More on European Air Taxi Operators

A Flight International article has a great update highlighting some of the more than 16 different European air taxis operators who are flying now or plan on doing so by 2010. In an informative article entitled "Will the emergence of VLJs as air taxis transform air travel?" authored by Kate Sarsfield, it is clear that the European air taxi marketplace is far from being defined and in that way will be the similar to the US market: a wide variety of models and aircraft (at least initially). The article contains discussions about Blink, Bikkair, JetBird, Taxijet, AccelJet and Air Cab.

One of the most interesting statistics comes from Iceland's AccelJet which claims "that charter movements at the capital's airport in Reykjavik have grown by 4,000% since 2003, from 116 to 4,600 movements a year. There is a huge demand for business aircraft services within Iceland - serving remote locations - and from Iceland to other European destinations."

The article also includes the chart below setting forth the operators, their geographic locations and the proposed aircraft.

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So What do you Think about DayJet?

With DayJet's scale back announcement, I have been asked repeatedly what I thought and what this meant for the air taxi marketplace. I have also spent the past few days reading most of the news reports and analysts' statements. Here is what I think, much of which has been stated in one way or another in previous posts this year.

This is an emerging market based on disruptive technology. It will take many, many years to define. There are multiple operators, multiple pricing models and multiple aircraft types - many of which we have not yet even seen in the sky. The free market will help define which combinations are the best models for the air taxi marketplace.

It's a tough time all over for aviation. Economically, there could not be a more difficult time to start a new company and seek additional capital, especially in aviation. Fuel is at a historical all-time high price with no end in sight to its weekly increases. Major air carriers -- most of whom have just emerged from bankruptcy -- are racing to try to merge with each other to survive or they will likely face additional bankruptcy filings. At least four or five smaller Part 121 air carriers like Hawaiian Airlines have filed for bankruptcy and some of those like SkyBus will be liquidated. Traditional air carrier on time performance in March was the worst ever. On Tuesday, May 6th, the Wall Street Journal ran an article called "Flying Foul:Passengers Behaving Badly," about all the foul habits of passengers on packed airline flights that we have all seen and experienced. The same day, the GAO released its report based on testimony before a U.S. House Subcommittee entitled,"NextGen and Research and Development Are Keys to Reducing Emissions and Their Impact on Health and Climate." However, a few months ago, the federal rule proposing the implementation of NextGen and ADS-B was met with an overwhelming barrage of industry and political opposition in DC. The FAA has no confirmed Administrator and as of yesterday, the FAA Funding Bill was stalled once again in the Senate.

We are still at the infancy stage of the "crawl, walk, run" transition of air taxis. There are indeed a few positive indicators. The back orders and demand for all sizes of new aircraft from Airbus 380s to vljs are breaking records. The aircraft are coming and people still want to fly. The time for the true measure of success or failure of the air taxi marketpace is likely five to ten years away.

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European Update - Blink and Jetbird

It has been a while since I have discussed the status of European operators, but an article in Time magazine recently highlighted the efforts of both Blink and Jetbird. The article entitled "Private Jets: Air Pressure" discussed again the projections about the number of vljs operating in Europe in the future and how that might impact airspace traffic and congestion - especially at the higher altitudes where fuel efficiency is the greatest.

Blink, which will be flying the Cessna Citation Mustang, and Jetbird, which has chosen the Phenom 100, are both discussed in the article. Based in Dublin, Jetbird's website is still calling for a 2009 launch while Blink -- claiming to be Europe's "first air taxi service" -- with its headquarters in London has indicated it will begin operations this month. The article also discusses a concern of Eurocontrol with the potential adverse impact of vljs (that I discussed here a few months ago):

It notes that "[i]n October, Eurocontrol will conduct a simulation in Budapest that will flood air-traffic control with hundreds of microjets. If the test suggests that the safety of larger planes could be compromised, Eurocontrol may push regulators to mandate dedicated flight paths and better collision-avoidance gear."

My sense is that ultimately the European market and customers for air taxis are somewhat different from that in the US with much greater initial attraction to leisure and vacation travel in Europe in addition to business travel. It will indeed be interesting to compare the two markets as they emerge. While there might be quite a few differences, one thing is the surley same: the common themes of improvements in quality of life and efficiency and renewed enjoyment in air travel are shared by both current US operators and prospective European operators.

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SATSair's Continued Success and Growth

I have -- since I flew my first flight on SATSair -- been a significant proponent of the company. Serving primarily the Southeast and based in my home state of South Carolina, SATSair has just released a press release of some rather impressive numbers for 2007 and the first quarter of this year. I attribute that success to a number of factors: reliability, excellent customer service, a fleet of Cirrus aircraft, a simple "air cab" pricing model, and a geographic reach in the weather-favorable Southeast. Ironically, while today's headline article entitled "Rising Costs Reshaping Air Travel Across the USA" in USA Today lamented the probable decrease in availability of commercial flights,especially to smaller airports, and noted how fuel prices continue to add to the commercial air travel woes, the SATSAir press release states they are actually seeing more use as a replacement of traditional hub and spoke service. Here are some quotes and highlights from the press release:

• "SATSair experienced more than 60% growth in the number of flights from 2006 to 2007."


• The air cab operation flew more than 16,000 flights and landed in 27 states in 2007.


• SATSair ended the year with over six million passenger miles flown since the company's inception in November 2004.


• The most noteworthy year-to-year growth took place in Florida, which saw a 314% increase in flights over 2006.


• Though Florida showed the most notable growth, every state SATSair flew to in 2007 saw an increase in flights from the previous year, including considerable growth in the company's core six-state region.


• SATSair's headquarters is located in South Carolina which had an average of 3 flights per day into all the major economic centers such as: Greenville, Anderson, Spartanburg, Charleston, Beaufort, Hilton Head, Columbia, and Myrtle Beach.


• Just as importantly, of 60 public use airports in South Carolina, SATSair landed in 47 of them, providing the start of an effective South Carolina Intrastate Air Network.


• Traditionally, the use of the air cab service has been a remedy for driving trips of 2-5 hours, not a replacement for other forms of air travel. However, 2007 saw a shift with a significant number of new SATSair customers using the point-to-point air cab operation as a solution to their hub-and-spoke airline frustrations and woes, in fact decreasing the door to door travel times.


• Nearly 90% of the company's business for 2007 was in a six-state region, comprised of Alabama, Florida, Georgia, North Carolina, South Carolina and Virginia.


• SATSair currently serves more than 600 airports throughout the Southeast.


• SATSair's mission is to provide safe, convenient, economical air travel and top-notch customer service.

This is an incredibly tough time for anyone in the aviation business. However, SATSair's success is an affirmation of a simple business precept that if you reliably provide a quality product, you will grow and experience repeat business. It also is an affirmation that the SATSair air taxi - or "air cab" model as CEO Steve Hanvey insists it be called -- is growing at rather significant rates while the traditional air carriers are likely merging, consolidating and shrinking.

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From JetBlue to JetSuite with the Phenom 100

A strong group of aviation professionals with significant ties to JetBlue formerly announced the creation of JetSuite in a press release yesterday. Led by Alex Wilcox, one of the original founders of JetBlue and later the COO of Kingfisher Airlines, JetSuite plans to operate Phenom 100s in a managed owner aircraft model concept. JetSuite plans to serve the West Coast and start by early next year.

JetSuite has an order for 50 Phenom 100s and options on an additional 50 Embraer aircraft. It will be the largest US operator of the Phenom aircraft. Speaking of large, the Phenom 100 is one of the largest of the new vlj models. The Embraer website has a great cross sectional comparative analysis of the Phenom cabin comparing it to the Eclipse 500, the Mustang, the CJ1, and the (potentially soon to be resurrected) Adam 700.

More details about JetSuite's plan are available on its website which has been up for some time. Here is some additional information:

The press release states that Wilcox is "joined by several former JetBlue founding colleagues, including Usto Schulz, JetSuite's Vice President Certification and Safety, who was Vice President, Safety for JetBlue and was with the Federal Aviation Administration for 17 years, and Amy Curtis-McIntyre, former Vice President of Marketing at JetBlue who is consulting on JetSuite's brand and product. Also, Ken Burnham, former Fleet Captain for the DC-10 at United Airlines, has joined JetSuite as Vice President, Flight Operations."

The JetSuite concept appears to be an innovative air charter management and owner/operator operation. While the aircraft are not being utilized by the owner, their "care and feeding" and charter flying will be handled exclusively by JetSuite.

The website states: "As a JetSuite owner, you are given a set number of hours to use per year for free. If you need additional hours, you can purchase them at a discount to our retail rates and significantly less than other offerings. . . . In exchange for placing your aircraft in the JetSuite fleet, you receive JetSuite’s premier management service at absolutely no additional cost. While our competitors charge you a monthly maintenance fee, our comprehensive program includes aircraft maintenance, hangaring, pilot training, arranging flight plans and flight crew, and much more at no cost."

JetSuite's choice of the aircraft, business plan and charter concept is surely worth watching as there is no doubt with respect to the depth of the aviation experience of its management team.

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DOT IG's Comments on Manufacturer's Suppliers

I spent a large part of last week at the NBAA Maintenance Management Conference in Florida where I had the honor of appearing on the agenda to speak on maintenance risk and legal issues both from the litigation and regulatory perspective. As always, NBAA put on a great conference. In preparing for my comments, there was needless to say a wealth of relevant news and information on maintenance issues involving Part 121 air carriers. I also was aware of the testimony of Department of Transportation Inspector General Calvin Scovel (29 year Marine Corps veteran) as he had several opportunities to appear before congressional committees in the last few weeks.

On April 10, he spoke before the Senate Committee on Commerce, Science and Transportation, Subcommittee on Aviation Operations, Safety and Security. His comments were entitled "Key Safety Challenges Facing the Federal Aviation Administration." The April 10th testimony focused on "the key actions that FAA and its stake holders will need to address over the next several years. These included (1 ) strengthening FAA’s oversight of the aviation industry, (2) improving runway safety, and (3) addressing attrition in two of FAA’s critical workforces–air traffic controllers and aviation safety inspectors."

One week later, on April 17, 2008, the Inspector General testified before the Senate Committee on Appropriations, Subcommittee on Transportation, Housing and Urban Development, and Related Agencies. His comments, many of which were repetitive, were entitled "Key Safety and Modernization Challenges Facing the FAA." They focused on "(1) strengthening FAA’s oversight of the aviation industry, including its systems for monitoring air carriers’ use of outsourced maintenance and aircraft manufacturers’ suppliers; (2) keeping existing modernization programs on track, reducing risk with NextGen, and setting realistic expectations; and (3) addressing attrition within FAA’s air traffic controller and inspector workforces."

The IG's discussions in the April 17 testimony with respect to the importance of NextGen including ADS-B implementation ("a new satellite based surveillance system that has the potential to enhance safety and capacity") are very relevant to the air taxi industry. I have previously discussed the importance of NextGen.

However, with maintenance compliance in the news and the reliability of aircraft components always an issue, I wanted to highlight the IG's discussion on the FAA's oversight - or lack thereof - of the suppliers to aircraft manufacturers. Earlier this year in February, the DOT IG issued a report entitled "Assessment of FAA's Risk-Based System for Overseeing Aircraft Manufacturers' Suppliers." Many of the comments about suppliers in this month's testimony were based on the findings of this earlier audit report. Here are some insights as to current matters related to aircraft component suppliers that I thought were relevant to Part 135 and 91 operators, many of whom are utilizing new aircraft:

• FAA's current oversight of aviation manufacturers is based on a system that assumes the manufacturer has primary control over the production of their aircraft rather than trusting suppliers to design and manufacture a large portion of the aircraft.
• "FAA has not ensured that manufacturers are providing oversight of their suppliers. Manufacturers are the first line of defense in ensuring the products used on their aircraft meet FAA and manufacturers' standards."
• "FAA does not require inspectors to perform audits of suppliers to determine how well manufacturer's quality assurance programs are working."
• In the last four years, FAA "has inspected an average of 1 percent of the total suppliers used by the five major manufacturers [DOT] reviewed."
• At FAA's current surveillance rate, "it would take the inspectors 98 years to audit every supplier once."
• The DOT observed "systemic deficiencies" at the 21 suppliers it visited. "For example, nearly half (43 percent) of the suppliers had deficiencies in their tool calibration and employee training programs. Deficiencies in these areas could impact the quality of the parts of these suppliers."

One of my presentation "take-aways" was the importance of due diligence in outsourced maintenance in that although you can outsource the work, you cannot outsource the liability and ultimate responsibility for FAA compliance. That remains with the certificate holder and aircraft operator. With respect to component manufacturers and suppliers, I thought these comments on supplier oversight were somewhat noteworthy and relevant to Part 135 operators -- most of whom's business plans include new aircraft with a large number of components provided by outside suppliers.

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Fallows on DayJet in 2008

In 2001, James Fallows published in hardback "Free Flight, From Airline Hell to a New Age of Travel." In 2002, he toned down the title of the paperback release to "Free Flight, Inventing the Future of Travel." I suspect the majority of the traveling public the past few weeks would think the original title was more appropriate. Regardless, I have posted before about James Fallows' book and Dr. Bruce Holmes and how what is happening today in the air taxi and on demand market with Cirrus and Eclipse aircraft was forecast by these gentlemen many years ago and discussed in Free Flight.

Fallows made a trip to DayJet earlier this year and took a flight with his fellow visionary, Bruce Holmes. He has written the most recent and detailed article to date in the mainstream press on DayJet which appeared in Atlantic Monthly's May edition. It's now available online. Entitled "Taxis in the Sky," the article traces DayJet's research, start-up, growth and development. It also includes Fallows' description of his recent flight with Holmes. The online article includes Fallows' photos of his trip.

There is a lot detail in the article and it's written by Fallows, so it's a good read. There are a couple of simple observations that Fallows makes. Here is my favorite excerpt about the simplicity and convenience of the air taxi service:

Fallows states: "[O]bjectively, this is a comfortable and convenient way to travel. You go to the airport, which, because it’s small, is less congested than ones you’re used to. You walk to the DayJet counter, which resembles a rental-car booth. There’s probably no line, because probably no one else is going at just this time. As you step up to the counter, a trapdoor-like device measures your actual weight while the attendant asks to weigh your bags. (On small airplanes this is important, for instance in determining where to place the bags.) A minute or two later, you walk out to the plane, and a minute or two after you’re seated, it taxis and takes off.

Decades ago, while working for Jimmy Carter, I was struck by one underpublicized detail about Air Force One: practically as soon as the president sat down, the plane started to move. It’s not quite as fast with these small jets, but eliminating the waste time of the airline experience—the hour or two you must be at the airport before the plane actually starts taxiing, the 10 to 15 minutes or more between taxi and takeoff—makes a big difference in overall travel speed. It’s the same at the other end. Two minutes after the wheels touched the tarmac on my DayJet flight to Lakeland, I was standing in the terminal.

The plane feels roomy rather than cramped inside, certainly compared with a jammed airliner. The cabin is quiet enough that you can talk in a normal voice—though by the end of my return trip, I noticed enough of a whine to want to bring a noise-canceling headset the next time I travel. (To be fair, I also wear these on airliners.) It was bumpy going through a layer of clouds on descent, but those clouds would have been bumpy in any airplane. And the view was great."

Compare his description and mine in an earlier post to your most recent trip to your airport or your most recent trip on the interstate. Five to ten minutes from the parking lot to takeoff. There is just no comparison.

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The Beauty of Air Taxis

"It is, by far, the easiest solution to traveling there and back in the same day."
Mike McMenamin, CEO Access Insurance Co.

With all the focus on the beautiful Masters Golf Tournament this weekend in Augusta, the Augusta Chronicle's Business section features an article today by LaTina Emerson entitled "Air Tax Services Growing." The article highlights ImagineAir, and also discusses SATSair and DayJet. The article describes how Mike McMenamin, the above quoted CEO of an Atlanta insurance company, has been using air taxi services for the past three years. This week, he flew on ImagineAir for a quick day trip to see the players, the greens, and the beautiful azaleas at the Masters. "He flew in Thursday morning and returned home later that day by 5pm, in time for dinner and to prepare for work Friday." The article also mentions the following:

• ImagineAir is considering locating a base in Augusta.


• ImagineAir has flown more than 500 flights since it opened a year ago.


• ImagineAir has 5 Cirrus SR-22s and plans to add another 5 to 10 Cirrus and several Eclipses this year.


• SATSair also ferried passengers to the Masters with 25 bookings (including PGA players like Charlie Warren) and is flying about 1800 passengers a month.


• SATSAir has 26 Cirrus SR-22s.


• In March, SATSair had a record 2,000 passengers (an amazing number!).

In 1994, I once took a "break" from law school to attend a practice round, but, of course, I drove there. The course is indeed unbelievably beautiful. This is a splendid time of the year in Georgia and the Carolinas with the spring flowers in full bloom before we get hit with the suffocating heat and humidity of the summer. I have had the opportunity the past few weeks to share with my young daughters the beautiful - albeit short lived - sight and smell of Wisteria draping a bunch of tall Southern pines near our home.

The article demonstrates that the air taxi model is not only for business efficiency, but also for pleasure travel and adds a whole new dimension to time savings and convenience. I agree with Mr. McMenamin's quote above and would even take it a step further: Air taxis are by far the easiest way to travel anywhere right now. For those using them, they are indeed a beautiful thing.

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NBAAs Maintenance Management Conference

The past few weeks we have witnessed how maintenance compliance must be inherent in any aviation organization's culture and daily operations. This week, American Airlines has cancelled hundreds of flights following the same actions by Southwest and Delta. Next week, I have the privilege of being a speaker at the NBAA's 23rd Annual Maintenance Management Conference ("MMC"). The three day NBAA seminar is full of information and could not be more timely. Here's what we will discuss:

According to the NBAA website: "The MMC is designed for those who own aircraft or oversee the day-to-day operational activities. It is a resource for single aircraft or large fleet managers wishing to enhance their knowledge and skills, not only in the areas of technical expertise, but in the process involved in managing the maintenance function. This three-day Conference provides valuable information for individuals interested in enhancing their knowledge of aircraft maintenance and management, along with ideas and suggestions for those interested in professional development or meeting career objective goals."

I am speaking on a panel entitled "Protecting our Maintenance Function" and it is described as follows:

"The two most important elements in managing your professional and personal liability within any industry are knowledge and protection. The knowledge is necessary to enable you to contain your action, that which is within your control and the protection is to shield you from actions of others, that which is outside of your control. In this session we will example principles and risk tools which shield yourself and your assets. The presenters will highlight specific exposure areas, while providing ideas and solutions to ease your daily concerns. The presenters are both current professional working in the fields of Aviation Law and Aviation Risk Management."

While the several hundred attendees and vendors will be mostly from corporate aviation departments and associated service providers, I find the above panel description (drafted before I was asked to speak) with the elements of "knowledge and protection" also applicable to all Part 135 operators.

I am looking forward to the conference to provide some advice to others, to engage in dialogue and to take some questions. I also expect to learn some Part 91 corporate "best practices" and pick up some transferable skills and advice for air taxi clients. I once had a wise General Counsel tell me that the only way to eliminate all the risk for our air carrier was to park all the planes. Short of that, it was our job to identify the risk and manage it to acceptable levels with adequate controls, smart programs, tested procedures and wisdom - and most of that begins on the hangar deck! A professional maintenance conference put on by an organization as credible as the NBAA is indeed a timely and welcome event.

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Defending FAA Enforcement Actions

I expect portions of today's sworn testimony before the U.S. House Transportation and Infrastructure Committee entitled "Critical Lapses in FAA Safety Oversight of Airlines: Abuses of Regulatory Partnership Programs," will garner the headlines of every major newspaper tomorrow morning. I also suspect it will result in additional and intense scrutiny on the FAA and the Agency's handling of the civil penalty and certificate action process. While the headlines of the past few weeks and the discussions at the hearing today were aimed at Part 121 maintenance and oversight issues, the impact will indeed be widespread. Further, as air taxi operators grow, the odds are that sooner or later the Part 135 operation, no matter how safe it is, will be the focus of an FAA investigation.

I have discussed previously practical advice on obtaining a Part 135 certificate and perhaps this post is more appropriately entitled "practical advice on keeping a Part 135 certificate." Whether the enforcement action is against the company in the form of a costly civil penalty or against a pilot or mechanic for his or her certificate, an FAA enforcement action can indeed be a "bet the company" matter, especially for start-ups. Realists know that it's not a matter of "if," but "when."

"A certificate action can be a significant blemish on an otherwise stellar twenty-five year pilot or mechanic career. In maintenance cases, the subject matter can be relatively complex, and the publicity can be significantly adverse at a time when such bad news is not welcome for the financially struggling air carriers."

That quote is from an article I published in the NTSB Bar Association Quarterly Newsletter in the Fall of 2004 (at page 8) entitled "Successfully Defending Enforcement Actions." (Ironically, in that same issue was an article (at page 11) right after mine entitled "SATS Program to Change Air Travel"). Based on today's news involving Southwest Airlines, not much has changed since then. The adverse publicity on all air carriers has been intense while Southwest executives today repeated numerous times under oath the complexity related to the Airworthiness Directives that the company has been accused of violating. Complex maintenance matters. Adverse publicity. Financially struggling air carriers.

In that article, I listed my top ten practice pointers for handling enforcement actions based on my experiences of handling hundreds of them. That advice is just as relevant today to start up air taxi operators. The original article has a wealth of mini "war stories" and real world practical applications and examples of these pointers, so I commend it to you for a quick read. Here is a summary of those tips:
1. Know the facts and the federal regulations - Once you get a Letter of Investigation ("LOI") or a Notice Or Proposed Civil Penalty, you must start preparing your defense.
2. Prepare years in advance for the formal action - These matters can take years to resolve or even be initiated, but start preparing immediately to preserve evidence and testimony.
3. Time is on your side - No need to rush to a resolution.
4. Did you do it? This will make a difference in the defense strategy in handling the case. You better know the answer to this question before you make any public statements. Better yet, don't make any public statements!
5. Always request an In Person Informal Conference with the FAA Regional Counsel's Office.
6. Know your adversary - Know the opposing attorney, the inspector, the Region, etc.... Counsel needs to do their homework.
7. Consider your previous violation history - First offenders are easier to defend than repeat offenders. Violation history is part of the FAA's assessment criteria for the severity of the penalty.
8. Make them prove it - The FAA has the burden of proof. Sometimes circumstances warrant taking a stand.
9. Argue the important facts and provide tangible evidence to the FAA - This is especially true if you are seeking mitigation of a proposed penalty because you know the answer to Number 4 above is "yes."
10. Consider all settlement options.

Perhaps this sounds self serving, but FAA enforcement actions are not something you want to handle without counsel. Many people innocently respond in writing to the FAA's initial Letter of Investigation because it politely invites you to do so (within 10 days), it comes from an inspector and there is a tendency and desire to want to give the appearance of cooperation with the FAA. While cooperation is indeed important, so is knowing what is going on. If the FAA has decided the matter is important enough to send an LOI, there is a high probability that the matter is important enough to warrant a subsequently issued Notice of Proposed Civil Penalty or a Notice of Proposed Certificate Action. Typically, in the FAA's Items of Proof Packet, revealed later in the future, the operator's earlier and initial written response to the LOI is Item of Proof No. 1. More information on the enforcement process can be found on the FAA website.

Today's hearing reminded me of the importance of properly handling all facets of an FAA investigation. Just as all operators have emergency response plans in case of an accident or incident, you should have a prepared FAA investigation action plan. At the initiation of the proposed penalty and even before proving its case, the FAA has the authority to issue a press release (A practice I have never thought was fair). Once adjudicated or paid by the entity, the actions become a matter of public record and the cases, sanctions and fine amounts are all listed on the FAA website in a published Quarterly Report. The last quarter of 2007 included fines ranging from $500 to $325,000.

The original 2004 article discussed here was written for an audience of attorneys, so Tips 1 through 10 were for practicing members of the NTSB Bar Association. For air taxi operators in 2008 facing FAA inquiries or investigations, best to find experienced aviation counsel -who preferably already knows tips 1 though 10! Good luck, stay compliant and fly safe.
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