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Pay-As-You-Go Airline Charges by the Minute |
Fatal Rocko Willis
Fleet Admiral
Fatal Squadron
Joined: March 01, 2003
Posts: 1336
From: Kentucky
|  Posted: 2009-01-07 13:14
Taking a cue from the cellphone industry, an upstart South African airline is selling flights by the minute and allowing customers to buy tickets and book flights via text message.
Airtime Airlines takes to the sky later this month, offering three flights a day from its base in Durban to Johannesburg, Cape Town and Port Elizabeth. Passengers purchase minutes much like they would for a prepaid cell phone and redeem them for a ticket. Fees are assessed according to the length of the flight — say, 75 minutes for the run from Durban to Johannesburg — and could save as much as half of what competing airlines charge.
Vino Eargambram, the airlines chief executive, calls Airtime "a low-key operation targeting a very distinct market — young professionals and self-employed business people." And while low fares are central to the airline's business plan, Eargambram says it will stand out from its competitors by offering complimentary snacks, drinks and other amenities that have become in-flight luxuries elsewhere.
Assuming Airtime gets off the ground.
IAfrica.com reports the airline, which is owned by Blackbird Aerospace and includes at least one cellular provider as a partner, must clear several regulatory hurdles before its planned launch later this month. And Business Day says Airtime's deal to lease three Boeing 737s from Air Aquarius fell through, leaving it without any aircraft.
If Airtime irons out those details, passengers will buy minutes instead of a traditional point-to-point ticket. They can buy a "starter pack" of prepaid minutes and top off their accounts by purchasing more minutes — by text message — at the going rate of 5 Rand (about 53 cents) a minute. Flight times have been mapped out in advance, so sitting on a runway for three hours won't triple the cost of your ticket.
Topping off accounts is where things get interesting. The cost for Airtime minutes can fluctuate, presumably according to promotions and market factors, so topping off becomes an exercise comparable to fuel hedging. Buy a big block of minutes when you think they're at their cheapest and you look smart, unless the price drops again the next day. Then again, it might go up. The price recently rose from 3 Rand to 5 Rand, meaning the cost of a round-trip flight from Durban to Cape Town climbed from about 750 Rand ($81) to 1,250 Rand (about $134). Still that's cheaper than the $200 it would cost on South African Airlines.
Business Day reports that Airtime's unusual approach and rock-bottom fares could prompt a price war, but one competitor say Airtime's fares are a gimmick that can't be sustained.
It is tough to see how Airtime has much chance once the novelty fades. Paying for flights by the minute is interesting but not at all intuitive. Airtime's competitors in the crowded South African market aren't likely to roll over and play dead, and the state of the economy means that times are tough for even the best-run airline, let alone a startup with a strange business model. Does anyone remember Hooters Air? How about Ted or Song?
This article can be found at www.wired.com
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Winters Rapture
Fleet Admiral
United Nations Space Command
Joined: December 09, 2007
Posts: 355
| Posted: 2009-01-07 13:34
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