red october columbia

Lean Launchpad Block Week

Donovan HamletIsobel RosenthalAlex SavonaTristan Loffler

Who we were: A domestic airline that bridges the gap between

flying business and flying private

Who we are now: A domestic airline that bridges the gap between

flying economy and flying business

Pivot

How we got here:79 interviews

Junior professionals

Senior corporate decision makers

Port Authority

City government officials

Leisure Travelers

Airline manufacturers

Remove the pain points of the business class flight experience domestically in the US by:1. Reducing time in airport2. Improving in-flight

experience (comfort & service)

3. Offering a cheaper alternative to flying private

The business class flier who wants to fly private but can’t afford it

Primary: Business flier• Flier/employee• Corporate decision-

maker• Descriptors: 1+ flight per

month, urban, time-crunched, employees of companies that promote high quality of life/culture

Secondary: Frequent flier• Business + leisure• Descriptors: High

income, urban, luxury standards

• Face-to-face meetings• Digital advertising• Mobile app• Website• Partnerships (luxury

brands, Uber)• Word of mouth

• 360-degree, seamless end-to-end experience

• Loyalty programs• Unparalleled customer

service support• Digital integration at

every touchpoint

• Subscriptions for corporations (with lower price per flight)• Flight-by-flight

• Airplane manufacturers/leasing companies

• Companies with potential fliers

• Existing airlines that can’t reach all of our destinations

• Second and third tier airports

• Food providers• Luxury brands that build

equity • Television/entertainment

providers• Technology providers

(televisions, wifi)• Mattress, desk providers

• Business Development• Marketing• Customer Service• Experience Design• Operations/Logistics

• Airplanes• Ramp space• Legal/regulatory

expertise• Business development• Client management team

Fixed:• Airplanes• Fees

Variable:• Employees• Fuel

Day 1

Key Learnings

Different channels & processes dictate flights business travelers book

Junior business travelers fly economy more than business domestically

Travelers won’t pay large premiums (business-class prices) for domestic flights

• Travel agents will be a key part of corporate partnerships

• Proceed with research of corporate channels

• Junior business travelers are less attractive targets for domestic business-class travel

• In order to capture customers we have to be price competitive or provide a unique offering

Day 1-2 Learnings/Implications

Hypothesized Product-Market Fit

Archetype

• Reduced time at the airport e.g., quick security, comfortable hub• More productivity on the flight e.g., wifi, desk space, outlets• An affordable alternative to business class that meets his company’s

budget

Value Proposition

• A comfortable experience she can rely on• Reduced time at the airport e.g., quick security, comfortable hub• An airline she can fly for business and leisure

• A more comfortable experience than economy• Affordable alternative to business class• Easy and convenient experience

Demos

Junior Professional• 28• $80K• Professional

Services

Senior Professional• 47• $500K• Executive

Management

Leisure Traveler• 31• $150K• Tech Startup

Proposed Channels

Airline Own Websites /

Apps

Online Agencies (eg

Expedia)

Offline Travel Agencies

Aggregators, eg KayakChannels

End-User Traveller Leisure Business

Corporate Travel Services

Airlines

A mix of channels are used by both leisure and business travellers, for research and purchase

Suppliers

Business Flyer:Remove the pain points of the business class flight experience domestically in the US by:1. Reducing time in airport2. In-flight experience

optimized for work and productivity


The business class flier who wants to fly private but can’t afford it

Primary: Business flier• Flier/employee• Corporate decision-

maker• Professionals• Descriptors: 1+ flight per


Secondary: Frequent flier• Business + leisure• Descriptors: High

income, urban, luxury standards




every touchpoint















High-Income Frequent Flier:

1. Reducing time in airport2. In-flight experience

optimized for comfort and entertainment


High-Income Frequent Flier:

• Direct & Indirect Sales• Partnerships with Luxury

Brands• Word of Mouth

Business Flier:• Travel Agents• American Express• Direct & Indirect Sales

Business Flier:• Subscriptions with Travel

Agents and Partners (eg Amex)

• Flight-by-flight

High-Income Frequent Flier:• Flight-by-flight

Day 2

Day 1 changes

Key Learnings

There’s more opportunity to improve the economy

experience

Passengers are also unsatisfied with the airport

experience

There is WTP for improved economy but people aren’t willing to pay 2-3x the price

for business

• Refocus interviews on economy domestic travel

• Explore the international premium economy model

• Prioritize pain points across airport and airplane experiences to determine key opportunities

• Determine which features are biggest drivers of WTP


PivotPivot

27% of revenue is attributable to business class travel

Overall Market (Economy + Business)

$250.6B

Served Market$67.6B

716M passengers boarded planes domestically at ~$350

Assuming we can steal 2.5% of Served Market

Target Market$1.69B

Overall Market (Economy + Business)

$250.6B

Target Market$1.69-6.27B

Assuming we can steal 2.5% of both economy and business markets

New Proposed Market

Before: Market for Business-Private Gap

Now: Market for Economy-Business Gap

Willingness to Pay

We asked interviewees how much they would pay for a flight that usually costs $257 if it solved their top two pain points.

• 50% would pay $310 (20% more)

• 30% would pay $330 (30% more)

• 20% would pay $360 (40% more)

Next step: Test willingness to pay across higher ticket prices

REDOCTOBER

Global US Carriers US Low Cost/Regional Carriers

Global Foreign Carriers US Private Jet Charters

New Competitive Landscape

Prod

uct

Class

Strate

gyNetwork

Convenience

Business Flier:Remove the pain points of the business class flight experience domestically in the US by:1. Reducing time in airport2. In-flight experience



3. Offering a cheaper alternative to flying business

Business flier:The business class flier who wants a better experience without paying business class prices• 1. Junior-level• 2. Senior Level• 3. Decision Maker• Descriptors: 1+ flight per


Leisure flier:The economy flier who is willing to pay a premium for a better experience• Business + leisure• Descriptors: High/upper-

middle income, urban, luxury standards




every touchpoint















Leisure Flier:1. Reducing time in airport2. In-flight experience

optimized for comfort and entertainment over the Economy class

3. Offering a cheaper alternative to flying private business class

Leisure Flier:• Direct & Indirect Sales• Partnerships with Luxury

Brands• Word of Mouth• Social Media

Business Flier:• Corporate Partnerships• Travel Agents• American Express• Direct & Indirect Sales



• Flight-by-flight

Leisure Flier:• Flight-by-flight

Day 3

Day 1 changes Day 2 changes

Key Learnings

Travelers are so used to the status quo they can’t

imagine a better alternative

Business travelers are also leisure travelers, providing

opportunity to capture more share of wallet

Seat comfort and time are the most consistent pain points across segments

• Educate consumers on potential for improvements through marketing

• Use partnerships (Uber) to educate and build equity

• Explore Blackberry model of acquisition

• Need to determine similarities/differences between the business/leisure and leisure market

• End-to-end service and efficient are must-haves and a compelling selling point

• Comfortable seats are a quick-win


Pivot Pivot

Leisure Business & Leisure1) Seat Comfort & Leg

RoomSeat Comfort & Leg Room

2) Time (incl. Commuting and Airport )

Time (incl. Commuting and Airport )

3) Amenities (wifi, outlets, desk space)

Amenities (wifi, outlets, desk space)

4) In-flight service In-flight service

Top Ranked Pain Points, by Segment

While seat comfort is a functional benefit we can easily provide, it’s already available at a premium from competitors (premium economy)

Time is a value proposition that other domestic airlines haven’t marketed or offered to these segments and may struggle to replicate (scale and legacy)

Testable Implications

Top Pain Points

Customer Relationships

Get

Keep

Grow

• Website booking• Social media advertisements• Corporate partnership (contract

with major company)• Brand partnerships (Uber)• Guerilla marketing• Aggregators (Expedia, Kayak)• Word of Mouth

• Digital integration at every touchpoint (mobile boarding, etc.)

• Unparalleled customer service (social media, call centers, attendants)

• Content marketing (recommendations on destinations)

• Incentives for completing surveys

• Loyalty program (free flights)• Promotions (seasonal discounts)• Add-ons (on the ground

concierge)• Sale of customer data

Business Flier:Remove the pain points of the business class flight experience domestically in the US by:1. More comfortable flight

experience (seats)2. Reducing time in airport

wasted end-to-end time3. In-flight experience



5. Offering a cheaper alternative to flying business

6. Providing end-to-end service

Business Flier:The business class flier who wants a better experience without paying business class prices• 1. Junior-level• 2. Senior Level• 3. Decision Maker• Descriptors: 1+ flight per


Leisure Flier:The economy flier who is willing to pay a premium for a better experience• Business + leisure• Descriptors: High/upper-

middle income, urban, luxury standards

• Get: Website, social, corporate & brand partnerships, guerilla, search, WOM

• Keep: Digital integration at every touchpoint, unparalleled customer service

• Grow: Loyalty programs, promotions, add-ons







providers• Key events (Art Basel,

SXSW, Sundance)• Technology providers

(televisions, Wi-Fi)• Mattress, desk providers• Department of

Transportation & State Regulatory bodies

• Seat manufacturers• Transportation providers

(Uber)






Leisure Flier:1. Reducing time in airport

wasted end-to-end time2. In-flight experience

optimized for comfort and entertainment over the Economy class

3. Offering a cheaper alternative to flying private business class

4. Providing end-to-end service

Leisure Flier:• Direct & Indirect Sales• Partnerships with Luxury

Brands• Word of Mouth• Social Media

Business Flier:• Corporate Partnerships• Travel Agents• American Express• Direct & Indirect Sales



• Flight-by-flight• Bundled add-ons

Leisure Flier:• Flight-by-flight• Bundled add-ons

Day 1 changes Day 2 changes Day 3 changes

Day 4/5

Day 4 changes

Final Summary

We now know that:

1. We’ve found a viable market (economy-business)

2. The leisure-business segments have significant overlap and increased WTP for improved experience

3. Must-have value propositions are seat comfort and time saving

What we still don’t know Next Steps to Validate

Revenue StreamsWillingness to pay premium remains constant across domestic flight

Run customer tests for a variety of flights and price points

Cost StructureMore precise flight economics, fees, etc. with focus on seat comfort and time saving (back of envelope calculations have been completed)

Project revenues and profits on select routes across potential aircrafts and compare with findings from pricing analysis (above)

Key ActivitiesAdditional understanding of regulatory and legal restrictions

Continue to validate legitimacy of business with Department of Transportation, FAA and local governments

Customer RelationshipsUnderstanding cost of acquisition, switching costs, and role of loyalty across channels

Additional interviews with target consumers, research on historical switching campaigns by competition, benchmark competitor acquisition costs

Next steps

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