VLJ air-taxi plan flawed

 - December 19, 2007, 11:13 AM

Don Burr and Bob Crandall exude confidence for their intended new venture, Pogo, but the air-taxi concept is not a matter of belief, nor is the outlook for it dire or grim; the concept is simply immature.

First, to bring the issue into sharper focus, it is important to distinguish between the very light jet (VLJ) itself and the air-taxi concept.

The VLJ may indeed represent a new transformational cost-benefit opportunity as pilots migrate up the product line from traditional piston and turboprop aircraft in the general aviation fleet. For an owner with a defined mission profile and utilizations typical of private use, the airplane might perform quite well. But even in this owner-operator segment, the kind of broad mass diffusion the VLJ OEMs predict is very unrealistic as it will require complementary intelligent infrastructure that is decades away.

Next, let’s be realistic about what kind of aircraft engineering is required to optimally support the air-taxi business model. It isn’t the VLJ. It’s a design-specific aircraft that can withstand airline-like utilization and cycles.  First-generation “beta” microjets will undoubtedly go through several iterations as they gain operational experience and generate cost and performance data.

What we will undoubtedly see is an aircraft that gets heavier and more expensive and eventually becomes the very jet that already exists: the small business jet, such as the Citation series and Hawker (Beechjet) 400. 

Burr has it precisely backwards: it is the success of the VLJ that will create industrial challenges for the VLJ OEMs with which they are neither equipped nor prepared to cope. Textron, Raytheon, perhaps Bombardier and even Dassault might well learn how to break the price barrier because they possess enormous R&D, maintenance, support, experience and distribution advantages.

But even this is not enough. A jet that is actually realizing the kind of utilization figures required to make an air taxi commercially viable is effectively a miniature airliner in airline-like operations; it is not a GA product in a charter-like operating model.

While we’re all thinking about the future, why not assume instead that Boeing could miniaturize the 737, Airbus build a new dedicated air-taxi jet or Embraer shrink the ERJ 135? These companies know how to build aircraft made specifically for 2,000 to 3,000 hours of utilization per year.

Lastly, outside the aircraft and operating business model issue is the marketplace itself–the consumer–and here again we’re not being sufficiently wide-eyed about what it will take to attract passengers into a separate air-taxi network. Getting consumers to abandon their old habits and repeatedly buy an air-taxi product sold in a separate travel infrastructure requires more than a cheap airplane, some working capital and a network of GA airports. The Pogo founders don’t seem to be on the same page concerning the most crucial element of their business plan: pricing. Burr quotes $1 to $1.50 per mile and Crandall throws out $3 to $4. 

But the slope of the demand curve does not change enough, even between these levels.  You’ll always pick up a couple of bodies within those price bands but not enough to build a business. Both are wrong on pricing, and pricing is where the air-taxi concept lives or dies.

The upper price boundary for commercially viable mass-market service is 50 cents per mile. Until we can price there or lower, all this excitement about a national air taxi is unfounded and a distraction from the real technical and industry constraints that have yet to be addressed.

Matt Andersson founded Indigo, a “regular and frequent” Falcon 20 operator selling seats between Teterboro, N.J., and Chicago, and is chairman and CEO of Aviation Development Holdings of Paradise Valley, Ariz. He is a member of the FAA Part 135/125 Aviation Rulemaking Committee.