Flight subscription startup OneGo says it can can corral costs for business travellers

People purchase newspaper subscriptions, mobile phone service, and gym memberships on the monthly basis-why not flights?

A startup called OneGo is ready to apply that model towards the skies, hoping to attract business travelers with a few measure of financial predictability – and savings – within the often chaotic world of airfare prices.

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The company’s other pitch is simplified booking: When a potential client suggests a lunch meeting tomorrow in Chicago, for example, those last minute fares won’t hurt. OneGo launched its mobile app on Monday, and intends to allow it to be offered at Apple’s app store March 1. An Android OS version is also planned.

“Through the elimination of those factors like price and payment, you actually allow people to concentrate on where they should be,” says founder Paulius Grigas. “You let them focus on their needs.”

Using seven from the largest U.S. airlines, OneGo partitions the nation into four regions. The service charges US$,1950 per month for flights in almost any of three zones, while a month around the West Coast costs US$1,500. A nationwide plan comes to Us$2,950 monthly.

For this business model to work, OneGo has to ensure that its pricing can encompass a range of last-minute fares and additional fees involving an initial 76 airports, which includes all the big U.S. cities. The company also covers several smaller destinations, such as Aspen, Colo., Lubbock, Tex., Pensacola, Fla., and Savannah, Ga.

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Prepaying for flights and locking in fixed costs is hardly a new idea within the airline industry. American Airlines, United, Air Canada, and others offer such products. American’s AirPass program begins at US$10,000 and offers discounted rates on last-minute, full-price tickets, which can be appealing to business travelers who may not understand what trips their future will hold.

Under OneGo’s basic plan, you’re allowed to hold four reservations at anyone time, and trips must be booked 7 days ahead of time. Items like baggage fees and cabin upgrades aren’t covered. For the next US$750 per month, you are able to hold up to as many as eight reservations.

Certain options are more expensive. Around the national plan, for example, adding the ability to book last-minute flights costs US$1,950 more monthly, and unlimited flight changes cost US$950.

OneGo is betting it can attract enough users to ensure that airlines will offer it the amount discounts they give major corporations that steer employees to specific carriers. The company is small, so it needs to develop a history before it can look for such discussions, says Grigas, who adds he invested US1 million of their own profit OneGo.

A former corporate turnaround specialist in Lithuania, Grigas concedes his company will lose money on occasion, because of the travel patterns of the very most hardcore road warriors. But long term, OneGo is betting not everyone who spends US$1,950 monthly for a subscription will fly the equivalent of Us$1,950 per month. (That’s the actuarial model that keeps insurance companies, as well as your local gym, afloat.) Just like your gym, OneGo’s service renews automatically until you cancel.

Carriers have used all-you-can-fly promotions to fill seats that may otherwise stay unsold during off-peak travel periods – and also to generate buzz among leisure travelers. JetBlue Airways Corp. has sold a flying pass on two occasions. Its initial program offered unlimited autumn travel for 31 days in the price of US$599 in 2009. The 2nd version, a year later, was smaller; prices ranged from US$499 to US$699, depending on travel days. That program and others enjoy it were aimed primarily at leisure travelers.

In the early 1980s, if this was looking for cash, American sold a US$250,000 pass that offered unlimited top class travel for a lifetime. That became a fiasco for that airline.

OneGo says it may save business travelers time because it will focus only around the best flight schedules and steer clear of wading through nonstop and connecting options, with different prices. Grigas said his team has tested the model for 15 months, stressing it with a variety of airfares and road warrior booking approaches. “Every day we have more confidence,” he states.

Still, prepaid flying may remain a distinct segment product because no one really trusts the complex (and frequently infuriating) software that sets airfares: a US$200 fare right now might fall to US$175 in Twenty minutes. So, like playing the lottery, a belief in luck of the draw may dissuade some travelers from giving airlines money before they really need to fly.

Bloomberg News