Who the F*&@ is AURA?

Who the F*&@ Is

Those of you who saw that I accidentally published my jumbled notes on AURA last week already knew this topic was coming. AURA, an airline you’ve probably never heard of, is under development and is hoping to start flying next year. This is not an ordinary airline effort. In fact, it’s incredibly ambitious from a design perspective. I spoke with founder Zander Futernick about his plans.

Let’s start with the basic idea. Zander wants to acquire some used CRJ-700s that are meant to hold about 70 people. He will put these airplanes through a massive reconfiguration that will result in a mere 29 seats on each aircraft in a very non-traditional two-class configuration. These airplanes, operated on behalf of AURA by Presidential Aviation, will fly between big cities. If all goes well, AURA will siphon off a tiny number of business travelers and make money while the big guys ignore the airline. In reality? I am incredibly skeptical.

I told Zander my feelings going into the conversation, and he fully understood my skepticism. He was just appreciative that I was willing to hear him out. It’s clear that he’s done a lot of work analyzing this, but analysis can only get you so far. This brought my back to the summer of 2003 when I was an intern with the founder of Atlantic Express, the airline that would become Eos.

At the time, our business plan seemed so simple. The New York to London market was huge, and we only needed a miniscule piece of it to fill our spacious all-business class 757s. How hard could it be? The answer: incredibly hard. Zander noted that in one of the airline’s first markets, Miami to New York, it only needs less than a percent of the total market to work. Sure, and it sounds easy, but it isn’t. To be fair, things have changed in the industry since my experience 15 years ago, but they haven’t changed that much.

In a market like Miami to New York, American will be paying incredibly close attention. It won’t need to lower fares to match, because AURA’s fares aren’t all that low. But the second AURA shows any hint of gaining traction, American will fight. I would expect targeted frequent flier bonuses and closer monitoring of corporate contract performance for one. Zander wasn’t as concerned about the frequent flier program since they’ve continued to be devalued over time. But the reality is that AURA can only help people on a couple routes. Business travelers will still be slaves to the big guys elsewhere, and those programs matter a great deal.

I’ll step off my soap box now. Let’s just talk about the product at hand. This product is really over-the-top with everything from pre-ordering of fresh meals to be cooked onboard and even self-sanitizing lavs. It’s a brand, an experience, and it sounds nearly impossible to pull off.

These airplanes will have 21 seats equivalent to a domestic First Class (above). They will also have 8 seats in “Wave” class which is a futuristic looking cradle of sorts (below).

The images look fantastic, there’s no question. But it’s going to take a ton of work and time to get this certified. Those Wave seats are actually AÏANAWAVE seats from a company called Yasava. Yasava does interiors for corporate aircraft, and it is… something else. Visit the website and you’ll learn that it’s Swiss. The office is, well, “the Yasava Creative Center above the lake of Geneva allows us to live and breath according to ancient wisdom.”

I did ask Yasava whether these seats were certified to fly. The answer: “These will be FAA certified for the specific application for AURA in the Bombardier CRJ200 / 700 / 900 / 1000 aircraft series, together with the other elements of the new cabin.” I read that as a hard no.

I can’t even imagine how miserable and lengthy the certification experience is likely to be. It’s not just the seat, but there’s also a lot of technology planned for the aircraft. Take a look at this image of a virtual window using OLED technology on the ceiling.

AURA says it’ll take delivery of the airplanes this Fall (not acquired yet), refit them in the winter, and then be ready to take passengers by mid- to late-2019. That sounds impossibly aggressive.

If AURA does get up and running, it’ll start with the Miami-New York-Chicago triangle. Soon after, you’ll see flights from those cities to Atlanta. Then it’ll go west into markets like LA to Denver and Chicago. These are all big city markets with a ton of service already. AURA plans on going in with up to 4 frequencies a day in the biggest markets. That’s a far cry from what the traditional airlines offer, but Zander says research shows that 4 is enough. I disagree. At the very least, it’s a negative when comparing with the big guys. And if that’s a negative, then what’s the positive beyond the futuristic cabin design?

Like JetSuite X, AURA is going with the private terminal-style of operation. Travelers will avoid the big passenger terminal headaches, and in some places, they’ll avoid the popular airports all together. I asked about airports, and Zander explained that they’ll look at several options and they’ll listen to their KeyHolders (I’ll talk about that in a minute) to see which airports they find most desirable. In Chicago, for example, if they have most customers going into Chicago from elsewhere, then they’ll likely prefer a private terminal at Midway or O’Hare. But if they have a big base of people who live in Chicago, particularly northern suburbs, and are looking to fly elsewhere, then they’d look at Chicago Executive (the old Palwaukee).

Another thing that will make the airline stand out is its pricing practices. It is starting out as a quasi-membership organization. If you pay a nominal initiation fee ($100 through July 31 at which point it goes up to $250 – regular rate is $700) you become a KeyHolder. Then those KeyHolders will pay $100 a month (sign-ups after July pay $250 a month) once the airline starts flying from their city. Zander says the number of sign-ups are in the thousands, but then again the only commitment is a $100 fee so it’s a relatively low bar. He compared this to an Amazon Prime-style offering where you get benefits for signing up but it’s not that membership fee that’s going to make the company profitable. It seems to be more a way to create that sense of belonging with the brand. You’re part of an exclusive club.

That membership fee does come with one major benefit: you pay half what non-members pay for tickets. People who aren’t KeyHolders can still fly, but they’ll just pay a lot more. What are we talking about? You can see the flat pricing list on the website. For KeyHolders, Miami to Chicago will be $380 for First Class during off-peak times and $480 during peak. Wave class will be $830 off-peak and $930 peak. (These fares are fixed for the first year but they may change after.) For comparison, I can buy a walk-up tonight (on the day I wrote this) from Miami to LaGuardia in First on Delta for $423.21. With a week’s notice it can go as low as $300. Is someone really going to pay double a commercial First Class price just to fly in a fancy cradle on a couple hour flight? That’s what AURA is betting.

Of course, we have a long way to go before anyone would even have the ability to buy those fares. Zander wouldn’t share any information about how much funding the company has other than to say that it is backed by “private investors worldwide.” That says nothing about how much has been raised, and whether it’s enough to acquire the minimum 4 aircraft AURA needs to take flight. Even if it has enough, can it refit those airplanes in a timely manner and get space at major airports? If so, then the fun begins. It has to woo traffic and become profitable.

Zander seems confident that this is going to work. I, well, I wish them luck.

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46 comments on “Who the F*&@ is AURA?

  1. I mean no disrespect to ambitious young entrepreneurs given how many of them can be successful (in many other industries)….but it looks like Zander has no airline (or seemingly for profit professional) experience? Did you enquire about a broader team to set this up (or are they just relying on Pioneer Aviation?

  2. I’m not surprised that people keep trying to fit into a spot right behind private jets but nobody yet has seemingly found the right differentiation to make it work. Fancy tech and a European seat doesn’t sound all that amazing to me. Still think the smart money is on cheap seats for the unwashed masses, but maybe this will be the one that works.

  3. F, while not spelled still equals F and is inappropriate for a professional article. Just seeing the F makes you think of the word itself. It offended me to see it as a title in my inbox.

    1. This is a series that Cranky has been running since at least 2006, all with this title (with the airline changed). See the category: https://crankyflier.com/category/whowhat-the-f/

      He even had a discussion thread in 2014 about whether to retire the name because a small number of readers find it offensive. There was overwhelming support for keeping the name.

    2. Separately, the first of these articles (which I saw by looking at the category) was “Who the F*&& is Allegiant Airlines?” in 2006. With 12 years of hindsight, that article holds up awfully well; it was relatively rare in this series in that Cranky thought they had a solid business model. Good work, Cranky!

    3. You folks shouldn’t go downvoting Steve.787. He is expressing a perfectly reasonable opinion and expressing it civilly. Turns out that Cranky already did “due diligence” in polling about this series title, and Steve.787 is apparently in a minority. So the title probably won’t change. But this seems like perfectly good use of a comment section.

      1. Is downvoting not also a perfectly good use of the comment section? Steve can state what he wants, and people can downvote that comment if they want

        1. I guess it depends on whether you interpret a downvote as “I disagree” or as “this is inappropriate.” People probably read it both ways. I generally read big negative vote scores as implying some sort of censure. And I don’t see any reason that a civil objection to the original post should generate that.

    4. Studies indicate those who drop the F bomb in general are people who lead less anxious lives. The F word is not always a negative.

    1. Jeremy – Well they’re private so we don’t know for sure. But JetSuite has gone to the well for money more than once, most recently getting that Qatar investment while JetBlue re-upped. We don’t know how JetSuite X breaks down financially versus the regular private jet operation either. That being said, it hasn’t grown all that much yet, and whispers are that it hasn’t gone all that well. But I just don’t know. As for SurfAir, same issue of it being private. There have been a lot of problems lately as it keeps transitioning which entity flies its flights. The last one is suing over unpaid bills. Other than that, I don’t know a ton.

  4. While the FF been devalued, most of the younger (under 40) flyers never got used to the 90% upgrades, and TATL awards that were always available for low miles, that marked the pre-9/11 programs. And the day to day perks especially at the top of DL, UA, AA are still pretty good.

    The biggest issue they are going to have, is that the price sensitive customers who don’t have any loyalty to AA, DL, UA, et al, aren’t going to pay a nickle extra to fly AURA. But virtually all of the price insensitive customers either personally or their company has a loyalty to at least one of the major network carriers. And they aren’t going to risk their status or contract to fly a carrier that isn’t a true potential alternative.

  5. I wonder if an airline like this could work if it would exclusively serve airports like Chicago Executive, Scottsdale (Arizona) Airpark or similar airports located near affluent areas where business executives and professionals tend to live. Another draw could be avoiding the crowds and traffic associated with larger airports. I may be wrong, but Midwest Express/Midwest Airlines made a similar model work for a number of years. One obvious flaw: Midwest Airlines isn’t around anymore.

      1. I haven’t had a chance to fly Ultimate Air Shuttle, but I can see how their business model can work on specific routes, especially as the timing on many of their flights allows for daytrips without the expense of a hotel. When you factor in $100+ savings from that, plus the time/comfort/productivity gained, I completely understand how many businesses are able to justify the fare premium for Ultimate Air.

      2. Ultimate Air Shuttle is solid; I’ve flown them a few times to LUK. If I lived closer to MDW instead of ORD, I would probably use them more. The convenience of no security, walking literally right to the airplane and a higher end clientele was worth the slight premium. And let’s not forget that the Dornier 328Jet is a kick ass RJ.

    1. I was thinking the same thing – though you run into issues with 2ndary airports because they’re typically not as centrally located, so depending on the exact situation, the timing could become a wash (private terminal at big airport vs. executive airport vs. the increasing use of CLEAR or other companies that make the security experience even faster).

      I kind of wonder if they’d have success at offering a “3rd option” to expensive destinations where many people fly private and the majors only offer regional jet service – think flights to Jackson Hole or Martha’s Vineyard, giving the “very affluent’ an option when they’re not the “very wealthy.”

      1. The problem with chasing that type of business, is there just isn’t all that much of it. The 2-5% may fly in/out of JAC or MVY once or twice per year, there isn’t enough demand to run daily service, especially with no connection network. It may work Friday/Sunday Seasonal Service, but then they’re little more than a high end charter business…and would be out of business shortly.

    2. DesertGhost – Midwest Express started out as a company shuttle for Kimberly Clark, so it had built-in business in markets where the company needed it to fly. So when it opened up the flights to others publicly, that was an easy transition. Its upscale model worked for a time, but then it stopped. Before Midwest disappeared, it kept trying to become what every other airline was because its model just didn’t work anymore. Of course, get rid of the differentiation and Midwest had no advantage at all.

      That’s not to say there couldn’t be opportunity from a close-in airport, but it will still be really hard to draw the traffic. Let’s say you live in Scottsdale and you can fly to LA on this new airline. You still have to fly someone else from Phoenix on every other route you take. You want to keep your elite status on that airline, and you get used to the drive.
      It’s really hard to pull people into something else when it’s not a complete solution.

      1. Thanks. Good points. My family is from Wisconsin and my mother loved Midwest Express. I flew Midwest from Phoenix to Milwaukee a couple of times as well. Loved both the airline and the convenience of Mitchell Field (as opposed to O’Hare).

    3. Midwest Airlines/Midwest Express was a regular commercial airline operating out of an MKE hub with secondary hubs for a while in OMA then later MCI. From those hubs, they served the major airports (BOS/LGA/DCA/SFO etc), so it wasn’t a secondary airport operation at all. I don’t think MKE fits anyone’s definition of an especially affluent area, though there certainly is some wealth in the suburban Milwaukee suburbs. MKE can siphon off some bargain-hunting travellers from northern Chicagoland, but that’s the opposite end of the spectrum from business executives seeking an extra-convenient airport.

      What was dramatically different about their service was that they used DC 9-derivative aircraft in a fully 2×2 configuration with domestic first class seats and meals served on china. The fancy meals went away shortly after 9/11 and they introduced more conventional 3×2 economy seating later that decade before ultimately being purchased by Republic, merged with Frontier, and then completely eliminated.

      1. My response was poorly written. I was really trying to make two separate points, which came out a bit conflated. One was about the possibility of serving smaller / specialty airports; and the other, which compared (tenuously at best) Midwest to AURA.

      2. Midwest Express was profitable for around 15 straight years in spite of the business-class service as much as because of it. They (1) focused tightly on business travelers and mostly lost money elsewhere even in the best of times (2) at a time of high business fares (3) in a market big enough to support their services but not so big as to support successful competitors (4) before the proliferation of LCC carriers (5) before the proliferation of regional jets which can bring competition to smaller city pairs (6) largely in times of fairly cheap fuel. Being an outgrowth of Kimberly-Clark’s corporate travel department made startup far, far easier than from scratch but KC traffic was only a small portion of total revenues and was next to nothing in most o their city pairs. The premium onboard services helped garner loyalty against competitors when all else was equal but few passengers would pay a cent more for it. Among the most obvious signs that it was pretty much everything *but* the service is that their Skyway commuter division…equally focused on business travelers with high fares and nonstop lights — did just as well in attracting loyalty with decidedly non-premium service. Even before fuel rocketed and LCC’s came to their markets Midwest was running out of places to make money with their high costs and (beyond Milwaukee) their limited scope. The market is far, far less hospitable to a premium-service airline akin to Midwest than it was 30 years ago.

  6. While a different service model, it seems the ultimate air shuttle flights from Cincinnati LUK to Cleveland BKL, Midway, Teterboro (I think) and CLT would be a good comparison as they offer similar frequencies and px capacities.

    Don’t know anything about ultimate air shuttle except it seems they’ve been around a few years now so maybe this model is possible in one way shape or form.

  7. Maybe AURA can piggy back on those Famlily/Avatar 747s that will be flying around the US to help save money. If the space shuttle could do it on the back of a 747, so could a CRJ.

    1. Eh, that’s overcomplicating things. Install the Aura cabin on the upper deck let them sell that, while Avatar stuffs a million seats on the lower deck that they sell for cheap.

  8. ThankQ Zander for your wonderful vision. The world needs people like you.
    It is sooo easy to pooh-pooh any new venture. All new ventures come with significant risks.

    My strong feeling is that we all complain about the lack of services and treatment we get from the big airlines – even when we pay for first class.
    Now an option may be available that always gives excellent service (albeit for a price). It is still less expensive than owning one’s own plane or flying charter. And there are a small percentage of flyers who value the ability to use their time flying to be comfortable or get work done in extreme comfort that would offset the small increase in cost.

    I know that to most people – it’s all about cost. But I agree with Mr.
    Futernick that a small percentage will pay for the excellent product.
    ThankQ Zander for your wonderful vision.

  9. I’m sorry, but on those routes and at those prices, they’re trying to push an elephant through the eye of a needle.

    If I’m traveling on a company or client’s dime, I’d be hard pressed to justify not flying a legacy, especially when even paid F is likely cheaper and with more schedule flexibility.

    If I’m a CEO or independently wealthy, I potentially have the choice between fractional, membership, or owned private jet travel, which buys me privacy, complete schedule flexibility, and direct aircraft access.

    Siphoning off even 1% would be a challenge.

  10. So… just doing some simple math…
    If an Aura flight, Miami to Chicago, is fully booked at peak fares, ticket revenue will total about $17,500. Considering expenses to include debt service, fuel, maintenance, airport rents & fees, insurance, various aircraft services, pilot, staff, corporate salaries, etc… I don’t see gross revenue of $17,500 pet flight coming anywhere close to paying the bills. And relying on monthly “membership fees” is a dangerously bad fiscal idea, especially when those members fly at a huge discount.
    To me, in this venture, 2+2=0.

  11. Can this be right: For comparison, I can buy a walk-up tonight (on the day I wrote this) from Miami to LaGuardia in First on Delta for $423.21. With a week’s notice it can go as low as $300. First for walk up same day at 423? Sounds too low.

    1. Kathryn – It was right when I looked last week. Today it’s different since flights are much more full. But I can still buy a ticket at 730p on American up to JFK for $468.19.

  12. Two brief points. 1. They are set to spend incredible amounts of money on things travelers do not care about and will not pay a cent more for. 2. I very much doubt the fares they have published have any relationship whatsoever to their costs.

    Fun to read about, though.

    1. Travelers will pay more. They won’t pay a monthly fee and on an airline that only flies domestically for it however. A look at the arms race in first and business amongst international airlines indicates that there are sufficient people willing to pony up for those features. If not, the Gulf carriers first experiences, Lufthansa, BA, and Air France, as well as Qantas and other Asian carriers investments would be silly. And many of those carriers are profitable.

    2. Agreed. I can’t imagine there’s a huge market for the fancy lie-flat seats except transcontinental and overseas–neither seem to be in the plans…

  13. Sounds like yet anorther case of Midway Airlines syndrome. Build an airline large enough to be potentially profitable for awhile but small enough that the majors won’t notice. If I’m skimming 1,000 passengers a day from American, United or Delta, will anyone notice or care?

    When you get too big fior your britches — SPLAT!

    That, in a nutshell, was Midway Airlines. With a convenient hub at then nearly-abandoned MDW, locals built a true commuter airline that flew from Chicago mostly to second-tier Midwestern cities. The airline ended up flying to New York but had so little capacity relative to United, American and TWA at the time that nobody cared.

    Then came the Eastern Airlines bankruptcy. Midway bid on and won Eastern’s Philadelphia hub. Huge mistake! Midway suddenly was competing against the biggies with a market share that made the biggies stand up and take notice. Shortly thereafter, Midway was squished like a noxious bug invading a church picnic.

    Midway Airlines Syndrome is the notion that I can fall under the radar for awhile but in my quest to grow and improve earnings, I reach a threshold where my better capitalized, better equipped competitors exterminate me before I become a threat to their networks, infrastructure and, most importantly, profitability.

    The fact that someone thinks American Airlines may be watching this closely tells us that the threshold where an idea gets Midway Airlines Syndrome is much smaller than in past years.

  14. “It’s a brand, an experience…” I was waiting for “rooftop bar”, #Joon

    Also, am I the only one who hears “keyholder” in Rick Moranis’ voice? “I am the KeyHolder…”

    Seriously, though, there are any number of problems with this. Others have covered the maths on revenue vs. expenses, Cranky’s mentioned the frequency issue, so I’ll just touch on the “Wave” seat. Why would anyone pay more for a weird-looking, uncomfortable-looking seat with (and this is the key), from the artist’s conception absolutely zero privacy? For three-ish-hour flights? I could see offering a really plush recliner with walls and a door, so higher-end hourly billers could really concentrate on work pretty much the entire flight. But I’m not even sure that’s a big enough niche to fill the Wave seats, since corporate travel departments will still want comprehensive contracts with the big boys, and more price-conscious travelers can just go with WN or B6 depending on which leg of the “triangle” they want.

    I’d have a little more confidence in the revenue side if they ditched the “Wave” class and just put in more of the first class seats. Even then, corporate travfel departments

    1. (oops, cut myself off) …will push using the big boys.

      Also, why Miami? Unless they fly into MIA and offer the ability to easily connect from Latin American airlines, I’m not sure why they’d go with South Florida at first.

  15. Zander Futernick is a con artist with no professional bio or experience. He has collected deposits from >1000 “KeyHolders” = >$200K.

    He does not disclose any info because there is simply nothing to disclose. There will be a DoJ investigation on this moron very soon, I promise.

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