Santa Monica’s Surf Air last week acquired rival subscription-based airline Rise of Dallas as part of an expansion that includes plans to launch service in Europe at the end of the month.
The value of the acquisition was not disclosed.
About 1,000 subscribers from Rise are set to join Surf Air as part of the deal, which would bring Surf Air’s total customer base to more than 4,000 subscribers.
Both companies’ subscriptions start at $1,950 a month for unlimited flights, meaning Surf Air’s subscription revenue would rise to about $94 million annually.
Surf Air flies a single-engine turbo prop Pilatus PC-12, which seats eight passengers, out of small airports, such as Hawthorne Municipal Airport and San Carlos County Airport in the Bay Area. Rise similarly operates small planes over a network of routes to and from Texas cities such as Dallas, Austin, and Houston.
Surf Air also announced last week that it has outsourced its flight operations to third-party service companies, which led to the recent departure of Chief Executive Jeff Potter. Potter’s flight operations knowledge was no longer needed, said new Chief Executive Sudhin Shahani, who previously served as the company’s executive chairman.
“It was a natural time for Jeff to move on, pursue other things,” Shahani said.
Surf Air’s new business model, he said, will see the company focus on marketing and customer service. The airline plans to lean on local operators for regional regulatory approval and flying expertise, which should make route expansion easier.
Rise, meanwhile, has long focused on marketing and hired third-party service companies to handle flight operations.
“In every new market we go to, we piggyback off the existing operator’s scale,” Shahani said, noting the airline plans to continue ordering and leasing Pilatus PC-12 aircraft to maintain consistent service and branding for customers.
The average Surf Air subscriber flies two or three times a month, he added, with the airline’s best service suited to routes of less than 400 nautical miles.
“Our market opportunity is the frequent flyer, the road warrior who is flying last minute on airlines like (Southwest Airlines),” he said.
Service to five European cities, including London and Munich, is scheduled to start late this month. The company is also eyeing a West Coast expansion with flights to Las Vegas beginning on June 9. In addition, Surf Air plans to service Orange County; San Diego; Mammoth Lakes; Bakersfield; San Luis Obispo; and Scottsdale, Ariz., in the future.
Surf Air’s investors include Institutional Venture Partners, Anthem Venture Partners, Velos Partners, Plus Capital, Eduardo Savarin, and Rick Caruso, according to the company’s website.
The company was founded in 2011 and has raised about $84 million in debt and equity financing.
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