Crowdfunding Platforms Kick-Start New Ways to Back Air Travel
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APEX Insight: While microloans and crowdfunding have been around for years, they’ve only recently gained momentum in the airline industry. Airlines are tapping would-be passengers for start-up funds, and passengers are seeking help from friends to purchase airplane tickets.
Lock It in Early
Chicago-based startup Airfordable, a microloan platform for air travelers, allows travelers to pay for plane tickets in installments. With a small down payment, a passenger can book a ticket, and then pay for it bit by bit with no credit check required. There are fees attached, of course: 10 to 20 percent of the cost of the ticket. However, the fee isn’t continuously compounded like the kind incurred when purchasing a plane ticket with a credit card.
In this case, a high-value scenario for a passenger could involve locking in a Thanksgiving weekend flight deal when it pops up in July, betting on the eventuality that the ticket price would shoot up more than 20 percent in autumn. Less than a year old, Airfordable already boasts more than 10,000 customers.
In the Sky With a Little Help From My Friends
Among some of the most successful crowdfunding campaigns to date is that for the Pebble Time smartwatch, which raised $20 million on Kickstarter. Crowdfunding can be tricky, though, when those funding aren’t getting anything tangible in return. Travel is a priority for many people, but economic realities can get in the way. Air Canada’s Air Canada’s Embarq is a crowdfunding platform that allows travelers to ask friends (or relatives or total strangers) to chip in on their air travel. The funds go towards an Air Canada gift card, which can be used for airplane tickets, baggage fees and seat upgrades.
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Trying to Take Off
If you thought crowdfunding your next holiday was a big ask, try crowdfunding an entire airline. It definitely isn’t easy to crowdfund a venture requiring so much equipment, infrastructure and staff – Zing Airlines and Avatar Airlines both failed in their 2015 Indiegogo crowdfunding attempts. However, Odyssey Airlines’ CEO, Adam Scott, is having a go at acquiring and outfitting a fleet of Bombardier CS100 jets to fly out of London City Airport. Scott told Bloomberg News that Odyssey is going for a premium experience, with lie-flat business-class seats that are more reminiscent of a private jet than a commercial airline. Having previously raised £5 million (US$6.5 million) in seed money, Odyssey then raised £1 million (US$1.3 million) more via a UK equity crowdfunding site called CrowdCube in 2014. Odyssey aims to begin operations in 2017.
Taking things closer to Kickstarter territory is POP, a long-distance, low-cost carrier startup whose name stands for “People Over Profits.” POP launched a crowdfunding campaign in June of this year to raise £5 million in order to begin flights from London Stansted to Amritsar and Ahmedabad, India. Crowdfunders are asked to contribute £500 (US$650), for which they get a VIP pass for a free flight as well as a series of perks for future flights with the airline. POP is 85 percent of the way there. Should the campaign succeed, POP will donate 51 percent of future profits toward charities chosen by its passengers.
Internet has made the movement of relatively small amounts of money easy, and as a result, microloans and crowdfunding have flourished. This has added new dimensions to what an investor is, as well as to what can be invested in. Perhaps the future of air travel is … crowd-pleasing.