Inside Surf Air Mobility ($SRFM) with Co-Founder Sudhin Shahani | Stocktwits Executive Interview

Welcome to another Stockris executive interview.

We're here at the floor of the New York Stock Exchange with Suhin Shahani, the co-founder of Surf Air Mobility.

This company is reinventing what regional travel could look like.

Let's get into it.

Welcome.

Thank you for stopping by with us today.

Thanks, Katie.

Thank you for having me.

OK, so for investors at home who might not be familiar, maybe they haven't experiencedur fair firsthand.

What is it that you do sell, build, uh, and what are you offering to your customers?

So we are, we're a regional air mobility platform.

Uh, we have a couple of different business units within that.

We operate one of the largest commuter air um airlines uh in the country, and we also have an on demand business where we work with a number of different operators to service uh flights.

Some of the more exciting things we do on top of that is we have a software business called SurfOS, uh, which is a technology business to service this growing kind of regional air operator, broker, etc. space, and we have an electrification business where we're working on the electrification of small aircraft.

Fascinating.

And so you mentioned the multiple brands and you know the the the airline the airplane hardware and then the software component.

How do those fit together in your business model?

Like what is the mix of those and where do you see that that mix evolving into the future potentially?

So I think the the fact that we're in these different businesses are actually is actually our key competitive advantage.

So we are, we think a true platform business, you know, we flew on the B2C side, we flew over 400,000 people last year.

On the B2B side, we work with 450 or so operators to service on-demand flights.

And what that does for us is these operators are really the core customer base or new technologies in the space, software, electrification, the different things we're building, and we think that gives us a real advantage over pure play software builders in space or pure play kind of OEMs building new vehicles.

It's a, it's a really growing space, regional mobility, you know, that number of operators will massively expand over over the next decades and so on as new technologies come to market.

And we think by having a business that, you know, as I said, we think is a true platform business that services different components will maintain a competitive advantage to be of the group that commercialize helps commercialize the space.

OK, interesting.

So what I'm hearing is there's the direct to consumer model.

Someone can say, Hey, I need to go somewhere.

And there's the B2B where someone can, can they they can charter your.

Aircraft or is it just the software as the B2B?

Well, when we talk about the B2B, the B2B customer is actually the operator of aircraft.

They're the supply side of the equation.

From a consumer standpoint, they can either get on a scheduled flight or they could charter an aircraft.

For our on demand that on demand business is served by a network of charter operators.

Fascinating.

OK, let's talk about go to market because this is, you know, you have multiple, great diversified business units, but different audiences you need to reach.

Let's start with consumer.

The, the tenor of conversation in consumer airline travel right now seems to be in your favor, you know, a lot of people are fed up with going to the airport.

So what is, what's the message to your consumer target and what has worked in terms of attracting people to your offering?

So we tend to fly, so we fly short retail hops, often there's short regional hops that are largely underserved by airlines.

You know, we're the largest inter-island operator in Hawaii, for example, where, where we help people get kind of we sometimes we're the only way they can get from one place to another.

We also operate flights in in the US as part of something called the Essential Air Service program where we fly from major hubs to underserved communities.

And you know, the idea is, you know, more efficient, shorter time frame, you know, we try to take people off the road into the air and do it at affordable prices on the side.

And then from the operator, the OS side, what is, what's the message to that buyer?

Who are those buyers?

Walk me a little bit through that process.

Yeah, so if you look at particularly our on-demand business, you know, typically in a charter transaction and the charter industry is quite large, you know, even pre-electrification and everything else, so conservatives, let's say private air charters somewhere in the $30 to $40 billion a year range.

Most of that are charter transactions where there's a couple of different constituents that need to come together to make a transaction happen.

You have the broker, you have so the broker who is finding the customer and also sourcing the supply.

You have the operator who's actually operating the aircraft, and you have often a separate owner who is given that aircraft to the operator to operate for them, and each of these constituents have different kind of uh.

Different decision making, the different decisions they need to make to approve a transaction or to support a transaction to happen.

Uh, typically in a somewhat fragmented supply side of this industry that results in call it 15 to 20% of the transaction going towards non-flight costs across these different groups.

What we're doing is we're providing a platform where each of these different constituents could be on platform.

Each of the all of their data is on platform and it's helping them make better data driven decisions.

Where we would essentially charge a take rate against that 15 to 20% cost to make it more efficient, resulting in better service for the consumer.

So the process before, was this a lot of manual, hey, I need a plane.

Let me call this person who has a plan.

It still is.

It still is, and that's where that's exactly what we're changing. absolutely the process for most of this industry and you know, we're again going back to the point about kind of our us being a true platform.

We built a lot of technology for ourselves.

A which we saw was necessary and in doing so we realized there was a big opportunity to provide the infrastructure, the commercial infrastructure to the industry as a whole.

OK, yeah, what you were describing almost reminded me of kind of what Flexport is doing in the supply chain logistics side of formerly manual processes.

Bringing all the people within a marketplace together to just be more efficient.

OK, let's talk about the Palanttier partnership because a lot of our viewers obviously follow the stock and are very also interested in seeing who Palanttier is working with as they understand that value chain.

So tell me a little bit about how you work with those guys.

Yeah, so as, as I just discussed, a lot of what we're doing here is bringing various, various sort of fragmented sources of unstructured data on platform and organizing it.

Uh, and in simple terms that's kind of what Palantirer does best.

So we use Palantirer's foundry and AIP platform.

We bring together brokers, operators, owners, etc. data, um, you know, through that platform, organize it, and an important thing to note is then we build all of our own proprietary front end applications and kind of more technology to then take in all that data and service each of these customers.

And it works really well from a kind of it it because it's a fragmented market coming together, I think each of the operators, owners, brokers are not, you know, individually have the economics wouldn't work for them to be able to go and license such a sophisticated data infrastructure platform and the economics wouldn't necessarily work for a large company like Volunteer to go and acquire those customers one day.

Um, so that's where we come in with, you know, we have, we work exclusively with them around this broker and operator space and we build software that uses their back end platform.

Got it.

OK, so you're kind of connecting talents here with high intent, you know, applicable customers that they might not have already reached.

How does the economics of that typically break down or is it a joint selling opportunity and a revenue share?

What is that?

Well, we, and we've, I think we've, uh, we filed some of the kind of the, you know, the agreements and we, we are, you know, we have the license from them for the foundry AIB platform for the space.

We've talked about the fact that there may be larger kind of specific teaming opportunities we may consider together for single larger customers, but we have, we haven't yet defined in the economics around those yet.

What's that I'm curious, what's it like working with them?

I, I, you know, that seems to be one of the more high performing teams.

They're doing very well.

They're integrated in a lot of different systems, whether it's government or private.

Market, what, how would you describe uh working with this?

I mean, in short, very impressive.

They're a very impressive group, very impressive, flexible, great to work with, uh.

For a company of that scale, fast moving, yeah, I imagine.

OK, I want to ask you about electrification now because this sounds like a very futuristic like the jet things you got flying. electrified vehicles, aircraft.

Tell me a little bit about your efforts there.

I know you had a demo demo flight, the Electra, recently.

How did that go?

Where?

What's the status of that piece of what you're building?

So again, going back to, you know, because we are one of the larger players in this short haul space and what's happening in the industry, I'd say is all of the new innovations in technology around new propulsion.

Kind of focused on a couple of key areas.

It's all small planes, not big, that's where the technology is at today, and it's all around reducing cost to make small planes affordable to a much broader audience.

And typically in business models that are scheduled service type or seat models for commuters.

Uh, that's why we feel we're very well positioned to usher in this new wave of electric aircraft because we through our business, our operators are on an operated network, we think we have the right routes, so on, and to scale and expand the market for electrified aircraft.

Now within that we have a strategy that is a combination of our own proprietary strategy where we are working on the electrification of one of the most prolific soberrop aircraft today, the Cessna Caravan.

We work with Textron, the OEM.

And we work with a lot of the key players in the supply chain where our role is to kind of design what's called a supplemental type certificate, a modification of the powertrain in a Cessta caravan, which will reduce costs, reduce emissions, and is something we could upgrade our own fleet of Cessta caravans with.

That's the airplane we operate.

We also work with what we think are the winners in building their own clean sheet design, kind of very ambitious, you know, projects that are coming to market.

For different mission types, so Elektra is a great example of that, but they're building is incredible.

And it will open up a whole new set of routes because of the short takeoff and landing capability where that will open up routes that current traditional aircraft won't be able to fly to, and that's a really exciting opportunity for us within our network and to all of our operators.

Yeah, it's fascinating to get the overview in depth because when you see at a glance and you think, oh, chartered flight, you're not thinking commuters opening up access, you're thinking the other way, but you're saying is you could actually A unlock more opportunities through this, and I'm curious, it probably varies, but what is the typical, like what is at the current moment we're at in the technology, how far can one of these aircraft go without kind of recharging?

Well, So you look at there's this whole segment which is being defined as advanced air mobility and that includes all of the new vertical takeoff and landing vehicles which is kind of geared as like the 50 to 80 mile sort of range like within the helicopter replacements, you will, and the big idea there is that.

Current heliports will be replaced or will be augmented by vertiports, and you'll be able to land at short takeoff and landing electric vehicles somewhere where you couldn't land a helicopter.

Where we kind of focus is the regional side, which is call it 100 to 500 miles, the sweet spot on that 100 to 300, where a number of vehicles have been created to serve that Elektra kind of what we're modifying the caravans to do, and so on.

And the great advantage of that is that you have over 5000 airports in the US alone, you know, airlines use maybe 200 airports.

The fact we have all of these airports means the infrastructure exists, but the regional part of this to come to market a kind of at scale, I would argue sooner.

Yeah, OK, but we're talking about short flights, small planes, short flights, and again, we live kind of in a country which doesn't have a very built out train or bus infrastruc. where this could be a transport network of the future where am I?

I was literally going there.

I was like we don't have people talk about Europe.

Oh I'll just hop skip and a jump to Portugal or Italy.

We don't have that here.

And also the potential to live regionally in an area but still commute to a physical office now that that right, which is of course a growing trend the post-COVID world and so on, a remote work situation like a lot of people.

Choose to do that and you know down the line this will enable we think this will enable people to live in just a lot more areas with connectivity than they could before.

Yeah, interesting to think geographically what impacts could be.

We have that conversation a lot here in New York whenever the the Tesla boring company tunnel conversation comes up and we say, oh, I could live in Philly and commute for 30 minutes.

It hasn't happened, but if it's.

And there's another.

Example of a lot of infrastructure needs to happen, specific routes for that to be a thing, but we have so many of these regional airports already, right?

OK, interesting.

OK, so looking ahead, you know, we're getting at, we're in the back half of the year, looking at the 2026.

I see the company's been public a while.

It sounds like you have a lot of great updates.

What are the big things you have the team focused on as you think about next year?

There are two or three things we're like, guys, we gotta, we got to do these things.

Yeah, I mean, look, the rollout of SEROS is a big priority for us, and that's something that, you know, we already have, of course we built it for ourselves and been testing for a while.

We have the beta users that have been giving us really valuable feedback and data, but 2026 is the year we commercialized SEROS.

So that's, that's an important, I'd say one of the most important initiatives for us.

We've talked about the airline business, uh, you know, reaching profitability and so on.

We've been sort of well that's something that's already happening and you know.

Um, that would, I think, be the, the main, the main things.

The electrification business is a little more long term and there's milestones along the way, but which, which we'll see, uh, you know, next year and beyond.

Sohiem Johani, thank you so much for joining us today.

Of course he's the co-founder of Surf Air Mobility.

Great talking to you, great learning about the company, and thanks so much for stopping by with us.

Thank you, Kitty.