The Software development of an entrepreneur airline
January 18, 2021 By Phil Lightstone
FLYGTA Airlines, a CAR 703 and 704 operator, began its operations with two pilots and one Piper Navajo. Founded in 2016 by Chris Nowrouzi and David Nissan, these commercial pilots/instructors turned entrepreneurs, created their airline in a sprint rather than a crawl, walk and run.
Flying out of Toronto Billy Bishop Island Airport (CYTZ), their vision was to provide affordable flights, tours and point-to-point flights to tourism destinations in Southwestern Ontario.
With tours to Canada’s wine country, in Niagara On the Lake, they began flights to St. Catherines, arranging ground transportation for their tourism passengers. Toronto residents were attracted to a lifestyle marketing pitch, inclusive of a modern Website and social-media networking through Instagram, LinkedIn, Facebook and Twitter.
In the beginning, Nowrouzi and Nissan were each working 80-hour weeks trying to keep up with the flying, regulatory requirements, maintenance, back office and business development activities. FLYGTA’s business model is structured around low-cost, low-margin tickets, attracting both tourism from Toronto and business travelers commuting in Ontario and New York state.
In 2019, their flights and routes expanded by leveraging Billy Bishop as their first airport, but the operation quickly expanded with bases created in St. Catharines/Niagara District Airport (CYSN), Kitchener/Waterloo Airport (CYKF), Muskoka Airport (CYQA) and Toronto Buttonville Municipal Airport (CYKZ).
Their expansion to Buttonville started in 2019, with renovating the old “Prop Shop” retail space and converting it into a state-of-the-art passenger lounge and moving their maintenance environment into a heated hanger.
In 2020, FLYGTA’s expansion continued with a base at Montreal Mirabel International Airport (CYMX) and Muskoka Airport (CYQA). David Nissan, explains “It was important to our business and operating model to create our own maintenance organization, thereby controlling costs, quality and time. Controlling maintenance insured that FLYGTA’s priorities were always at the top of the line.”
During 2019, FLYGTA had 13 aircraft, including Piper Navajos, Piper Seneca, GippsAero Airvan, King Air B-100, Cessna C207, Cessna Citations, and Embraer Phenom 300.
During 2020, the fleet was right-sized to six aircraft, five of which are turboprops and jets with one Piper Navajo. The move to turboprops and jets has seen an improvement in dispatch reliability while reducing the cost per nautical mile and vastly increasing range.
Key to FLYGTA’s expansion, was its approach to business development and flight operations, always leaning on the side of passenger/crew safety and business risk management. Nowrouzi and his business development team forged relationships with Ontario municipalities promoting tourism. The Niagara and the Muskoka regions were first onboard to garner the benefits of air travel-based tourism.
FLYGTA, working with the City of Kingston, established scheduled flights from Toronto to Kingston with an introductory one way fare as low as $39. (inclusive of all taxes and fees), filling the gap which Air Canada had left. In late 2020, that fair is now as low as $49. (inclusive of all taxes and fees). With an expansion into tourism, through acquisition, passengers are able to book hotels, car rentals and tourist activities, like Thousand Island boat cruises, directly from FLYGTA.
During Covid-19, FLYGTA, like most airlines, furloughed roughly half of its employees. As with many charter operations, the company was initially conducting one-way flights moving Canadians and Americans back home. Tourism-based flights stopped in March 2020 and were re-established in August before more strict lockdowns came into effect at the end of 2020. Health risks were mitigated through eliminating onboard snacks and drinks, eliminating the need for passengers to remove their masks while in flight. Strict disinfecting protocols were followed for the aircraft, crew areas and passenger areas. Charter flights increased as business travelers chose charters over airline business-class tickets. Interestingly, one-way flights comprise 80 per cent of their revenue. That revenue contribution allowed FLYGTA to remain profitable during the initial months of Covid-19.
Key to FLYGTA’s success has been creating both a digital and physical environment focusing on customer satisfaction. Innately, these principles drive repeat business, lower customer acquisition costs and additional travel products purchased on the same transaction. These concepts went into the requirements of their airline management system. In the beginning, FLYGTA used a hodgepodge approach to software, finding that most of the cost-effective systems were focused on the needs of flight schools rather than a small airline.
With a business model offering scheduled flights, charter and tour operations, finding an affordable comprehensive airline management system was problematic. The processes and data delivery requirements are different between these three distinct services (scheduled, charter and tourism). Customer satisfaction and system usability were key components as Nowrouzi and Nissan looked to the software providers in the aviation and tourism industry. As a fledgling start up, software acquisition and monthly operating costs were another set of constraints, limiting potential software providers.
To create a competitive advantage, in a highly regulated industry, the business partners embarked on a software development effort, partnering with a Canadian software development company, ABOMIS Innovations Inc., to design and implement a full airline management system. The collaboration delivered 21st century techniques and a grass roots understanding of the business and operational requirements of an airline.
Their software automated the end-to-end process both from the customer’s and operator’s perspective. FLYGTA’s team focused on the business, industry and regulatory process requirements embracing all operating groups and most importantly their customers. ABOMIS took FLYGTA’s designs, concepts, reporting and business rules and created a digital environment, inclusive of Web applications and smart-device apps.
Nowrouzi reports, “We focused on a consolidated system rather than a best-of-breed approach which delivers a controllable competitive advantage.”
Their new system contains the basic modules which most airlines require: dispatch; flight tracking; pilot tracking; safety management; CRS (fare, revenue, ticketing); booking; passenger check in; and GDS integration. Unique to their system is the use of artificial intelligence and machine learning. This has the impact of delivering business driven analytics allowing FLYGTA staff to make informed decisions based upon meaningful data. As an outcome, the risk factors associated with making back-of-the-napkin, gut-feeling decisions are minimized. Training new FLYGTA employees on the system takes roughly one day. Outside of the standard new employee onboarding time, the time to maximum productivity (TMP) is radically reduced.
With no legacy IT systems and archaic processes (typically handicapped by the underlying technologies), Nowrouzi explains their operating costs and overhead are reduced relative to that of a typical airline. He believes that FLYGTA’s overhead is roughly 10 per cent of a typical legacy airline with artificial intelligence managing revenue and eliminating people costs. Ticketing and customer service are completely managed by the customer delivering 80 per cent reduction in costs.
Expansion of FLYGTA’s revenue flights was facilitated through linking into a global community of travel trade. A Global Distribution System (GDS) network facilitates transaction enablement between a community of travel agencies, airlines, hotels and car rental companies. Implementation is planned for the immediate future. Typical one time and operating GDS costs create a barrier of entry to start-up aviation companies.
FLYGTA’s can-do attitude, however, facilitated the exploration of alternative digital entry points into the global travel industry. With that in mind, FLYGTA has been collaborating with an undisclosed company focusing on interfacing with an I.A.T.A. New Distribution Capability (NDC) system. NDC will allow FLYGTA to bring its flights to the travel ecosystem, while also allowing them to sell and book hotels, rental cars and other tourism products, by adopting the ONE Order concept outlined by IATA. Both online travel agencies (like Expedia) and office-based agencies will be able to book FLYGTA flights. In essence, this delivers vertical integration without the costs and capacity constraints that typical airlines do not incur. NDC integration has been delayed due to the global impacts of Covid-19. However, Nissan expects that NDC integration should happen in the near future.
With a field-tested production airline management system, FLYGTA is planing to market the new system, yet to be named, to the regional airline industry. Through a joint venture, software development and technical support activities will be executed by ABOMIS with FLYGTA focusing on sales, design, process and technology improvements. Based upon the drive with which Nowrouzi and Nissan have brought to FLYGTA, this new initiative can deliver a new profit stream, while providing the regional airline ecosystem with access to valuable software. Nowrouzi expects the sales and marketing activities to begin in January 2021.
FLYGTA is focused on weathering the Covid-19 storm. Since the fall, its charter operations have been busy moving snowbirds to their warm destinations. Hopefully, Covid-19 rapid testing, delivered to the airline industry, will help drive revenue levels. What’s on the horizon for FLYGTA – only time and the pandemic can tell. | W