Airtime airlines – literally paying as you go

From Wired comes news of this innovative business model and pricing strategy just announced by a new South African airline, here's a longish snippet describing how it will all work, if they manage to get things off the ground, so to speak:

Taking a cue from the cellphone industry, an
upstart South African airline is selling flights by the minute and
allowing customers to buy tickets and book flights via text message.
Airtime Airlines takes to
the sky later this month, offering three flights a day from its base in
Durban to Johannesburg, Cape Town and Port Elizabeth. Passengers
purchase minutes much like they would for a prepaid cell phone and
redeem them for a ticket. Fees are assessed according to the length of
the flight — say, 75 minutes for the run from Durban to Johannesburg —
and could save as much as half of what competing airlines charge.

[…]

If Airtime irons out those details, passengers will buy minutes
instead of a traditional point-to-point ticket. They can buy a "starter
pack" of prepaid minutes and top off their accounts by purchasing more
minutes — by text message — at the going rate of 5 Rand (about 53
cents) a minute. Flight times have been mapped out in advance, so
sitting on a runway for three hours won't triple the cost of your
ticket.

[…]

It is tough to see how Airtime has much chance
once the novelty fades. Paying for flights by the minute is interesting
but not at all intuitive. Airtime's competitors in the crowded South
African market aren't likely to roll over and play dead, and the state
of the economy
means that times are tough for even the best-run airline, let alone a
startup with a strange business model.

I'm not saying that I can predict whether Airtime will be successful or not or even whether it might be a tad early, but after the observations made across South Africa during EFL's first project a year ago, I am far less skeptical about the business model than the Wired folks and tend to see it as far more in tune with mobile culture in the Rainbow nation.

Update: On further thought, the middle paragraph seems to imply that one could conceivably buy airtime over time, that is, top up one's minutes towards one's flight AS and WHEN one had cash, then, when enough had accumulated, purchase the ticket. So, in actual fact, this business model just might be one that provides a way for those on irregular incomes to contemplate the purchase of a large ticket item, puns wholly unintended in this serious research blog.

This entry was posted in Africa, Airtime, Base of the Pyramid, Business Models, Cashless transactions, Mobile platform, Research, South Africa, Strategy. Bookmark the permalink. Post a comment or leave a trackback: Trackback URL.

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