Check out these travelocity air images:

visible demand – the new market for air taxis
travelocity air
Image by Esthr
This is our program covr for Flight School: Air. In order to get ready to run this workshop, I’m writing the next issue of R1 about it. (You can expcet more on this topic over the next few days, especially since I somehow misplaced my camera and won’t be generating any new photos for a while….)

The airline industry is one of the most effective users of IT – even though you see no evidence of that fact in the form of profits. Perhaps it just proves that using IT well to implement a broken model gives you…a broken model.

But consider this: The airline industry was one of the earliest users of computers and information systems. The Sabre system (developed by American Airlines parent AMR Corp.) led the way in transaction processing and scheduling, and later American Airlines itself led the way in “revenue management” (the art of dynamic pricing) and with its AAdvantage frequent flyer program, now in its 26th year.

Cut forward a decade or two, and Expedia, Travelocity (spun out of Sabre) and Orbitz changed the industry forever by making supply visible – while Priceline increased load factors by making below-market pricing available while keeping it invisible. The next, non-quantum step came from Sidestep and Kayak, which allow users to state their demands to see the closest matches to existing supply.

The next big phase shift will come from a new group of air-service players (equipped with very light jets, or VLJs) who will make latent demand visible, using online interfaces not just to publish information but to collect user travel requests and to use them to schedule and price flights dynamically. In other words, they will use the visibility of demand to create supply, in the form of specific flights that would not otherwise have happened.

A number of companies are already offering some form of air-taxi services, even though the VLJs from Eclipse Aviation and Adam Aircraft that most of them plan to use are still not in regular production and won’t be certified until this summer at the earliest. Some air-taxi operators are outgrowths of air-charter operations; others are green(air)field startups.

The players have different business models, ranging from “bus” (individual strangers in the same plane) to “limo” (one person or group to a plane), short-haul to medium-haul, with ranges of assumptions about pricing, timing, ownership of aircraft and other parameters. They will be competing for aircraft and financing as well as for customers and visibility…and for sure, they will all be tweaking their models over the next few years.

so how many will we make in Octobr?
travelocity air
Image by Esthr
Peg Billson, COO, and Vern Raburn, CEO, of Eclipse Aviation. this is one of two leading companies (photos from Adama Aircraft coming soon) that are making the new very light jets (VLJs) that will support the air-taxi market.

In short, Orbitz, Expedia and Travelocity made supply visible, driving down prices in a world of oversupply and irrational competition. The new air-taxi companies will make *demand* visible in near real-time, driving up utilization (as long as the suppliers optimize properly). The difference is that optimized utilization will reduce costs as well as prices.

If the players can actually get their numbers right, this will be an exciting new market, luring drivers out of their cars for short hops that previously required a hub connection and often an overnight stay for a single trip. (I’m studying all this to get ready for Flight School:Air, my next workshop, in June. And, of course, I’m impatiently waiting to be a passenger!

travelocity air
Image by Peter Konnecke
Error with the Google flight search function. See where it says Flights from Houston TX to New Orleans LA.

If you click on any of the companies (Expedia Hotwire Orbitz Priceline or Travelocity, you get the following error
(as appropriate per the link you click on)..

The requested URL
was not found on this server.

Does anyone else get this or have this problem previously. It happens in IE and Firefox.