harry Campbell. “American airline carriers have consistently been falling behind, compared to more robust international carriers, when it comes to price and experience.”
Campbell says applying the Uber model to aviation would improve the flying experience for everyone, even if you choose to fly on one of the four dominant carriers.
“It would further intensify the pressure on airline carriers to improve their product, lower their prices and become more efficient,” he says.
That’s already happened in the lodging sector, where Airbnb and vacation rental services such as HomeAway have kept rates competitive and forced large hotel chains to up their game by adding more services and amenities. It’s happened in ground transit, in which Uber and Lyft offer an often cheaper, more accessible alternative to taxis and limousines.
Chester Goad, a university administrator and Uber customer in Cookeville, Tenn., says he’s “excited” about having the same option for flying. What if, for example, an Uber for airlines could utilize smaller airports that are more conveniently located and offer direct flights to airports not traditionally served by large airlines?
“The bottom line for me, is if the fares were reasonable or offered conveniences not offered by other airlines, and if they were equally accessible, I’d definitely check it out,” he says. “Especially if I could avoid the hassles of a major airport.”
It’s easier said than done. Several travel start-ups have tried to follow the Uber model. Although they’re an option for business travelers, they’re still priced out of reach of most leisure travelers. For example, Rise, a private flight-sharing service in Dallas that launched this May, offers an “all-you-can-fly” option starting at $1,650 a month. It offers scheduled flights on King Air 350 eight-passenger twin-engine aircraft between Dallas, Houston, Austin and Midland, depending on demand, and has announced plans to expand domestically and fly London to Brussels in 2016.
Rise is interesting because it had to secure special approval from the Department of Transportation, which regulates air travel in the United States. More on that in a minute.
Industry experts say that in at least one sense, flight-sharing — or ride-sharing for planes — already exists. In private aviation, it’s referred to as the gray charter market. That’s where passengers pay for a flight with an aircraft operator that does not have the correct permissions to fly the trip commercially.