|BlueSky Business Aviation News|
Finer slices of the market does not make the market larger. This does nothing to serve more people or move down the marketing pyramid. This is just product marketing for head-to-head competition, and while that does serve a fine purpose in keeping prices in check to some small extent, it is not innovative.
There is a natural upper limit to the business jet. We call them airliners, regional jets, really. There is nothing that a bizjet airframer can do that a heavy commercial airliner manufacturer canít do at least as well. Want to seat sixty people? Buy a BBJ. It will be a better bargain. Manufacturers like to go bigger because of the (generally) larger margins associated with larger aircraft. We call this ďmargin creep.Ē
Small is still too big
Most airframers donít want to go smaller. Yes, we got the Cessna Mustang and the Embraer Phenom, but only after Eclipse showed that there is a huge potential market in that size aircraft. But, those airplanes, small as they are, are still twins. The cost to acquire and maintain a twin is substantially more than that required to acquire and maintain a single-engine aircraft. Lower costs is the key to successfully moving down the marketing pyramid.
The Diamond D-Jet and the still largely theoretical Stratos 714 are small single-engine aircraft that appear to be a good match for a distributed air taxi business. The Eclipse, the Mustang, and the Phenom are all too large and too expensive for the sort of expansion in the market that I am advocating.
To briefly recap, for business aviation to re-energize, we require a lot more people, very smart people, very innovative people. Smart and innovative people go where the money is (which is how we know they are smart, right?). For business aviation to generate more revenues, to become more profitable, we need to serve a much larger market than we do currently. There is no market growth at the top. Or rather, there is no market growth at the top faster than the growth rate of the global GDP. Iím sure thatís fine by a large number of people in the industry as the market has already selected the current crop of winners and losers. Rocking the boat will generate an entirely new group of winners and losers and people who are currently winners donít want change. I get that.
Since we cannot grow at the top in any meaningful way, the obvious solution is to grow at the bottom. That means to serve people farther down the marketing pyramid. For my money, the obvious bet is air taxi. DayJet was headed the right direction, though in my opinion the Eclipse is the wrong airplane. I think itís a good airplane, but not the one that will carry us through to a successful and profitable air taxi. We need a less expensive airplane.
SAAS: The Web infrastructure
My thought is that someone provides the Ďnet infrastructure in an open source, open architecture way so that independent operators can buy and operate their own aircraft on the routes they think will be profitable without having to invent their own web sites and booking software. This is a totally distributed model. This is at sharp variance with the usual methodology of figuring out how to assemble the giant killer global corporation to run all the air taxis in the world. I do not care for that model. Itís not very democratic. I think people should be empowered to be successful and we can do that by putting the right infrastructure in place. Imagine the possibilities with hundreds of independent air taxi entrepreneurs!
A suitable airplane
To get to my vision we need a number of things. The obvious bit is an airplane that is operationally and financially suitable for this kind of operation. Not to beat on the expired equine, but it needs to be as low cost as possible to allow more people to buy it and to keep operating costs low. Not just low acquisition cost but also low maintenance costs and low fuel burn. It must be reliable as possible with rugged systems, and yet still be relatively comfortable on the inside for that hour long flight.
For this airplane, I would not design for people to work while inflight. I would not design against it, but I think the by now traditional design of a couple of seats behind the pilot will suit admirably. Perhaps we can offer kits to install inflight net access or inflight use of the cell phone. Those options, I think, would be well worth the cost.
Software to amass customers and operators
The Ďnet infrastructure is just as critical. We need a way for independent operators of air taxi aircraft to offer their services to likely customers. We need to build mass rapidly. We need a lot of operators in a lot of different cities to be able to come to one place to find customers and our customers need a single place to find their air taxi operator. There is a lot that can be done with this software. Seriously, the sky is the limit here. Think of it as the eBay of air taxi services.
Not only can air taxi services be found here, but we should also be able to find ground transportation options like cabs, rental cars, bus schedules, subway schedules, or whatever other options exist at each airport. Hooking into the system should be relatively simple and painless, just as signing up on eBay is relatively simple and painless. There is no reason to make it more difficult than necessary. We donít need another barrier to entry here.
To make this possible we need leadership and financing. Not much can happen in aviation without money, and usually big piles of it. There is a lot of money out there, particularly in comparison to the size of the business aviation industry. We really arenít that big. Has anyone else read the Nexa Capital report on business aviation? At best we are $150 billion, but direct payrolls are around $53 billion. Weíll squander more than that in Afghanistan this year alone, and have nothing to show for it, either. Investing in a new segment of business aviation has a real future, a potentially very profitable future.
Order of magnitude cost
How much money are we talking about, really? Cost to certify a new airplane is $250 million and up. We might get change back from our billion dollar bill, and we might not. Cost to bring up a new open source, open architecture enterprise quality web site? Again, I suspect we are in that quarter billion and up space. Itís not cheap to start, but the benefits are awesome. It will take a shared vision and leadership to get there.
Without solid leadership, it wonít matter how much money is available. It wonít get spent effectively. Thatís what good management brings to the table, really, being able to spend those resources effectively. Without good leadership, business aviation will continue to stagnate, going nowhere in particular at the speed of the global GDP. I think it is time for those people who currently lead us to actually lead us to a new place, one with more potential and a broader economic base. I, for one, am looking forward to it.
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 email@example.com
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