Discussions about aviation fuel software are most often focused on functional aspects. Indeed, the functional spectrum of aviation fuel software is essential. However, there’s one aspect that is even more important than having the fanciest functionality: The network effect!
The network effect is so unbelievably powerful. Unfortunately and surprisingly, at the same time the network effect is also disproportionally underrated by airlines when it comes to aviation fuel software.
What Is The Network Effect About?
In case you haven’t heard of this theory before, let me quickly explain. In my simple words, the network effect describes the value an additional user of goods/service brings to other users (check Wikipedia for detailed description).
Although there are different types of network effects, the telephone is probably the most prominent example. The value of a phone can be defined by the number of people that are connected to the phone network — or, in other words, the number of potential connections.
Let’s make a quick trip back in time when the telephone was invented.
Well, the first two people who owned a phone didn’t enjoy the network effect. Simply because there was precisely one person they could call. With the third person, the number of possible connections increased to three. Still not amazing, right.
Let’s take a few steps forward: Once ten people owned a phone, the number of possible connections rapidly jumped to 45. Not bad! But things get better. Once we reach 100 phone owners, the number of possible connections explodes to 4,950. With 1,500 owners, the number of possible connections already exceeds 1 Million.
Here’s a table providing a more detailed and structured overview on the numbers:
|No. of Users||Possible Connections|
If you want to do the math on your own here’s the formula:
N*(N-1) / 2 (whre N is number of users)
But Why Am I Telling You All This And How Is It Connected To Aviation Fuel Software?
After my recent posts about Electronic Fueling Processes, many discussions with people from airlines all over the globe evolved.
In a short sentence: Electronic Fueling is an aviation fuel software that digitizes an airline’s operational fueling process.
It was exactly in those discussions when I realized that many airlines look at Electronic Fueling —which represents just on example for aviation fuel software— solely from a functional-point-of-view.
You all know those discussions. Can the software do this? Is it possible to do that? Meets the functionality our specific requirements? And on, and on, and on.
Don’t get me wrong. Of course, it is important to be aware of the functionality. This is essential in order to asses if an aviation fuel software serves the purpose.
But! Coming back to my initial phone example: You can own the best, fanciest, coolest smartphone. If there’s only one person you can call your benefit is quite limited.
Let’s Translate The Network Effect To Electronic Fueling — One Example Of Aviation Fuel Software
Together with seven clients, we’ve already connected 45 airports to our solution. In fact, that didn’t happen overnight and was only possible due to our fantastic clients.
Accordingly, that means if an additional airline starts with Electronic Fueling and connects its main base (in case it isn’t Electronic Fueling ready), the airline can also directly use Electronic Fueling at 45 other airports. On the other hand, all of the existing clients can now use Electronic Fueling at one more station.
So, with one new airline (resp. connected airport) the number of potential connections grew by 53! (45 existing for the new airline + the new connected airport for the new airline and the seven existing airlines = 45 + 1 +7 = 53)
Indeed, due to the supply/demand setup, the network effect is slightly different and less significant compared to the phone example.
Nevertheless, due to the high amount of already connected airports, additional airlines already enter a considerable network. On the other side, one additional connected airport brings enormous value to many existing, already connected airlines. And this “double-sided” effect significantly grows with every new airline and subsequently connected airport.
The Network Effect Provides Value To Existing And New Electronic Fueling Airlines
From my point-of-view, the existing network of eFueling-ready airports provides an enormous, additional potential to airlines that are currently considering implementing a digital fueling process.
Compared to the direct benefits, which can be realized at their main hub, this network effect is most often grossly underrated. Therefore, airlines should definitely take into account this massive additional benefit.