“It was not our aim to produce an Uber for business air travel and to do away with brokers”, explains Artur Abadzhyan, the executive director of the company. “We realized that operators and clients had problems, and offered them a solution. After all, the internet is moving towards peer-to-peer technologies, in which services are provided from one entity to another through some sort of platform. Business air travel is one of those branches which on one hand, should be among the leaders of technological development, and on the other, is working in a conservative mode. The first thing we produced was a B2C product, namely JetHunter, which enables clients to reserve flights directly from the operators.
Everything is simple for the customer. A ticket for a regular flight can be bought by filling in the fields “To”, “From”, “Date” and “Number of people”. Having done that, you wait for offers. The average response time is five minutes. In responding, the aircraft owners are betting against their competitors. In this way, prices can be reduced by approximately 5-8%. And if you factor in the absence of intermediaries (or commission for them) in the chain, the end price for the client works out 10-20% lower. The customer can also “wander around” the passenger compartment of the selected aircraft by means of a virtual tour, and specify his wishes regarding catering and any other aspects of the flight.
When the deal is concluded, the airline operator pays 3.5% of its sum to the service. The average cheque is for $30-35,000. The approximate income can be calculated on the basis of the total number of auctions held (over 3,000 up to the end of January).
“Operators do not always understand what their “market price” is. We give them the opportunity to optimize the cost sensibly and win the order. It is more profitable for them to work than to stand still. Aviation is a low-margin business, not infrequently running ‘at zero’”.
To impress carriers with the benefits of the new site, it was not enough to know the market and its particular features (and Artur spent eight years working in Aeroflot, Lufthansa, Austrian and Korean Air). The start-uppers rang round the operators, travelled to personal meetings and invested in advertising. Characteristically, the cost of one client proved comparatively small – less than fifty dollars. Nevertheless, the company soon earned the credit of trust. And whereas in October 2015 there were about 100 partners in the service base, by the end of January 2016 there were more than 400 (there are about 3,000 airline operators in the world altogether). But it is not only a matter of financial benefit, but also of attitude.
“We check each application. We automatically compare the possibilities and logicality of the data supplied and the route. We ring the client to make sure he is real, and that he understands what business air travel is and how much it costs, and is not looking for a ticket for an ordinary aircraft.”
There is much in JetHunter that is personal. Let’s start with investments. We started the service entirely at our own expense. It cost about five million roubles. The first investor only appeared in March (the contract was signed by the beginning of May). This was Miriam Judowitz, a business angel from Israel.
“She is impressed by aviation. And she likes technological products which change the manner of consumption. And in our case, in talking of a B2C product, we were, all the same, closer to an Uber for business air travel, which was interesting. This was a gesture of faith in our project.”
The second round of investments took place in October. The company’s own clients invested in it. And it’s not going badly. Turnover for 2015 was 1,500,000 euros. The service has not yet reached self-sufficiency, but Artur says this isn’t in their plans yet.
“We are moving in accordance with our expectations. Our unit-economy will help us reach self-sufficiency not on the lines of a standard online service (when big money is pumped into the project and spent over several years). Our economy is sufficiently positive, and as we increase sales, with shall soon reach operating zero.”
The website is now taking part in a new investment campaign, reckoning on large-scale expansion into external markets: the Middle East, Europe, the USA and Asia. But it is the American market which is of the greatest interest.
“The USA has 50% of the world market in business air travel. And we know what the customer there wants and how to act. They love new technologies in the USA, the liquidity there is great. And the mental attitude is such that people are willing to try new products.”
It is also important that the world market in this field is not stagnating. The influence of the crisis has been apparent from the moment JetHunter was started. It had the effect of reducing the number of applications. But from September, when start-uppers began trying their luck in foreign markets, it was noticed that the fall by 30-40% in Russia did not reflect the general world situation. The RF has no more than three per cent of the global market. Therefore it was necessary to go abroad. And all that ties the project to Russia is its technological team of 15 people on Russian territory.
Expansion into world markets opens up new opportunities, but is also fraught with difficulties.
“In the American market we have competitors, and they are successful companies. But they all have different models. But JetHunter works in auction format, and is better adapted to new technologies. All such companies have their strong and weak sides. But competition is always a good thing.”
According to Artur, work is now in progress in the company on creating a new B2B product, which will make it possible to improve the interaction between brokers and operators. In this one, the business model will be different. That is, there will be no attempt to force the middlemen out of the market. But the plans do already include reducing their share, raising efficiency and bringing certain other improvements into the process itself.