Wednesday, August 10, 2005

VLJ - i.e., Very Little Justification

I have just returned from Aspen, CO. My god, can there be an airport that is more challenging to land at?! 7800' elevation, surrounded by mountains on three sides, dramatic noise abatement rules...and heaven help you if you have to make a go-around at night, or in IFR conditions. And yet there, on a typical weekend in August, is perhaps the largest collection of private jets on earth. Gulfstreams, Falcons, Lears, Citations, Hawkers, even a Bombardier Global Express. There must have been 75 of 'em. It makes you both salivate at these beautiful machines, and wonder "who on Earth has all this money!?".

But soon, that stable of fabulous bizjets will be joined by a cadre of smaller, less expensive jets....the so-called "very light jet", or VLJ. Several companies, including Eclipse, Adam Aircraft, and of course Cessna are racing to field these ~$1-2M (and up) jets...and I hope they're fabulously successfully, offering about 100+ mph over the equivalently priced conventional powered twin. Sell your twin turbo-prop now!

What many of the VLJ manufacturers are relying on however, is the emergence of a new aviation market segment, called the "air taxi" service (or air limo, perhaps). Ah! Now there is a business plan to challenge if ever I saw one.

Let me go ahead and say it...I believe the air taxi business model is fundamentally flawed, and will fail, and will possibly take with it one or more VLJ manufacturers...probably Eclipse. Here's why:

  • Safety: Okay. Let me get this right...hundreds of VLJ air taxis operating from smaller, non-controlled airports with pilots holding only the minimum of commercial qualifications...this is an accident waiting to happen. And once the safety record is damaged, it's very difficult to restore. Just ask ValuJet.
  • Destinations: Is there really a crying demand to fly to Franklin, VA or Georgetown, KY? I would say no. Most people still need to fly to Washington, Boston, and New York. So...I believe the air taxis will end up merely duplicating service to already existing destinations over already existing routes. And there they will compete with current commercial and private jets...and likely lose.
  • Cost: It won't be cheaper than commercial airlines, it won't be cheaper than taking a car, and worse, it won't be expensive (or luxurious) enough to lure the truly wealthy away from their Gulfstreams and fractional ownerships. People who can afford private jet service already have it, and the VLJ air taxi doesn't promise to lower the cost barrier enough to appeal to the masses.
  • Predictability: Both business and personal travelers will insist on predictability of air travel regarding departures, arrivals, number of stops, and flight duration. I believe the air taxi concept will be challenged to deliver on all fronts.
  • Infrastructure: The air taxi concept depends on opening hundreds of new airports to VLJ service. As wonderful as this concept appears, the infrastructure is just not there. Not enough instrument approaches, not enough night lighting, just not enough facilities at many of these airports. No "ground" taxis and no rental cars...let alone business lounges, restaurants, hotels, and a Starbucks. It just won't be very easy to fly into El Dorado, AR, and then get anywhere else.

Don't get me wrong. I love the new VLJs for their creative design, high performance, focus on maintainability, and reasonable cost. But on the air taxi business model, I remain the naysayer.

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