Thursday, September 15, 2016
A Chicago Startup Is Making 'Uber for Airplanes' a Reality
With the massive popularity of ride-sharing, tech companies and startups have tried to "Uberize" just about everything. But the "Uber for planes" business model has had a hard time getting off the ground.
The Federal Aviation Administration effectively shut down Boston-based startup Flytenow for operating an Uber-like sharing economy service that connected travelers with private pilots. Pilots would post their flight plans on the startup's message board, passengers would reach out if they were traveling in the same direction, and the passenger and pilot would split the costs. Flytenow turned those pilots into “common carriers,” the FAA said, thus requiring them to obtain a commercial license.
But a Chicago startup believes it's found a way to bring air travel to the sharing economy by connecting passengers to licensed, professional pilots. And it just launched its on-demand service nationwide.
FlyOtto allows travelers to find, book and pay for regional flights on privately chartered aircraft from their phone or computer. The service, which was born out of Chicago startup OpenAirplane, a company that lets pilots rent planes similar to renting a car, says it gets around any potential local issues as it's governed by Part 135 of the FAA's Federal Air Regulations, which states that only professional commercial pilots and charter certified airplanes can be used.
Think of FlyOtto not so much as UberX--where you're connected to any available driver--but rather Uber Black, where you're matched with a professional chauffeur.
Here's how it works: Users log on to FlyOtto and enter their pickup and drop off destinations, and they are matched with a pilot and aircraft--usually a piston or turbo prop airplane that seats 3 to 9 people. Users select from the available options, chose their date and time, and pay through the FlyOtto platform. The service works with over 5,000 airports around the country, and is available virtually everywhere in the continental US. FlyOtto takes 7% of the transaction, giving 3% to the credit card companies and the rest to the plane operator.
OpenAirplane founder Rod Rakic said FlyOtto is perfect for the traveler who doesn't want to spend 4 to 6 hours in the car, or all day in airport terminals. FlyOtto isn't necessarily for the traveler who wants to go from major hubs like Chicago to Las Vegas, for example, but is better suited for flyers that are poorly served by the airline hub-and-spoke structure and need to get to small and medium sized towns.
FlyOtto is certainly convenient, but that convenience comes at a price. A one-way flight to from Chicago to Traverse City, Michigan, for example, will run you over $1,500 for a three-person plane. But for those who are accustom to paying for chartered flights, Rakic says FlyOtto is cheaper than the typical process of going through a broker or chartering a jet.
OpenAirplane has been building its network of pilots and airplanes since it launched in 2013, and has over 12,000 pilots signed up to fly and 340 aircraft available for rent. Launching a feature for passengers was a natural evolution for OpenAirplane, Rakic said, but he knew he had to get it right to avoid any issues with the FAA.
"We designed our business to be completely legal form day one," he said. "It's aligned with federal air regulations, state and local laws...(Our pilots are) getting oversight from the FAA on everything from safety operations, maintenance, and operational oversight."
Rakic admits he doesn't love the Uber comparisons, but acknowledges that FlyOtto has been inspired by the ride-sharing giant's business model.
"We finally created a way to make private air travel an impulse purchase, which it never really was before," he said.
Read more here: http://chicagoinno.streetwise.co
Posted by Kathryn on 8:23:00 PM