Markets in the Air

(Photo: Christopher Doyle)

I stumbled on this nifty business idea, Nanny in the Clouds, to create a market in the air for nannies. Think match.com, but for wanna-be-nannies and parents on airplanes.

A clear market failure: people on flights with kids want some help; other people on flights want to make some money taking care of kids. Social norms don’t really allow for instantaneous markets to appear (“hey, for $10 I’ll watch your kid for the next two hours so that you can take a nap” is unlikely to get many takers, I suspect). But prearranged, where the norm adheres to our expectations in the babysitter market, and we have a market helping make trades otherwise not made.

Here is how it works: Sign up on the website, put in the flight you’re going to take, and see if any parents (nannies) signed up and are looking for a nanny (parent who wants a nanny) on the same flight. Negotiate your rates directly, and pay Nanny in the Clouds $10 if the match is made.

The problem, of course, is simple: unless it gets big, what are the odds you find a match? And how many failed attempts at a match do you put up with before you forget to keep checking the site (the site allowes you put in your flight and date and then be informed when a match is posted, so you don’t have to keep re-checking for any particular flight, but that doesn’t help you six months later when flying again). Anyhow, a nice example of a market failure (search costs too high, information isn’t free) potentially solved through a business process innovation.

Two thoughts — no doubt ones they have had: it seems that airlines would benefit as well from helping this happen, by letting people put this into their frequent flyer profiles so that matches occur without having to go to a second site for every flight. Or even better: by facilitating markets right at the gate (of course the $10 match fee would be harder to collect, and this could turn the gate area into a zoo, not something the airlines would like). What else can they do to get the necessary network size to make this work and still protect their revenue source?