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All-You-Can-Fly Airline Takes Off

The brutally competitive airline industry has a new competitor designed to win over travelers who fly a lot, especially between two cities.

It's called Surf Air, an all-you-can-fly private air service based in Santa Monica, Calif. Surf Air will fly you as much as you want between certain cities for $1,650 a month.

"This is a flat-fee all you can fly subscription," said Wade Eyerly, the founder and CEO of Surf Air. "We have been compared to a country club with planes instead of golf courses or we have also been talked about as the Netflix of air travel."

The start-up airline on Wednesday launched initial service between Burbank and San Carlos, Calif. in the Silicon Valley. It plans to add flights to Monterey and Santa Barbara later this summer and to other California cities and Las Vegas early next year.

Avoiding Airport Hassle

Surf Air's CEO says the business model is designed to attract frequent flyers who want to save time and avoid the hassle of flying commercial.

"If you are coming out of Southwest, Virgin or any other shuttles that are between Los Angeles and San Francisco, this represents a two hour time savings every time you fly," said Eyerly.

(Read More: Airlines Hit New Record High Collecting Ancillary Fees)

Eric Johnson, a private wealth manager in Los Angeles, made the inaugural Surf Air flight up the California coast.

"This helps me save time," said Johnson. "The long lines, the time spent waiting at an airport and the hassle of flying commercial makes this option very attractive."

But does he make enough flights to justify spending $1,650 a month?

"Absolutely. If I make four to five trips up to the Silicon Valley every month, this will be worth it for me," said Johnson.

Johnson is one of 150 founding members who have signed up to fly Surf Air. The airline says there are an additional 4,500 people who have expressed interest in paying the monthly subscription price.

Start Up Airlines Struggle to Soar

Historically, start-up airlines have struggled to take off. Heck, many of them barely made it off the runway before they had to shut down.

Fact is, launching an airline is a long shot because it takes capital and time to build a customer base. Turning a profit is tough given the thin margins and brutally competitive pricing in the industry.

Former Continental CEO Gordon Bethune is among those skeptical Surf Air will fly as a business.

"P.T. Barnum said there was a sucker born every minute. Who is going to invest in this? This is a tough, tough investment, very, very highly speculative," said Bethune.

(Read More: Cheers! Spirit Airlines Serving Wine...In Cans)

When I told Eyerly about Bethune's skepticism, he chuckled and said, "We'll see. A lot of people think you have to be crazy to start an airline." Still, Eyerly and his team were able to raise $11 million in venture capital to get Surf Air off the ground.

CEOs and Entrepreneurs Signing Up

Surf Air says 80 percent of its members are CEOs and entrepreneurs with an average annual income of $300,000.

They are wealthy, but not so rich they can commit to the cost of locking in fractional ownership on a private jet. At the same time, they are traveling for business and for them, time is money.

"They can immediately relate to what we are building and why. They understood the problem of delays at airports," said Eyerly.

Pilot speaks with passengers on initial Surf Air flight
Phil LeBeau | CNBC
Pilot speaks with passengers on initial Surf Air flight

Will Surf Air soar and give business travelers another option?

(Read More: United Offers $499 'Subscription' for Leg Room)

Eyerly says the business plan is designed to work on 53 different, short-haul routes around the country like Atlanta to Sea Island, Georgia or Kansas City to St. Louis.

It makes sense on paper, but Eyerly admits the real test is whether the customers keep paying $1,650 to fly his airline every month.

"We'll know in a year if this business plan can fly. I'm optimistic, I think it will," he said.

By CNBC's Phil LeBeau; Follow him on Twitter: @Lebeaucarnews

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