Aggregated customization

By Ross Dawson on April 26, 2006 | Permalink

A new business called DayJet – based in the US – is about to launch a new airline that allows business travelers to fly direct to regional airports thereby avoiding time-consuming connections at big airports and also avoiding unwanted overnight stays in small towns and cities. So far not that exciting, right? What’s interesting is how Day Jet plans to do this. First the airline has ordered two hundred six-seater micro-jets at a cost of US $1.3 million each. This will bring airliner style performance at a fraction of the cost. But that’s still not the interesting bit. The airline has no set routes and no fixed prices. Instead the airline will aggregate demand ‘on the fly’ linking small groups of people that want to go to the same place at roughly the same time. Routes and pricing will thus fluctuate in real time as demand comes and goes and customers will be offered a series of different prices depending on how flexible they are willing to be (give a little, gain a lot). What’s really fascinating about this idea is how the business model combines some of the hottest trends that are around, all of which will affect everyone in some shape or form in coming years. What are the trends? First there’s mass customization. This allows customers to order a customized version of a standardized product. Second there’s dynamic pricing. This is where the cost of a product or service changes depending on demand or supply. Finally there are social networks. This is how the Internet pulls people together that have similar interests or needs.