DayJet reveals first plans for air-limo operations

 - November 1, 2006, 6:40 AM

It’s all too easy for industry analysts to say that if the air-limo concept–point-to-point service for the masses–is possible, someone would already have done it. Perhaps they’re missing the bigger picture, which is that all of the ingredients to create a viable air limo aren’t yet available.

After all, you can’t make bread if you’re missing flour, yeast, oil or water. The same holds true for air limos, even if the recipe is quite different and hasn’t yet yielded a product.

A key ingredient for air limos are suitable aircraft with low acquisition and operating costs, as well as exceptional reliability under high-utilization conditions. Those proposing air-limo services say point blank that aircraft in service today–either new or pre-owned–don’t meet these exacting requirements, but they do believe that the upcoming very lights jets will fit the bill. (The $1.175 million Eclipse 500 is expected to be certified next March.–Ed.)

Another essential ingredient is scheduling and flight optimization, which translates to eliminating waste to maintain profitability. Despite all the money the fractional aircraft providers have spent developing scheduling and optimization software, it’s evident that they have a long way to go to cut waste in their operations. NetJets said it barely eked out a profit last year, and it’s widely believed that Flexjet and Flight Options have been bleeding red ink for some time.

If the fractionals can’t run efficiently, how can a start-up air-limo? Delray Beach, Fla.-based DayJet says it has the missing piece–proprietary, real-time operations software–and a well researched business plan.

DayJet was founded in January 2002 by Ed Iacobucci, creator of software maker Citrix Systems. Iacobucci (pronounced “Yakkaboussey”) has always loved aviation, and he originally intended to get a degree in aeronautical engineering, not software engineering. But massive layoffs at Boeing in the 1970s prompted him to change majors in college.

Following his passion for aviation, in May 1999 Iacobucci started Wingedfoot Services, a Part 135 operator that has two Learjet 60s and a Challenger 604 on its certificate. He left Citrix Systems in June 2000, but soon tired of the “retired” life.

So Iacobucci decided to fuse together his software and aviation experience. What he created was Jetson Systems, which last month he renamed DayJet to better reflect the company’s vision of making direct, same- day, on-demand air transportation between secondary U.S. cities a commercial reality.

DayJet has placed a firm order for 239 Eclipse 500s and options for 70 more, deliveries of which are slated to start next spring. DayJet said it chose the Eclipse airplane because of its highly efficient engines, innovative manufacturing techniques and integrated avionics. He estimates that each aircraft will make five to eight flights per day.

Essential Ingredients

If the aircraft is the lifeblood of the start-up air limo firm, then the real-time operations system software is the heart of the operation. To develop this system, Iacobucci hired a small group of hand-picked software engineers from Citrix, several of whom have extensive experience in writing algorithms.

The company spent nearly $20 million on the software alone, and the result was a real-time air logistics, flight scheduling and optimization engine. DayJet also developed a “comprehensive operations application” that–when integrated with this real-time engine–enables significant scale, meaning efficient operations using large numbers of aircraft. These two applications work together to continuously optimize flight scheduling.

But the innovative software and aircraft are only part of DayJet’s entire air-limo recipe. The last ingredient is the business model.

Here, DayJet shatters the preconceived notion that all air limos will be national programs. Instead, the company will provide no-frills, regional transportation services at a price about 40 percent above full-fare coach on the airlines. Interestingly, the air-limo service will run only on weekdays from 7 a.m. to 11 p.m.

DayJet is targeting regional travelers–defined as mid-level managers and salespeople with annual salaries between $80,000 and $100,000–who now have the option of either connecting airline flights or driving as many as eight hours to get to their destination. According to market research, companies are willing to spend the 40-percent premium for this service if it means same-day travel instead of overnight stays.

Each of DayJet’s geographic service areas has about a 600-nm radius, with 100 to 150 “supportable” airfields within the region. However, the air limo company plans to serve only between 30 and 50 of these airports in each region for better efficiency. DayJet ground staff will be present at these “preferred fields” to facilitate an “airline-like experience.”

Flight Logistics

Customers will select the origin and destination airports, the time they want to “depart no earlier than,” and the time they want to “arrive no later than” at their destination. DayJet said it will not publish schedules for its service, which is sold strictly on a per-seat basis.

Customers, who will be able to book flights online, will get lower fares by having a more flexible “travel window.” The travel window is defined as the time between when a customer is willing to show up at the arrival airport and when the flight must leave to make it to the destination airport at the requested time.

It works this way: a customer wants to fly from A to B and must get there by noon. The flight time is one hour and customers will need to arrive a half-hour early to check in and board, meaning the customer can show up at the arrival airport no later than 10:30 a.m.

But the DayJet booking system will ask if the customer can arrive earlier to expand the travel window. Someone willing to show at 8 a.m. will be quoted a lower fare than someone who is willing to get there at 9 a.m. Later show times would increase the fare, up to the maximum for those who wish to get to the departure airport at 10:30 a.m. for their noon arrival.

The reason fares are lower with a wider travel window, DayJet said, is because it is easier to pair passengers with overlapping windows going the same direction. This last point is important since the customers on board might not be going to the same destination.

For example, the aircraft carrying the customer from A to B has another passenger on board who’s going from A to C, and both destinations are east of airport A. So the aircraft would stop en route at airport C (halfway between A and B) to drop off a passenger and then continue on with the customer who wants to go to airport B.

This grouping of passengers is important, given that DayJet said it needs to carry an average of 1.3 passengers a trip to break even. The example above going from A to C to B with two passengers constitutes one trip, meaning it would be profitable according to the company’s estimates.

DayJet’s Eclipse 500s will be configured with five seats, three of which will be for passenger use. Each aircraft will be flown with two qualified pilots, who will work set shifts each weekday and will start and end this shift at their base airport.

Pilot work shifts will be either from 7 a.m. to 3 p.m. or from 3 p.m. to 11 p.m., which DayJet said the FAA likes because crewmembers will never violate Part 135 crew duty and rest requirements. Further, DayJet pilots will have a predictable, set schedule, allowing them to come home to their families every night.

DayJet expects to launch service in the summer next year to select markets soon after it takes delivery of its first Eclipse 500. The company will continue to expand operations to additional locations throughout 2007, and it plans to serve as many as 30 markets with per-seat, on-demand service by the end of its second year of operations.

Will the concept work? According to Richard Aboulafia of The Teal Group, a Fairfax, Va. market research firm, “DayJet probably won’t revolutionize the travel industry, and it certainly won’t be the next NetJets. However, with airline service cutbacks in the Southeast and Northeast, these two regions would be a good place for an air-limo experiment. I don’t see any virtue for such a service on the West Coast, though.”

Taking a more optimistic view of DayJet, General Aero president and former NBAA president Jack Olcott believes DayJet could very well succeed. He told AIN, “It seems that his air limo will address a real need, even though this new market is extremely difficult to predict. DayJet will be something well worth watching.”