Uber’s Airbus Helicopter Partnership Flies Close to the Sun
Posted by | Fuld & Company
It’s raining. Traffic is backed-up and not moving. Take out your smartphone and summon an Uber. An Uber helicopter that is.
Uber has hovered around the aviation sector for the past few years, offering helicopter rides from Manhattan to the Hamptons and flights to Coachella. Last weekend the firm announced it was partnering with Airbus to provide on-demand helicopter services for the Sundance Film Festival in Park City, Utah. Local authorities have tried to shut down the service this weekend, but what spurred the partnership in the first place?
Airbus’s motivation for the partnership is clear; it is hunting for other customers for its struggling helicopter business since the low oil price has undermined sales to its main clients: oil companies and related service firms.
However, Uber’s motivations are a bit more opaque. Uber already offers boat and rickshaw rides, is it focused on becoming a holistic transportation solutions firm?
Unlikely. The rickshaw adventure was a test case for how Uber’s services and business model could work in one of the company’s most important emerging markets, India. Is Uber investigating adjacent industries before moving into the private aviation industry, challenging firms such as NetJets? Probably not, this industry is increasingly competitive and has a poor financial track record. Reports indicate that NetJets is worth significantly less than the $725m Berkshire Hathaway paid for it in 1998.
Finally, is this partnership a marketing ploy meant to boost Uber’s image as a cutting-edge firm bent on offering unique and efficient transportation services? This is the most likely answer. Uber will continue to flirt with on-demand helicopter rides at major events, such as the Super Bowl, but the era of ubiquitous on-demand helicopter rides remains out of reach for the time being.
However, this partnership does expose two interesting trends: 1) Uber is exceedingly aggressive in trying to marginalize its competitors and 2) The rise, in numerous sectors, of non-linear partnerships focused on enhancing the customer experience.
Dominating roads and skies
Uber is continuing to be exceedingly aggressive in trying to marginalize both its established competitors, such as Lyft, and nascent competitors, such as Blade. Recently, Lyft announced it had received a $500 million investment from General Motors. While this investment will allow Lyft to keep its lights on for the foreseeable future, it also highlighted the major disparities between Uber and Lyft.
Uber is 10x more valuable, and while Lyft is struggling to compete in its core business, Uber is expanding into helicopter on-demand services. Another ride-sharing competitor, Sidecar, was forced to close its doors on December 31. If nothing else, Uber’s partnership with Airbus helps reaffirm its market dominance over its ride-sharing competitors.
Uber’s partnership is also a way to arrest the momentum of inchoate competitors. The start-up firm Blade launched an app-based on-demand helicopter service and is also offering rides at the Sundance Film Festival. Uber, loath to miss any new transportation trends, is using the partnership with Airbus as a way to squash this nascent competition before it gets off the ground.
Birds not of a feather
Second, Uber’s partnership with Airbus is indicative of a wider trend impacting numerous industries: innovative and seemingly random partnerships focused on enhancing the customer experience.
In 2009, Biotherm, a luxury skin-care division of the L’Oréal Group, partnered with Renault to construct a concept car, dubbed the Spa Car. The car incorporated a system to diffuse personalized essential oils, an air filtration device to improve skin health, and an innovative climate control system to keep skin hydrated. By looking beyond its normal partners, Renault was able to create a highly differentiated car that offered an improved riding experience.
In 2012, Italian automaker Fiat partnered with Lavazza, known as Italy’s Starbucks. In an attempt to improve the driving experience in their new 500L model, Fiat turned to Lavazza to create a built in espresso machine in the center console. With the International Coffee Organization predicting that global coffee consumption will grow by 25% over the next five years, offering a built in espresso machine might just be the feature that pushes buyers to select the 500L over the competition.
Other non-linear, or unanticipated partnerships in the auto industry include Hyundai’s 2013 partnership with Hermes. Two companies at near opposite ends of the luxury spectrum combined to legitimize Hyundai’s entry into the luxury vehicle segment by offering an improved customer experience thanks to the Hermes designed interior. In 2014, Delta Airlines partnered with LinkedIn to launch a new in-flight service on specific flights designed to connect business leaders and aspiring entrepreneurs. While some pundits have lambasted the idea, this example, along with the others, reinforces the notion that companies are increasingly identifying non-linear partnerships to enhance the customer experience.