Air-taxi operations steal spotlight at VLJ conference

 - July 3, 2007, 11:09 AM

Air-taxi operators and potential operators used a recent VLJ forum, “Business Models for VLJs and Light Jets,” to outline their plans for using the new class of jets to offer point-to-point service.

A diverse crowd of very light jet enthusiasts, finance and insurance experts, air-taxi startups and operators, FBO and airport personnel and manufacturer representatives attended a late-spring forum on VLJs and light jets in West Palm Beach, Fla., produced by Aviation Week Conferences & Exhibitions. While the title of the conference suggested that subjects covered would focus on business aspects of VLJs, the forum also included manufacturing, finance and insurance, VLJ effects on FBOs and airports, safety and training and an extensive discussion of user-fee issues.

Air-taxi operators were well represented by DayJet, Pogo, JetBird, Linear Air and SATSair, but there was a surprising dearth of participation from VLJ manufacturers. Only Eclipse Aviation, Embraer and Cessna participated as speakers at the forum, although Honda Aircraft and Piper Aircraft did have personnel in attendance.

The most interesting sessions focused squarely on VLJ issues, but unfortunately these sessions were not predominant. The sessions on insurance and financing, airport and FBO growth opportunities, user fees and airport classification were peripheral to more critical VLJ issues and, judging from comments attendees made to AIN, could have been left on the cutting room floor.

Panelists on the first forum session represented a cross section of buyers or potential buyers for a good number of VLJs. Mike Stuart, Pogo executive vice president of operations, stood in for Cameron Burr, president and COO, who arrived later. Pogo is planning to get started in the VLJ air-taxi business “at a slower pace,” according to Stuart. “We want to get into an aircraft program when it approaches maturity. With any new product, there are always going to be teething pains.”

Stuart acknowledged that Pogo plans to “be in the [Eclipse] platform,” and that, regarding orders for Eclipse 500s, “We are in the process right now.” Pogo plans to start slow then ramp up to flying an ambitious 2,100 to 2,300 hours per year per airplane, Stuart said. “We intend to bring them home every night. Pogo is going to run as close as possible to a [Part] 121 operation. We’re going to have a 121-standard maintenance operation.

“We’ve been doing a lot of research on how to roll out the product,” he added. “It will be easy to book on the Internet, but there will be a significant amount of education we’ll have to do.”

An Alternative to Driving
Dublin, Ireland-based JetBird has ordered 100 Embraer Phenom 100s (50 firm, 50 options). The company chose the Phenom, said managing director Paul Geaney, because it has a lavatory and because Embraer has strong maintenance and training capability in Europe. JetBird is targeting European business-class fliers with an air-taxi option that is 50 percent lower than typical European fractional share costs. “We still think we can get a compelling market,” he said. “We believe it will be a significant market, and it will attract others with deeper pockets.” But, he added, “blood will flow” as the marketplace winnows out weaker competitors.

Steve Hanvey, president and CEO of SATSair, plans to watch the other air-taxi operators start their networks and see how they work out before committing to launching jet service. SATSair currently operates a fleet of Cirrus piston singles in the southeast U.S., targeting those who normally drive instead of fly. “Our customers are not [people] who traditionally used aviation,” he said. “This is the start of personal transportation. As VLJs come on board, it’s a natural extension of what we’re doing. It’s not really about the platform. A lot of people enjoy this experience. We’re seeing, like the fractionals, a lot of new entrants.”

DayJet president and CEO Ed Iacobucci agreed with Hanvey. “The biggest misconception,” he said, “is that it’s about the airplane, because it isn’t.” He maintains that the VLJ is an evolutionary development in aviation offering the most economical and efficient short-haul low-cost travel. “It’s about a revolution in economics, not engineering. We’re in a new-market game, and we’re selling seats instead of the airplane. It turns out to be the biggest nightmare I’ve ever been involved in,” he said, referring to the logistical problem of trying to schedule single-seat buyers flying among a variety of airports in DayJet’s Eclipse 500s.

Unlike JetBird, SATSair and DayJet are targeting travelers who would rather pay more to fly point to point than drive or use inconvenient airlines flying through hubs.

DayJet customers, according to a focus group study, aren’t concerned about the small size of the Eclipse 500 cabin. “We were looking for the lowest cost platform,” said Iacobucci, “which means small.” A uniform comment from the focus groups was that while the cabin is small, “it sure beats the alternative.” Added Iacobucci, “It’s hard to get in it, but once you’re in it, it’s worth it. You aren’t going to jump up and down and do cartwheels in the aisle, because you can’t do that.”

Of the people who have paid $250 each to sign up as DayJet members thus far, 90 percent would drive their planned trips but not fly on the airlines, Iacobucci said. What DayJet’s customers want is a guaranteed seat on a reasonably priced airplane. If DayJet can fill the customer’s need for a flight to a particular destination within the time window that the customer selects, then that customer is guaranteed a seat. If the customer waits too long to commit to the flight, DayJet might not have a flight available.

William Herp, president and CEO of charter operator Linear Air, expects to receive his company’s first Eclipse 500 in the late third or early fourth quarter, a few months later than expected. Linear Air is approaching the VLJ air-taxi business in a slightly different fashion, operating a fleet of Cessna Caravans to prove its model first, then planning to add Eclipse 500s. “We think the space we’re going after represents a big opportunity,” he said. The Eclipse 500 “is the only aircraft that fits the economic profile of the market we identified. We intend to have 1,000 pilots in five years flying 300 airplanes,” Herp said.