Virgin’s most recent new business, Los Angeles based Virgin Charter, launched this evening. The company was founded by CEO Scott Duffy with the hope of modernizing the booking systems for charter aircraft. Virgin’s Richard Branson got wind of the startup, gave the company three times the funding they were looking for and took a controlling interest. The company was renamed Virgin Charter.
Today, the Internet doesn’t play much of a role in chartering private aircraft. Well to do clients have their organizations contact small operators who generally control 3-5 jets. Schedules are compared and prices negotiated. The entire process takes up to five hours on average. And inefficiencies in the marketplace result in very high prices – the average U.S. flight is $18,000 round trip, and a cross continent, Los Angeles to New York flight is generally $35,000 – $65,000. Much of the price is due to “empty legs” – flights that have to come back early instead of waiting for clients, resulting in four legs flown for a round trip. The most well known Internet site for operators to list their planes is CharterX, but it leaves much to be desired.
Virgin Charter aims to change all that by putting small operators of charter aircraft together with potential buyers. In a process that is much like booking a trip on expedia, buyers can look through available aircraft, view ratings on the companies and actual planes, and choose to big on flights. Sellers respond, and flights are booked. Payment is completed via the site using a credit card, wire transfer or EFT, and Virgin Charter keeps a percentage as their fee. Following the flights, both the buyer and seller are requested to leave feedback on the other party. And Virgin Charter will work hard to fill those empty legs, which increase marginal revenue substantially for operators.
The U.S. is most of the worldwide market for private aviation, Duffy says, with about 75% of operators based here. The company is starting out only in the U.S. for now.The company has been in private beta for a few months, with 60 operators (out of 2,500 in the U.S.) By September, when they go live, they plan on having the largest 500 operators under contract.