Some things in life improve with age. A fine wine. A meaningful relationship. A good marriage that was meant to be. A teenager past awkward adolescence and ready for prime time.
Add to those, the performance of a carefully selected and well-nurtured team. A smart idea whose time has finally arrived. Aerion's AS2 supersonic business jet could very well be that timely idea.
In our consulting work, we are regularly approached by brilliant, impassioned individuals seeking to animate their back-of-the-envelope airplane designs. Almost to a person, they seek to take their ideas from abstract concept to metal or carbon fiber—to literally go where no one else has gone before. Their queries to us tend to have some common themes, including the following: “How many can I build? How many can I build at price X? Price Y? How much more will customers be willing to pay to have Feature A or Feature B on their next airplane? What is the price elasticity of demand? What if…what if…what if?”
With many of these prospective clients, a common belief that is apparent in many of these conversations is that funding an aircraft prototype and getting it into the air with minimal delay is a prerequisite to attracting a bevy of investors who will be clamoring—checkbooks in hand—to make sure they are on the inside track of this next great innovation. The one they can be proud to tell their grandchildren about.
Herein lies the rub. In our view, some very smart people have treaded along this very path, and very few have succeeded. In the heady days of the 1960s, when the sky or even space was not considered a limit, Bill Lear had an idea that would eventually spawn an entirely new segment of the business aircraft industry. By all accounts, he was fearless—an enthusiastic “damn the torpedoes” kind of entrepreneur who at least on one occasion was only able to make payroll after receiving payment from an insurance claim from a horrific flight-test accident.
More than 50 years ago, at a time before many regulations had been crafted to enhance aircraft safety and stop people from literally killing themselves, this approach occasionally bore fruit. A plane flew, customers got excited, orders were written, hangars were built and filled to capacity, and assembly lines were activated. Smiling customers took delivery of their shiny new toys. Everybody was happy, or at least that's what seemed to be happening for a while.
For aspiring aircraft manufacturers, there are some common dangers along the proverbial runway to success. A few years into the aircraft development program, cash gets tight, the economy changes, shortcuts are made, creditors get nervous, suppliers go unpaid, and customers are almost inevitably disappointed. Sometimes, an incident or accident throws a wrench into the machinery—and you-know-what hits the turbofan.
For the typically undercapitalized entrepreneur, it’s well past time for a rethink. The investors aren’t happy, and new ones are circling, ready to pounce, and primed to fix the problems and restructure the business, in exchange for equity control. A fresh envelope emerges with new scribbles on the back, and a different plan is created and a new set of leaders are appointed. Time marches on, and what may have started as a brilliant aircraft concept has become someone else’s not-so-easy-to-manage adolescent.
There is a different path to a new aircraft development program, but few take it. As always, at the core of the process is an entrepreneur—the spark that eventually builds into a steady flame. They start with core beliefs and a simple concept to address a real customer need in the marketplace. They see the big picture and play the long game. They believe that success is not about instant gratification, but rather about creating a higher standard that does not exist.
They are not out to darken the skies with airplanes. They think; ask many questions, such as “What if we did this? What if we opted for that?”; carefully select team members; get deeply involved in the intricacies of the business. They love what they do, and they go deeply into their own pockets to ensure that the business is built on a strong foundation.
Notably, they seek and find the finest talent with the brightest eyes and the bushiest tails. They employ teams, often at different and even remote locations, to do the hard work, dive deeply into the data, and do the due diligence. They seek and find business, legal, regulatory, technical, industrial, and community partners to bring to life a carefully-crafted strategic action plan that has no resemblance whatsoever to the scribbled-on back of an envelope.
Fifteen or 20 years is like an entire lifetime or two for many business leaders. Over this span of time, many chairmen, CEOs, or presidents will have been witness to two or perhaps even three complete business cycles. It is a fact that most business leaders are only in their jobs for a few years before moving on to their next opportunity, whether it be by their choice or someone else’s.
Ahh…to be your own boss, with your own team and resources, with the foresight, energy, patience, and determination to persevere, pioneer, and ultimately partner. In our experience, leaders who work in this space are operating in rarefied air. They inherently know that success in aircraft development is much bigger than they themselves can achieve. It takes so much more than one person, one sketch on an envelope, and one more emptied checkbook.
Airbus, Lockheed Martin, and Boeing. These are the types of partners that would make any warm-blooded aerospace entrepreneur salivate, just thinking about the possibilities. Aerion’s AS2 supersonic business jet is more than a needle-nose concept whose time has finally arrived. Civil supersonic flight was always a smart idea, especially for executives and high-net-worth individuals and their families and friends. But getting from smart idea to a profitable and durable business model takes time—that most precious of commodities to those who value it most.
Boom, Spike, and QueSST, as well as smart people in Savannah, Montréal, Saint-Cloud, and elsewhere won’t be far behind with their own designs for our faster and hyper-competitive future. But only one organization will be first to reach the departure end of the runway.
How fitting is it that an entrepreneur with the time to figure all this out has an investment horizon that transcends quarterly earnings calls and pointed questions from ever-watchful and rarely satisfied equity analysts? Aerion founding investor Robert Bass and his team—which now includes Boeing, GE, and Honeywell—are on the path to success.
With a recipe of equal parts of rocket science, financial engineering, courage, vision, and a quarter cup of humility—earned over some 20 years of experimentation, small victories, and numerous setbacks—the AS2 design and industrial strategy have first-mover advantage on the supersonic chessboard.
With first flight in 2023, Aerion AS2 customers—including leading corporations, high-net-worth individuals, charter and fractional operators such as Flexjet, and heads-of-state—are poised to participate in a new era in business aviation. It really is about time.