|BlueSky Business Aviation News|
Is cost really our biggest problem in aviation? Really?
If we want to open up our customer base to more people so we can get more money flowing through our industry, yes, yes it is.
Remember, to create a whole new aviation renaissance, we need more brilliant people, and more places for them to work, plus the money to pay them, and the resources to support the new developments. We canít get that without a broader-based industry and we canít get a broader base without climbing down the marketing pyramid and we canít climb down the marketing pyramid until we reduce costs to the point where we can profitably serve these new customers. Key word there is ďprofitably.Ē
So, what does that imply?
The implication is that to serve these additional customers, we need to think about the services for which they are willing and able to pay. Then, we need to think about what business structures and equipment that we will need to profitably serve this new niche.
Until someone does some serious market research--and publishes it where I can read it--I will have to go on what I think I already know. That is, I suspect we will find the same sort of customers in the next strata down. We will find the usual status travelers and we will find the working business person. We will find that the average trip length is still going to be around 600nm. We will find that the customer values the flexibility and responsiveness of business aviation, but they canít afford the current prices. I will assert that with this slice of our customer base, we are competing head to head with the commercial airlines.
I think that last part requires a little explanation. In our more traditional slice of the customer base, we also get the status traveler. We serve them pretty well, I think, and again we are competing directly with the traditional airlines for their business. If they donít fly business aviation, they fly business class or first class commercially.
It's different with the working executive, though. We aren't so much competing with the airlines as we are with alternative technology. I.e., our customers are most likely to fly business aviation, if they fly at all. I think the key to getting a larger slice of that business is to provide the customer with the means to continue working effectively while traveling, which reduces the opportunity cost of travel.
The status traveler is no problem. Bring the price point down to something they can afford, and we have a new customer. I am in that group myself. Make it so I can afford it, and I will be yours for life. Seriously.
The working businessman has other requirements, as I've discussed previously. They will also be exploring the use of alternative technology to achieve the necessary effectiveness at a distance that telepresence can provide. I think the same sort of solution will also work for them. I.e., an actual work space, a net connection, on-board telecommunications; in essence, allowing them to continue to function as though they had never left the office.
How do we do that at a much lower price point? There are two possibilities here. First, putting more paying passengers on the aircraft to spread the cost of the flight. Second, reduce the costs per flight.
I think we need to revisit the DayJet demand aggregation, for one thing. Yes, DayJet failed, but let us not throw out the baby with the bathwater. There was a lot of brilliance in the original idea. It was a bit overly ambitious, perhaps. And the software was still being written. But it seems to me that there are a very limited number of ways to bring more people on-board the aircraft, and demand aggregation is probably the core concept. There is also the regulatory aspect where we do not want to look like an airline, and DayJet was successful there.
Demand aggregation is, I think, the best way to handle the status traveler. Moreover, I don't see any reason why several companies can't get together to form a consortium to serve that market. In fact, there may well be a killer business in that idea. Demand aggregation may be our best near-term strategy, really, since it doesn't require a change in equipment, just a change in the way we operate.
To achieve lower costs per flight, I think we are going to have to rethink a number of issues, and this rethinking process will end up with new requirements for aircraft. The ones we have currently won't get us there, and for a number of reasons: Cost of acquisition, cost of operation, environmental costs.
I'll have more to say another time about the environmental costs and the cost of acquisition another time. Lets talk about the easy one first, cost of operation.
Crew, fuel, and maintenance have always been the big three for cash direct operating costs. Other than going with a single pilot aircraft, I don't think there is much more to be done with the cost of crew. I think we in business aviation very much need highly skilled, highly professional pilots, and we should pay them appropriately. They are the only people standing between us and an accident rate that looks like the rest of general aviation, which looks almost exactly like the accident rate for cars on the road. Professional pilots give us accident rates that look like the airlines, which are the finest in the world. For short legs in relatively simple aircraft, I think a single pilot is the way to go. Larger, more complex aircraft, please give me two pilots, thank you very much.
Cost of fuel is very high these days, and given the crisis of global warming, rightly so. We need to get the carbon dioxide costs down. This isn't my field, obviously, but I think we will be seeing things changing. We need to find a way to get off the paleo-carbon cycle where we are burning ancient forests (petroleum), and at least move to the contemporary carbon cycle by burning alternative, sustainable fuels. Hydrogen fuels would be so much better, I totally agree, but we are in the very early stages of making that happen. We can use the contemporary carbon fuel in existing equipment. Lets start there.
As the "alternative" fuels infrastructure builds out, they will become the standard fuels, obviously, and we as an industry need to be on the forefront of that change; we need to be at the leading edge of this technical change for a number of reasons, our image as a cutting-edge technological industry not least of all.
Cost of maintenance is one that requires a longer lead time and much thought. My experience is that with different types of aircraft come opportunities to confuse the maintainer. It would be very helpful if the OEM would give more thought to the maintenance professional. Documentation is key, but even before solid documentation is design for maintainability. Where is our maintenance steering group? Where are the folks who set the standards for maintenance practices? The airlines have that. The guys who make the heavy iron have that. We should have that, too. Standardization is a wonderful thing, and Iíll have more to say about that another time. We should get more of it.
Cost of acquisition is a much tougher subject, I think, as it is not a single monolithic entity. There is the cost of design, the cost of certification, the cost of manufacturing, and the cost of materials; all of those are difficult nuts to crack, and yet we must if we are to grow as an industry. Weíll talk about that next time.
Terry Drinkard is a Contract Structural Engineer based in Jacksonville, Florida whose interests and desire are being involved in cool developments around airplanes and in the aviation industry. He has held senior positions with Boeing and Gulfstream Aerospace and has years of experience at MROs designing structural repairs. Terryís areas of specialty are aircraft design, development, manufacturing, maintenance, and modification; lean manufacturing; Six-sigma; worker-directed teams; project management; organization development and start-ups.
Terry welcomes your comments, questions or feedback. You may contact him via firstname.lastname@example.org
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