It’s been just over a year since Oliver King took over from Niklas Berg as CEO of the Avinode Group, becoming the first person who wasn’t a founder of the company to step into the role. His main challenge? “I need to keep the entrepreneurial flair within the company.”
In practical terms, King says when he replaced Berg he was left with ‘three cards on the table’. The first was to continue growing the Avinode marketplace globally, an achievement King believes is somewhat evidenced by its recent US statistics.
For example, in the weeks leading up to Thanksgiving 2017, Avinode reported an 80% growth in requests sent in the US compared to the previous year. At that point (November), the company had already seen requests from US buyers to sellers grow more than 100% year-on-year.
Geopolitical factors mean growth in Asia and Latin America has proved less effortless. King explains: “Asia has turned out to be an ‘interesting’ market for us, and I use that word in the British sense. Reports of the massive expansion that was to come were greatly exaggerated – what we’ve had instead is a steady but moderate annual growth in activity in the region.
“One of its largest markets, China, is very constrained. However, other markets around Asia, such as Thailand and Indonesia, have proven very successful. What Avinode has played a role in doing is making the demand that exists in the US and Europe visible to operators pioneering in those markets. That way, they can serve international clients who may be coming in commercially on a long-haul flight and trying to pick up private jets for shorter trips across the region.”
And Avinode’s work is being noticed. In 2017, the Asian Business Aviation Association (AsBAA) awarded the company the title ‘Best Business Service Provider’ at its Icons of Aviation awards, and its business is growing considerably.
During ABACE in April this year, Avinode announced that requests for arrivals into Asian airports made through its platform rose by 43% from 78,269 between April 2016 and March 2017 to 111,964 for April 2017 to March 2018. Requests for departures from Asia also saw a 53% hike.
Interestingly, China overtook India to become the second most popular destination for arrivals in Asia in terms of domestic charter trips requested through Avinode, with requests up 70.6% across the aforementioned period. For domestic departures, Chinese airports climbed from the fourth to the first most requested in Asia, with requests more than doubling from 2,286 to 4,765.
Elsewhere, King acknowledges Latin America is the third largest market in the world for business aviation. He notes that Avinode had an office in Brazil at one point, but when economic tensions – specifically in Brazil and Argentina – led to a contraction of the industry, Avinode decided to reduce its presence.
King doesn’t see this as a major concern, since his company is focusing on much more than the geographical growth of the Avinode marketplace. It recently identified artificial intelligence (AI) as one of the ‘bizav tech trends to watch in 2018’ and has been experimenting with how it could improve its offering in that regard.
“AI requires massive loads of data. Last summer we had about 600,000 requests for charter through the marketplace globally, and you need to be at that level of volume to make AI worthwhile. We’ve had one or two of our own ‘FedEx days’, which is when technology companies allow their employees to work on what they think is interesting from a technology point of view. In the last year, we’ve had experiments looking at empty-leg pricing, making recommendations based on where somebody has investigated chartering an aircraft or delivering additional information where an operator has rejected a request, to see if they might re-consider their decision.
“These are areas where we’re taking baby-steps to see what we can do, because this whole area is in it’s infancy. I think it will be a while before you see the kind of movie-level AI behind the scenes, allowing you to book a flight, but I wouldn’t be surprised if we’re there in a decade because a lot of what you’re looking for could be managed by AI in terms of producing the options.”
Despite being a technology company, Avinode is keen to make sure its platform allows users to deliver a high level of customer service, something it has prided itself on for the last 15 years. “I would be very surprised if the industry does not remain multi-channel throughout my working generation in terms of allowing customers to look for charter on a mobile device, PC or on the phone.
“The phone is still pretty important in terms of delivering service, particularly when people already have an existing relationship with an operator or broker. I think the London Biggin Hill to Nice-type segment is certainly very ripe to have a high percentage of bookings taking place on a mobile or a website, but as you come out of that segment the complexity drastically increases and that’s when I think some of the good old-fashioned voice servicing comes into play.
“Also, just because somebody is talking to a broker over the phone, it doesn’t mean that the technology or the process the agent is using to service the customer has stayed the same. The industry has been very paper driven over the years, but the same tools and systems that have been developed to deliver a front-end digital experience for customers can be increasingly applied behind the scenes to simplify the way a journey is organised by the broker or operator on their behalf. Just because you don’t see it, it doesn’t mean there’s not a revolution happening behind the scenes.”
Payment is one area in which Avinode has innovated to be rid of the traditional paper trail. At NBAA in 2016, the company launched PayNode, which it is marketing as ‘the world’s first end-to-end payment platform created specifically for global business aviation’. The service allows customers to pay directly for charter flights using a credit card; giving this new business the care and attention it needs to grow was the second card King says Berg left on the table for him.
PayNode became available in Mexico in May 2017 before being rolled out across Europe in June. When asked if there was a difference in the way the service was being used across the ‘pond’, King replied: “There has been a different reaction, a reaction that we anticipated. In the US market, a much higher percentage of air charter is paid for with a credit card. In Europe that is not the case – it’s a much larger percentage paying with wire transfer or bank-to-bank payments.
“We did a very soft launch because we anticipated that and we’re currently working with World First to build out and deliver an electronic wire solution. We’re working with larger operators and brokers in the European sector to understand and work through what their needs are.
“Most payment is a pain point, because when you’re in the wire environment you have to almost constantly refresh your bank account to see whether the transaction has been received so that you can go to the pilot and give them the go-ahead. That’s not an efficient model, and so we’re working on making it a much more automated experience.”
Avinode is yet to release its wire transfer product, but King says certain companies are about to begin a beta testing period, so they can provide feedback and help improve the service before its official rollout.
After some initial exploration, Avinode decided cryptocurrencies were a less important area of focus. “I think this is a space where a lot will happen. As visibility and regulation comes in, I think everybody will end up offering a cryptocurrency as part of their payment portfolio, but we felt at this stage it was too early for us.
“We’ve been talking to customers and by and large there’s been almost zero request or demand for it. I suspect that, along with a large portion of the world, some of our clients have bought a single cryptocurrency just to participate and see how it works. Given that, I don’t think it represents a serious currency for us yet.”
The third card left on King’s table was the growth of its US-based fleet management company, SchedAero, into a product relevant for increasingly large US operators. It’s safe to say King has been delivering on this, with SchedAero releasing 300 updates during 2017 alone. New features from last year include PayNode integration and automatic fuel requests for members’ most common airports.
Based on customer feedback, in 2018 SchedAero is planning to strengthen its Pilot Compliance capability, develop the first SchedAero API so it can be integrated with other applications and integrate Docusign into its offering to bring an end to printing, scanning and manually signing a document.
Away from the development of its own products and services, King reveals Avinode is also thinking about the bigger picture when it comes to the development of the business aviation industry. “At the moment there’s a lot of discussion about how you actually make collaboration across the industry a more efficient process.
“The numbers of manual interactions required to get a private jet off the ground is very high. It still involves a mixture of emails, telephone calls and even faxes in some instances. A lot of that is information moving backwards and forwards between different providers as a trip works its way through from a booking to a flight that’s being executed.
“We believe we can play a role, not by ourselves but with other business aviation companies, in getting an electronic backbone to run across multiple players in the industry across which information can be run up and down. Everyone would benefit from the delivery of an efficient electronic work flow. We are putting some of our energy into seeing what we can do in terms of a contribution there.”
That’s some real blue sky thinking, but what’s next for charter technology? With industry players beginning to offer instantaneous pricing on shorter, simpler journeys, King says the next logical step is to combine the instantaneous pricing with the feasibility that says, ‘yes this flight can operate’ and, ‘yes I have the schedule capacity to deliver this flight’.
“Solving both of those two would actually prime our industry for its next wave of growth. When you can truly get your product in a digital, repeatable form, you then have the ability to scale very quickly. Over the next 10 to 15 years, when Avinode would be 30 years old as a company, that’s where I hope we will have got to. That will be great for the industry.”
Avinode has come a long way since it was founded by Niklas Berg with two fellow fresh-faced graduate students, Per Marthinsson and Niclas Wennerholm, with a plan to offer an air taxi business across Europe using wholly-owned, emerging super light jets. If its first 15 years of existence is anything to go by, it might just achieve everything they hoped to.