Joining the Jet Set on the Cheap
A Florida native, George Tedder loves his home state. But he has seen enough of it from the ground, driving 50,000 miles a year between the Florida offices of the engineering firm where he works. So Tedder gushes when he talks about DayJet, a start-up that promises to fly him between his home in Gainesville to his offices in West Palm Beach, Lakeland, or Tallahassee-direct. And not on some thumping turboprop. No, DayJet will fly a shrunken jet, one that carries only three or four passengers. "It's like when I was a kid reading Popular Science about cars that will fly," says Tedder, 50, who recently tried one of the jets on for size when DayJet flew it into Gainesville. "It is just so cool."
There is a certain zeal that permeates the nascent world of "very light jets," a new class of airplane under development at a half-dozen or more manufacturers. They're gambling more than $1 billion that the aircraft, untested in the market, can expand sales of small jets to private owners and to fleets at new air taxis like DayJet in the Southeast and Linear Air in the Northeast, for starters. "The revolution won't stop here," says William Herp, Linear Air's CEO.
The idea of smaller, technically advanced jets has percolated since at least the 1980s, when developments in navigation and electronics suggested something dramatic could emerge, says Bruce Holmes of NASA, which helped nurse the concept. "The big idea was that these airplanes could change aviation," he says.
Prices for the aircraft start at about $1.5 million for an Eclipse Aviation model, which recently won federal certification to go into production. That's less than half the $4 million it now takes to buy a business jet. Cessna has a certified model it's selling for $2.6 million, and while it meets the informal description of a very light jet (under 10,000 pounds), Cessna says it isn't marketing it as such. Other VLJs are known to be coming from Adam Aircraft, Honda, Diamond Aircraft, and Embraer Air. Their boosters talk of thousands of the minijets flying in a matter of years; more than 3,000 are already on order, and planned sales would hit a thousand a year. That's in a market for business jets that this year, a good year by historic standards, will sell a total of about 900 planes.
Crowded skies. Sounds like a stretch to Gerald Bernstein, an aviation consultant at the Velocity Group. For one, air taxis would work only in regions with clusters of cities that also have poor commercial air service. Overall, he's predicting sales would top out at around 700 aircraft a year at most, meaning a shakeout is inevitable. "There are just too many players out there," he says. Teal Group researcher Richard Aboulafia is harsher, predicting sales of perhaps 300 a year. The planes include impressive advances in electronics and engines, he says, "but there's no magic here. It sounds more like buzz designed to get investment cash." That is, it sounds more like the days of the Internet bubble.
Hype or not, the start-ups in this business swarm with former tech execs. Eclipse Aviation founder Vern Raburn,an early believer in the concept, is a former Microsoft executive and has Bill Gates as a key investor. "It's always the outside [expletive] who comes in and says he can do it better," Raburn says. He's also using plenty of tech, including cutting-edge electronics in the cockpit and computers to automate his production line. That's where the test moves now, after the Eclipse 500 recently won certification. "Now we've got to go build these suckers, at the speed and cost that we said we could," Raburn says.
The Eclipse 500 will hold two pilots and three or four passengers-and no bathroom, which Raburn argues isn't needed on the short flights that are targeted by the jets. A competitor, Adam Aircraft, is nearing certification of its A700, a twin-boom model whose look is akin to an upside-down catamaran. The wider tail should make for a smoother ride and allows room for five passengers, and a bathroom, says Adam President Joe Walker. "A bathroom is about perception-it may never be used, but many people will want it there," he says. The futuristic tail also gives the A700 some pizazz, Walker says: "It's sort of like pulling up in front of a restaurant in a Ferrari."
CEO and founder Rick Adam once ran information technology for Goldman Sachs before making a fortune at his own tech company in the late 1990s. He invested $26 million to launch the aircraft business, which already has a turboprop version in the air. One of its biggest customers is Magnum Jet, which will operate what it calls an "air limousine" service in the Northeast, at least initially booking only an entire plane to companies or groups.
More of a pure air taxi, DayJet plans to sell single seats on demand. That requires a sophisticated computer system to match customers with planes and times. Founder Ed Iacobucci worked at IBM and then helped start Citrix Systems, and seems not to have left the tech business, as he throws around terms like "scalability" and "peer to peer" in designing DayJet's network-of routes, not computers. Only when pushed does Iacobucci talk about the Eclipse aircraft that he's buying; even then, he says the biggest advantage is that they're coming from the first mass producer of business jets. "It's having a critical mass of airplanes that are exactly the same," he says.
The air taxis are the unknown in whether the very light jets can achieve widespread success. Generally, the services plan to charge between $1 and $3 a mile, much less than the $10 that a typical private jet might charge but usually more than a first-class or last-minute commercial air ticket. Many of their potential customers now drive between cities, and it's those folks who will have to put a high value on their time to make the investment in jets pay off, says Raburn at Eclipse. "This is about personalizing air travel for a group of people," he says. "This is not about a chicken in every pot-this is not the VolksJet yet."
This story appears in the November 13, 2006 print edition of U.S. News & World Report.