This case is set in July 2013, shortly after the launch of Surf Air, an all-you-can-fly subscription airline based in California. Wade Eyerly, the CEO of Surf Air, has to decide if the business model is sustainable, and also if Surf Air could be expanded to other locations.
Three directional trends are predominant in the domestic airline industry in the US – consolidation of airlines, operational discipline and cost-cutting, and an unbundling of services to create ancillary revenue streams. Customers are struggling as shrinking hubs or cancelled point-to-point routes result in more flight connections, and higher costs to reach their destinations. Surf Air is introduced in the California region to address the above issues, by providing frequent business travellers an affordable option through a monthly subscription. The airline commences operations with six-seater Pilatus PC-12 jets serving two secondary airports in Los Angeles and the San Francisco Bay area; and this is shortly followed by another service to Santa Barbara.
Eyerly notes that the months leading up to the launch of Surf Air have brought about high expectations from his investors and the media. Would the all-you-can-fly model of Surf Air prove to be sustainable? Where could Surf Air expand to next?
This case can be taught in undergraduate, graduate or executive education classes. The case evaluates the viability of a new, innovative business model that is introduced in a traditional industry with established business models.
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