Cleared for Takeoff: Interview with Kavoo CEO Richard Humphrey
After Richard Humphrey sold his product design company in 2006, he took a couple of years off. He traveled, did some investing, added an instrument rating qualification to his pilot’s license, and started to think about his next business.
“One of my mantras was, whatever I do next, I have to love it,” he says. “I made a short list of things I loved, and one was aviation.” Humphrey managed to get an introduction to Curtis Brunjes, a senior manager from a major airline, who had a similar vision on where the opportunities lay to make private travel with a small aircraft affordable to a larger group of consumers. New technologies touted by aircraft manufacturers looked promising.
So he and Brunjes created a business around the new possibilities and named it Kavoo. “We bought a small airline. We bought a flight school,” says Humphrey. “We really had this wonderful business plan. It was all decked out, ready to go.” It was late 2008.
And then everything came to a screeching halt. “The financial world was really crashing around us. Funding dried up and customers dried up. Private travel almost became non-existent for about the next 24 months,” he says. “The world kind of came to an end.”
Although many of their competitors went out of business around that time, Kavoo managed to stay up in the air. For several years, Humphrey and his team moved slowly, taking time to work on planning, infrastructure, redefining the business, and thinking about how Humphrey’s own money—Kavoo had no outside funding—was being spent.
“There’s a term ‘flying lean of peak,’” Humphrey explains, “which means the engine runs at a slightly slower speed but is significantly more fuel efficient. This means the engine does more with less. Lean of peak is the way we decided to operate the business. I’ve thought about every dollar differently than guys who have raised $100 million.”
Several of Kavoo’s remaining competitors had been crippled by the fact that the technologically-advanced aircraft they had planned on using were no longer in production. “We shifted gears to different types of aircraft that were still modern, still fast, and still fuel efficient, and they just have different price points,” Humphrey says. He and Brunjes decided to discontinue the flight school and concentrate on their strong point: an affordable option for private air travel.
Air Travel’s Next Level
According to Humphrey, Kavoo is not just a charter service. By combining the best parts of major airlines (online booking, loyalty programs) with the best parts of private charters (no long waits or security hassles), the company has developed a service that helps its clients get to where they need to go, quickly and easily, allowing them to get more accomplished and helping them earn more money. “We offer online booking, guaranteed fares, no upcharges, customized service, individual customer accounts, and flight cards. We have broad coverage and brand recognition: these are all very different than typical charter flights,” he says. “We consider ourselves a sky limo company; we’re the next generation of air travel.”
The company’s five planes fly to over 750 airports around the northeast, serving a clientele of hedge fund managers, principals, and business owners running $10 million to $100 million businesses. The average flight lasts about an hour and costs around $1,200, which can be split by up to three passengers.
Although the company is not yet profitable—“I don’t mind saying that publicly,” says Humphrey—they expect to be by 2014; the company’s sales have approximately doubled year-on-year. The company currently has three offices (in Manhattan, White Plains, and Connecticut) and more than 25 employees, but expects to employ around 50 total by the end of 2013.
Within five years, Humphrey plans to have Kavoo at 200 planes and expanding the company’s territory out of the northeast region and across the US to areas with high-level opportunities and a growing business market, such as California, Florida, New Mexico, Tennessee, Texas, and Des Moines, Iowa. “We intend to be a national company, always doing regional service, but on a national level,” he says.