Industry Insider: Beacon's Wade Eyerly
Editor's note: Beacon Air went out of business after the following story was posted.
Wade Eyerly helped develop the all-you-can-fly subscription model with California-based Surf Air, which he cofounded with his brother David and others in 2012. Offering customers unlimited flights aboard its fleet of Pilatus PC-12 single-engine turboprops, the company provides service primarily between the Los Angeles and San Francisco Bay areas.
Because it offers scheduled flights, it officially constitutes an airline, but it bills itself as a “private air travel club” because it employs private terminals and executive-configured aircraft and seeks to deliver “exceptional” service. Operating from general aviation airports and exempt from the security screening required for aircraft seating more than 19 passengers, the carrier allows customers to book flights quickly online, up to 15 minutes before departure. Rates start at $1,750 per month, plus a one-time $1,000 initiation fee. Since launch, the major challenge has been meeting demand.
For reasons he explains in our interview, Eyerly left Surf Air in 2014 and subsequently consulted and took board positions with several startups that his company had inspired as well as with a handful of technology companies. He continues to own a portion of Surf Air, but says he doesn’t know how much, just that additional fundraising has significantly diluted his stake.
This fall Eyerly launched Beacon, which employs elements of his old company’s business model. It currently flies between New York and Boston and offers seasonal service to and from the Hamptons and Nantucket.
Like Surf Air, Beacon charges a monthly fee ($2,000) for unlimited flights; but unlike the California company, which owns and operates its airplanes, the new venture has contracted with Virginia-based Dynamic Aviation to acquire and operate a fleet of at least 27 twin turboprops (King Air 200/250s and Beech 1900s) exclusively for Beacon for the next decade for $400 million. Eyerly says that this will free him and his team to concentrate on customer service rather than operations.
His all-you-can-fly concept, which seems counterintuitive and appears to defy air-transport logic, may partly reflect his lack of previous aviation-industry experience. Born in Kansas City, Missouri, the oldest of eight children, Eyerly makes easy reference to his Mormon upbringing and his close-knit family’s humble circumstances. Today a Honda Odyssey and Kia Optima provide his ground transportation, and Beacon keeps its operations lean.
We met Eyerly at Westchester [New York] County Airport shortly before Beacon’s launch, where he hosted a demo flight to showcase its service style. Dynamic Aviation hadn’t delivered the first of the refurbished Beacon aircraft, with their signature dark aquamarine and light-blue accents, so we flew aboard a King Air 200 from charter operator Eagle Air. Trim, energetic and dressed as conservatively as a Mad Men-era executive, Eyerly was friendly and expansive as we talked before, during and after the preview flight along the Connecticut shore.
What are the roots of your entrepreneurial spirit?
My dad was an entrepreneur. I knew some of the realities that made it less sexy—sometimes we were doing great, but other times we were on the school lunch program. But I always knew I wanted to do that. I sold Christmas cards door-to-door in July and I’d look in the back of magazines for things I could buy and sell. My dad would always encourage us.
What did you do before starting Surf Air?
I was in the first graduating class at Central Missouri State [University; now University of Central Missouri] after 9-11. I had had two years’ overseas experience and I was a Russian speaker [because of missionary work]. I had the ability to help, so I joined the Defense Intelligence Agency. My security clearance took five and a half years. While waiting, I worked for the Bush-Cheney campaign, attended the U.S.-Russian Summit in 2004 for the International Economic Alliance and went to graduate school. I started at the Defense Intelligence Agency in 2007. I went to Iraq and when I came back I became an economist, writing reports to the Joint Chiefs of Staff. But I knew government wasn’t going to be my career.
When did you first fly privately?
That would have been on our airline. The first flight when you inaugurate a new airplane or salute a retiring captain, the fire department will come out and shoot water cannons, so our very first flight at Burbank [California] Airport…it sounded like driving a car through a carwash. It was a great feeling, the culmination of a lot of work. My brother [a pilot] was in the right seat in the cockpit. Once before I’d been up in a Cessna 172 with him.
What was the genesis of the all-you-can-fly concept?
My brother had just graduated Embry Riddle [Aeronautical University]. He called and said, “The FAA just raised the retirement age to 65 [for airline pilots]. I’ll have a quarter-million dollars in debt and no job.” I said, “What will it take to keep you in the air?” He said, “Buy an airplane, start an airline.” I said, “OK.”
I started looking at business models, digging into data to find a way to make a living in aviation. We researched for five-and-a-half years, and ultimately we hit on a model we thought would work. We are addressing people for whom flying is a chore. You buy tickets for things that are a privilege; you don’t buy tickets for things that are a chore—for example, to go to the gym. The subscription model makes it less painful. We make a bet on ourselves every month that we will make you happy. The month you have a bad experience, you leave.
How did you launch Surf Air?
We put up a website to see if anyone cared, saying, “Do you want to know more?” and in six weeks we had 12,000 people signed up. So we pulled together a summit over Veterans Day weekend in 2011 and invited dentists, doctors, attorneys, scientists—anyone we thought could give us good advice. We laid out our research, waiting for them to say, “This is a terrible idea.” Instead, five said, “We’ll leave our jobs to do it with you.” We got into the MuckerLab business incubator program, and we raised money in three rounds of financing in six months—two equity and one debt offering.
Why did you leave Surf Air?
We spent money fast, and ultimately the former CEO of Frontier [Airlines, Jeff Potter], raised his hand and said, “I’d be willing to run the company.” The way we phrased it, if you can get [famed NFL quarterback] Brett Favre to run your flag football team, you do. The plan was to work together, but to a certain degree there’s a cult of personality, and I knew my presence would undermine him. I still owned a huge part of the business but I needed to leave for him to succeed. So I resigned. They asked me not to, but I did.
What did you learn from your Surf Air experience?
Build strong relationships with investors. I hadn’t done that as well as I wish I had. We have a really great relationship with our investors Romulus Capital here.
Why did you start another subscription airline?
I thought I wouldn’t do aircraft again. I started giving advice to lots of clones [of the subscription model] around the world, and the advice we gave was different [from the way Surf Air operated]. We realized we could do this on the East Coast. There was no non-compete clause with Surf Air.
How does Beacon differ from Surf Air?
It’s similar from a customer perspective. We’re a sales-and-service company, not an airline. Surf Air is an airline; it buys and maintains airplanes. We take care of customers for a living.
Surf Air operates single-engine turboprops, whereas Beacon will primarily use twin-engine models. Why?
It comes down to the number of seats we can fit comfortably in the plane. It costs more to run a twin, but if that’s 30 percent more and I can fit 50 percent more seats [it makes economic sense]. And King Airs are very common aircraft, so they’re not hard for us to get ahold of.
How does Beacon’s service model differ from a traditional airline’s?
At a traditional carrier, the person at the ticket counter—that’s the bottom of the totem pole. For us, that person at the ticket counter is the concierge—the most important person. We’re focused on training them to deliver service, hiring the right people with the right personality and mindset. We want to be the Westin Hotel chain; not the W, not trendy, not the Four Seasons, not white glove. It’s executive, consistent: “You will be comfortable.” We want to make the pain points go away.
How do you find the right type of employee?
First we do a competency interview: Can they do the job? Then I do a culture-fit interview: Do they get the vision of what we are? Are they going to fit with the team? They meet the team over lunch. I let the team decide if this is going to be a good fit. You have to enjoy working with coworkers. We can’t pay people enough money to work the hours we do, so they have to love it. We have 30 employees now. Twelve are handling sales, about 12 are concierges, and the rest are administrative, supporting them.
Who are Beacon’s customers?
We refer to them as frequent commuters. They’re most often working in professional services—accountants, attorneys, data, finance folks—with an average income of $400,000 to $500,000. They’re not early-career guys; the average age is in the early 50s. Not more than 15 percent are women. When you look at the Acela [high-speed train service between Boston and New York], it’s more than 15 percent female, so we’re missing something, but I don’t know what.
What’s the background of the other Beacon principals with whom you started Surf Air?
Reed [Farnsworth, cofounder and CFO] was at the Federal Reserve. Cory [Cozzens, cofounder and COO] is an attorney. [Chief business development officer] Ryan Morley was the finance director for Mitt Romney’s presidential campaign and raised $1 billion. Scott Porter was a nursing-home administrator—the perfect lead for our customer-experience team: if grandma’s coffee isn’t right… He’s overseeing every taste, smell and sound as we build the experience.
You didn’t recruit from within the aviation field.
Aviation is an industry that has been slow to innovate. You can name only four or five innovators since Howard Hughes, and none of them were pilots: [JetBlue founder] David Neeleman, [Southwest Airlines cofounder] Herb Kelleher, [NetJets founder] Richard Santulli and [Virgin Airlines founder] Richard Branson. Pilots ultimately run airlines, and they’re very good at running companies the way they’ve always been run. So people need to come from outside the industry to innovate.
Do you plan to launch additional regional subscription services?
Yes. Anywhere high-speed rail would work, we’d work. Any direction out of Chicago, any direction out of Atlanta. We’ll do it as fast as we can sell it and not degrade or dilute our service. There’s about a $2 billion to $4 billion domestic opportunity, and a $2 billion to $4 billion international opportunity. We’re negotiating with folks in about a dozen countries to take the model. Usually we take a percentage ownership in the company and provide them with technology and support—in essence, subscription service in a box. We can grow faster that way.
What’s your advice for starting a successful business in the aviation industry?
Be very lucky, and work your tail off. The idea is worth almost nothing—the execution is where all the value resides. I think entrepreneurs do a disservice by claiming too much credit for our success. We get lucky.
At Surf Air, we were in the front end of an investment cycle. I couldn’t have known that. A lot of people throw up barriers about why they can’t start a business. Not doing it is a much greater risk. To leave a job you don’t like to do something you do like—that’s not risky. People overestimate the risk involved, and also overestimate the correlation of money to their happiness. It’s weakly correlated at best.
NAME: Wade Eyerly
BORN: June 12, 1979 (age 36), Kansas City, Missouri
POSITION: Cofounder and CEO, Beacon
PREVIOUS POSITION: Cofounder and CEO, Surf Air
EDUCATION: B.A., International Economic Policy and Cross Cultural Relations, University of Central Missouri. M.P.P. Public Policy, International Economic Development, Brigham Young University. Certificate, Global Management, Brigham Young University.
PERSONAL: Lives in New Canaan, Connecticut, with wife Kelli and three sons. Hobbies include collecting and designing strategy board games.
James Wynbrandt, a private pilot and longtime BJT contributor, has also written for the New York Times, Forbes and Barron’s.