KC Underweight Deal: Uber Pool for Charter Flights

3.7M

Key Stats: Personal Airline on StartEngine

Valuation Cap

3.7M

Amount Raised

$10,192

Number of Investors

18

Minimum Raise

$10,000

Maximum Raise

$107,000

Likelihood of Max Unlikely
Start Date

06/18/2019

Stop Date

11/12/2019

Days Remaining

27

Security Type

Common Stock

Investment Minimum

$300

Deal Analytics

Click Here

Summary

This week we’re diving into the pros and cons of Personal Airline, Inc. currently raising on StartEngine. As always, the purpose of KingsCrowd’s analysis is to provide a realistic picture as to the potential for the startup in question to generate returns for investors and deliver on its concept for customers.

Personal Airline seeks to be an “Uber” for personalized flight. We’ve all experienced the pains of traveling commercial. At the same time, we have also all experienced the hassles of short-range travel (say, 1-3 hours). This is doubly-true for business travelers. Often, there are just no good short-to-medium distance travel options for business travelers in a hurry: Until now.

Personal Airline’s management has a point.

The private flight market in the U.S. is enormous, with 2.5 million flight movements occurring every year. New York’s Teterboro airport alone was responsible for 27,520 charter flights, or 75 per day. A private charter on a 4-seater Embraer Phenom 100 plane from New York to Washington, D.C. (a quick 46 minute flight) costs an average of $8,100, according to PrivateFly.

At the same time, Aviation has lagged far behind recent innovations in automobile-based transportation innovations(Uber, Lyft). By creating a two-sided market (not unlike eBay or AirBNB) Personal Airline hopes its platform will allow would-be travelers and the owners of charter aircraft to quickly and efficiently arrange travel at a reasonable price.

The company’s platform has been dubbed WingTips and allows travelers to book charter flights on a per-seat-basis from one of over 5,000 regional airports (commercial airlines fly out of just 300). The idea is not unlike Uber Pool which, for the unfamiliar, allows low-cost Uber rides by putting multiple passengers in the same car with similar destinations.

Despite the potential merits, we see a few flaws with the concept. This is not to say Personal Airline won’t drive the increased-use of charter aircraft forward. Or that its WingTips platform isn’t the right path. Upon investigation, we have found that there are indeed many reasons why medium-range flight hasn’t been Uberized.

What follows is our analysis of these difficulties and our views on Personal Airline’s chances of solving them.

The Concerns

Personal Airline: Raising on StartEngine

1. Supply and Demand:

One intuitively knows that lowering the cost of a charter flight (by allowing travelers to purchase a seat instead of renting out the whole plane) will likely increase demand.

But what about supply?

One of the major features of the Uber/Gig economy is that it also increases the supply of those providing said services. More specifically: Thousands even millions of drivers have turned their personal cars into taxis. So, in a way, Uber exponentially increased the number of ‘taxis’ on the road.

We find it unlikely that too many additional planes will find their way to market because of Personal Airline’s platform.

2. Regulations

Many fliers are unaware of just how many regulations there are governing the skies. Whereas with Uber, one could simply pass a background check and be driving paying passengers in a matter of days, a simple trip to the Federal Aviation Administrations Regulation Portal is enough to make ones head spin.

Looking past national-level regulations, a myriad of questions arise when one stops to imagine climbing aboard an ‘Uber of the Skies”:

Are there weight limits to one’s luggage?
How many bags are you allowed to bring?
What happens if a fellow passenger tries to fly with illegal materials?

With increased use comes a myriad of problems that are now minimized by private, charter flights.

3. Booking Complexity

Anyone who has tried to book a vacation on a popular travel site or an airline’s own booking page knows what a hassle it can be. Avoiding layovers, price, and seating are all weighed alongside other considerations like the events of the trip itself. To say the process can be taxing would be a gross understatement.

We greatly appreciate Private Airline’s attempt at creating a proprietary algorithm-driven platform to minimize the damage and (hopefully) make negotiating a shared-charter flight with a handful of fellow travelers a breeze. However, we can’t help shake the feeling that it’s easier said than done.

This is no mere commercial flight-booking. Finding a gate slot at congested airports alone can be a problem for charter flights. To say nothing of weather delays, working with customers unique requests (and there WILL be unique requests), and cost-effectively getting all passengers to their destinations.

4. Plane Owners Get the Final Say

We were surprised to learn that most private aircraft available for charter are not owned by an airport, fleet service, or airline but by wealthy individuals and corporations. These aircraft owners make their property available for charter — not unlike a homeowner renting out their home on Airbnb.

Because charter jets are often not owned by a charter-friendly service but by individuals, an additional level of complexity is present in addition to the difficulties already listed. Many owners insist on knowing who the passengers of flights will be and have the right of refusal. Another problem, for a booking service like Personal Airline is the fact that many of these owners can take time to respond.

The Rating: Underweight Deal

As a result of our initial research, we are assigning Personal Airline’s current crowdfunding round the rating of Underweight.

While there is likely room for the charter/business market to adopt more advanced technologies and booking methodologies, we think total ‘Uberification’ is unlikely. The unique problems associated with charter private flights are just too complex.

If you have any questions regarding the underweight rating of Spintura, you can reach us at hello@kingscrowd.com.

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About: Chris lustrino

A Boston College Eagle for life, on a mission to democratize startup investing for all people at KingsCrowd, with a passion for Fintech, investing, social impact, doing well and doing good, and an avid runner, cyclist and writer.

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