Air Taxi Franchise idea?

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AirCon
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Post by AirCon » Tue Feb 24, 2004 1:06 pm

Just a note about Cat's suggestion about the SatPhone.....EXCELLENT idea.

The base camp that I am at has a 2 KM driveway off a MAIN highway. The cost to run phone lines from the highway to the camp office?...$40,000!!!...no BS!!!

Cheers....

A
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Cat Driver
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Post by Cat Driver » Tue Feb 24, 2004 1:40 pm

Sat phones have really come down in size and price.

We rent them and the new ones are small enough to clip on your belt just like a cell phone.

Nothing beats coming up on your planned point of no return over the ocean than punching in the phone number of the tower at your destination airport and actually talking the the controller and getting a real live time chat about their weather and its trends. Especially in places like Narsarsuaq in Greenland because if you can't get in you are really screwed.

We don't even think of using HF anymore, only a complete idiot would use HF if you have a sat phone.

So if the cost of owning and using a sat phone is going to cause problems you are in the wrong business. :lol:
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AirCon
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Post by AirCon » Tue Feb 24, 2004 3:07 pm

Yup...I would have to agree......let's see...should I pay 40,000 for a phone line, or should I get a SatPhone????.....hmmm..40 grand will buy a lot of SatPhone air time!!!

Cheers

A
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Waldo Pepper's Circus
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Post by Waldo Pepper's Circus » Tue Feb 24, 2004 6:21 pm

Okay, I will reply to each concern now that I've had a moment to think things through. No suggestion is a bad suggestion but keep in mind why franchises are so powerful. McDonalds does not sell 3 course meals and they don't pretend to. They focus on a single strength (a consistent product) and you know before going in that the food won't be great but in a strange town, you'll likely choose the McDonalds over the local place.

Now with the air taxi franchise, there is no point in going into jets. The idea here is that a franchise is affordable to the average person which then implies high growth. A million dollars for a jet aircraft (which will never happen anyways if you've even priced out a simple Baron lately) would exclude too many interested buyers. Subway will sell you a franchise for $10K and there's one on every corner. The same thought should happen here. Keep things affordable and you'll reach the mass market. So in order:

Spinwing: Choppers would be difficult because they seem to be located in clusters around work areas and not as spread out as aeroplanes. If you lok at Great Slave and their idea, they have a few central bases and then seem to send choppers out on seasonal contracts. Now obviously CHC has the right idea but it doesn't seem practical to have owner/pilots/franchisees spread out from Thailand to Russia. What I think would work better with choppers is to work out a type of financing lease where the owner/pilot roams across a wider network looking for contracts. Obviously maintenance could be a concern and how would you stop franchisees from infringing on each other's territories? The nice thing about Chieftains is that you can get a beautiful refurbished plane for $300K CDN while a simple JetRanger would be over $500K without spares or storage, so again you hit the affordability and high growth barrier. The only way you'll get investors on board is if you can show a strong growth rate and that means affordability.

The next person who mentioned other owner types such as AMEs and non-pilots is not that practical. The entire franchise idea is based on efficient allocation of resources. To now require additional staff that are already in place at headquarters is wasting money. Its like a McDonald's franchisee hiring an accountant or a marketing consultant. Sure, you could do it but the point here is to be efficient and only spend money where necessary.

Aircon: hiring assistants would be a matter of personal choice. Their salaries are an additional expense and if you felt the added revenue from being able to respond to every phone call would pay off, then hire extra staff. Maybe a better solution would be to have your cell-phone forward to your on-board sat-phone linked through your intercom so you could book charters in-flight. If your busy, thye could just leave a message and you could call them back after landing. The point here isn't to control the whole market so if some flights are missed, well, at least you were too busy to take them. As far as time for adminsitration, there isn't really any. Head office controls all the billings, receivables and expenses. Your job would be to market the franchise in your designated region and fly the aircraft. A broken down aircraft could be replaced within a few hours with a spare from headquarters along with a mechanic to fix the broken one. Its similar to franchisee who don't figure out what to sell, prices, or inventory; they just basically do as their told. I recall somewhere that said enterpreneurs make terrible franchisees because they want to improve things while the successful operators just follow the recipe.

DJ: in terms of FTUs, American Flyers and those types have done this to a limited extent but its really a different idea as its all the same company with separate bases. No one has franchised FTUs and it might be an idea but I just have no experience with that side of the industry. I do wonder how a FTU could ever be profitable on a small scale when you look at a typical operation. A 172 going for $75 an hour leave almost nothing for the owner. Even a 20% margin which would be incredible is a pittance for all the work in booking flights and dealing with all the crap. Why bother with the headaches when a 703 operator will generate $700 an hour for probably less effort and no cancellations when it rains?

Flying Pusser: Like I stated earlier, jets, even inexpensive ones would limit your growth rate. If you look at what NetJets did with their fractional ownersip, where the real money was made was in the leasing arrangements. Take a Citation X for example that retails for $20 million. NetJets places an order for 50 hulls and then turns around and sells you a 1/8 fractional for $2.5 million. Meanwhile, NetJets up front cost was likely $17 million which is a $3million profit before they even begin flying them. Next, guess who gets the depreciation rights? These can then be resold for another $1million up front and you multiply this by a few hundred hulls and its no wonder why Warren Buffet bought the company (along with Flight Safety). The guy is the weathiest guy in the world for a reason and when he says he only invests in simple ideas that he understands, well, this is pretty simple. A franchise set-up with jets in Canada would be about impossible.

My idea of starting simple with one aircraft type of a common year with turn-key franchises sold to pilots should be affordable and safe. Its not intended to compete against KingAirs or be the cheapest rate. Its simply a safe, affordable, and value-oriented approach to northern charter operations. Thank you to everyone for your input.
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Cat Driver
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Post by Cat Driver » Tue Feb 24, 2004 7:31 pm

You may be on to something Waldo.

It is really hard to beat a Navajo for what you want to do.

And a good looking well maintained Navajo is customer friendly.

Now you need to come up with an attractive and distinctive name and paint scheme.

Something like " Canada Wide Air Taxi. "

Cat
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Post by Guido » Wed Feb 25, 2004 1:29 pm

*bump*

I think this is a great idea... Do you guys think this would be a good way for all the starting out commercial pilots who have that 'go-getter' spirit to start out? I for one would love to do something like this for a career.
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Udet
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Post by Udet » Thu Feb 26, 2004 7:44 am

Waldo,

It really sounds like you have given this a lot of thought. Just like the others have said, I think you really have a very good idea here. There seems to be a few of us here that could and would have a lot of knowledge and or experience about regulatory, business and start-up conciderations and would be willing to contribute. I for one would like to see it taken to the next step. Key to it all, in my humble opinion, would be to find a current operator with the necesarry assets (or ability to acquire said assets), infrostracture, impecible reputation and good industry name. Then a wonderful, and I mean absolutely glittering business plan to approach such an operator, if he exists. All of which is well within the grasp and knowledge of some dedicated people.

As for the aircraft of choice. I have to agree with the light twin idea for the short term. (Next 10 years or so) A good Chieftain or Cessna 400 series can do an excellent job. Nice paint, great equipment is needed in any case. Two pilot at any rate, despite the potential sacrifice on load. In the future we can expect turbines to become almost unavoidable and affordable, and anyone can tell us that a PT6 is almost indistructable. Of course I may be getting ahead of myself now. Like you and/or others have mentioned, the aircraft has to be rugged and operable in somewhat unfriendly environments. Can't see the nice fancy new light jets trundling down some of the strips we have all been in and out of in the areas this sort of operation would be viable.

I very much commend you and all those that have shown support on this topic. Very interesting indeed. I would love to hear more.
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Re: Air Taxi Franchise idea?

Post by FenderManDan » Tue Jul 16, 2019 5:54 am

This topic was brought back from 2004. I am not sure if anything came up from this, but the question is would this type of service with the uber flair be viable today?
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jakeandelwood
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Re: Air Taxi Franchise idea?

Post by jakeandelwood » Tue Jul 16, 2019 7:34 am

Sounds like a great idea. Starting a small airline otherwise would require buckets of money. Someone told me it's way cheaper to buy a small air operator than to build one from scratch, obviously easier as well. I'd seriously think of buying into a franchise like you describe, I've always wanted to start my own small air operation, but I just don't have the big $.
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icosco
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Re: Air Taxi Franchise idea?

Post by icosco » Tue Jul 16, 2019 10:08 am

Very interesting stuff. We operate Navajo's up in the Yukon and I can confirm, they are a relatively low maintenance machine (considering), are surprisingly capable in the bush, and are inexpensive to purchase and run.

Feel free to give me a shout whoever wants in on this! :lol:
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Re: Air Taxi Franchise idea?

Post by photofly » Tue Jul 16, 2019 11:21 am

I think the corporate structure needs more thinking. Franchises are usually independent companies that licence the intellectual property of trademarks, operating manuals from the franchisor, as well as entering into contractual arrangements with the franchisor over leased property etc. But essentially each franchise is it's own corporation. That way there is no liability exposure between one franchise and the next and between the franchise and the franchisor.

As a franchisor this is appealing because you are isolated from the commercial failure or success of each operator. As a franchisee this is appealing because you reap most of the benefits of a successful business for yourself.

I think you would have to work very hard with the lawyers come up with some structure to have this separation, yet be able to convince Transport Canada that the entire organization had a single responsible executive with genunine command over the entire organization, and could therefore operate under a single OC.

I think you would have more success if each franchise has its own OC. Then the expertise of the franchisor is used to set up each franchisee on their own with their own operating ticket. The franchisor can run an AMO which provides maintenance services to each franchise. That way if one franchisee has their OC suspended or removed it doesn't affect anyone else.
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Re: Air Taxi Franchise idea?

Post by iflyforpie » Tue Jul 16, 2019 1:01 pm

This is almost like a CPA and a lower tier operator.

All of your tickets are sold through Air Canada, but the air service is done by a smaller operator at an agreed to rate.

All sides win, the passenger doesn’t have to navigate a separate reservation system on any number of smaller airline websites. The mainline carrier can move passengers for cheaper on thin routes. And the regional gets guaranteed business and doesn’t have to spend money on marketing.

However... there comes a point where this is no longer advantageous. We saw the bottom with Air Georgian where Air Canada no longer wanted its name on the sides of 1900s due to public perception and the problems with a lower tier operator in terms of maintenance and incidents and an aging fleet and declining pilot experience base meant that it was a direct threat to Air Canada’s image.

There’s a reason why there is no “franchise system” in the 703 world... its far far far too risky, and nobody is going to go out on a national scale to make one because 1) it would split markets from already established companies and 2) the reward isn’t there and 3) the work is too diverse for a single plan to work.

A 703 scenic tour operator in Niagara is going to have completely different considerations than an ad hoc charter operator in Northern Alberta.

The only elements of “franchises” are those who do consulting to set up AOCs and AMOs, aircraft leasing companies, third party AMOs, and hangar owners. There’s very few people willing to loan out an AOC for someone to get off the ground... and if you have to get your own AOC going that’s most of the effort right there. Profit margins are thin and you can’t make it up on volume like you can in other franchises like fast food. Your franchise fees will eat directly into your profits.
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Re: Air Taxi Franchise idea?

Post by clearmyside » Thu Aug 08, 2019 3:35 am

I love this idea. Been thinking about something similar for some years now.
I think there would be no shortage of interested pilot owners/operators accross the whole spectrum from piston to jets.
One thing that provides an area for concern would be operating standards and safety. A way to monitor that would be flight data acquisition and monitoring, providing training and in extreme cases sanctioning repeat offenders. You wouldn't want a couple of guys to be the reason for transport to yank the whole operation's certificate.
Safety first... always.
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Heliian
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Re: Air Taxi Franchise idea?

Post by Heliian » Thu Aug 08, 2019 5:30 am

See: Canadian Helicopters

They did this decades ago, essentially buying up all the mom and pops and rebranding but still using the same crews and operators.

They all fell under the one operating certificate and were managed out of one office.

They have fallen away long ago but the same thing was attempted by discovery/GSH, failed miserably.

You need to have open competition for a sustainable industry like that.
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Re: Air Taxi Franchise idea?

Post by digits_ » Thu Aug 08, 2019 7:39 am

Heliian wrote:
Thu Aug 08, 2019 5:30 am
They have fallen away long ago but the same thing was attempted by discovery/GSH, failed miserably.

You need to have open competition for a sustainable industry like that.
Do you know why it failed or what exactly went wrong? The competition is only necessary from a customer's point of view. From an operator's point of view, it's best if there is no competition.
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Re: Air Taxi Franchise idea?

Post by Heliian » Thu Aug 08, 2019 8:26 am

digits_ wrote:
Thu Aug 08, 2019 7:39 am
Heliian wrote:
Thu Aug 08, 2019 5:30 am
They have fallen away long ago but the same thing was attempted by discovery/GSH, failed miserably.

You need to have open competition for a sustainable industry like that.
Do you know why it failed or what exactly went wrong? The competition is only necessary from a customer's point of view. From an operator's point of view, it's best if there is no competition.
One financial hit after another, levied down to the actually profitable "franchisees".

Look at tim horton's for ex. bought up by bigger and bigger corporations and slowly destroyed in the quest for more money and more profits. Poor business practices, no ethics and stupid marketing ideas. Just like tim horton's new "non-meat burger" steamer they are selling right now.

I'm getting tired of all these "new" ideas for a business model. They are called pyramid schemes, uber being one of them. They've never turned a profit and will eventually collapse.

Queue the investment wizards about to tell us how successful they are. Congratulations on your bitcoin investments.
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clearmyside
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Re: Air Taxi Franchise idea?

Post by clearmyside » Thu Aug 15, 2019 6:04 am

Waldo,

i love this idea and have been thinking about a similar set-up for some time. one of my biggest concerns is on how to manage sop's and a safety minded way of operating each and every flight. some individual operators may be more risk averse than others, but it would only take one incident/accident to put the AOC at risk. So additional costs would have to come by the way of a FOQA system, but would ensure development of SOPs got the right way, help with training on arising issues and in the worst case scenario revoke a franchisee's rights, if he/she continues to operate below standard.

The other thought I have is that while Navajo's are great machines, nowadays clients expect turbines and many in fact will not award contracts to piston operators. PC12s and King Airs are the "new" small aircraft standard for most governments/companies and it would be a shame if the franchise wouldn't be able to capitalise on those sort of contracts.

Cheers,

P
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Re: Air Taxi Franchise idea?

Post by 172ReliefPilot » Thu Aug 15, 2019 10:51 am

I read this thread with no expectations and am highly impressed. Seems like an awesome idea
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