DayJet Moves to Cover the South(east)

Last week, DayJet announced the addition of two more DayPorts and 14 DayStops. Orlando and St Petersburg-Clearwater were the latest DayPorts added. New DayStops included multiple locations in the Carolinas, Georgia, Louisiana and Mississippi. With the addition of the two Dayports, 83 % of the state of Florida's population lives within 40 miles of a DayPort. The map to the right of 60 DayPorts (blue) and DayStops (green) shows an impressive coverage area and a significant Florida concentration. While the company's expansion is not nearly what it projected at the beginning of the year, the current coverage is consistent with an effort to focus its assets and services in a concentrated geographic area. Also of note is the location of a number of DayStops in the Altanta metropolitan area inlcuding Cobb County-Mc Collum Field (KRYY), the popular and busy Dekalb-Peachtree (KPDK) Airport and Peachtree City-Falcon Field (KFFC).

DayJet's July 9, 2008 press release noted: "The nation's air transportation service is facing a crisis. Nowhere is that more evident than in short-haul and medium sized markets. As scheduled airlines improve efficiency focusing in higher-volume markets, flying larger aircraft less frequently and on longer flights, business professional conducting regional business operations are loosing most of their travel options."

When DayJet was launched, the primary targeted market segment was designated as those business travelers on the highway. Perhaps the silver lining in the misery of the high fuel prices and the current recessionary economy is that the original business plan for DayJet and other air taxis has expanded the target market to include business travelers loosing regional air transportation options. With additional schedule cutbacks and rounds of layoffs announced this week by a number of air carriers both large and regional, it is going to get a lot worse by the fall. The expanding air taxi network should help provide much needed relief.

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Linear Air and DayJet Not Impacted by FAA Order

News of the Eclipse engine throttle inspection emergency order issued by the FAA this week as the result of the NTSB report on a recent Eclipse June 5 incident was surely widely publicized. However, it would appear that the magnitude of the national publicity in articles like that in the New York Times ("Federal Agency Grounds Light Jet Used as Air Taxi") was somewhat overdone, so to speak. With the order being issued Thursday, both DayJet and Linear Air had completed the required inspections with no impact on Friday's scheduled flight operations.

In today's Washington Post article entitled, "FAA Orders Jet Inspections After Emergency Landing," it's apparent there was no adverse impact on Fridays' flight operations of Linear Air's four Eclipses. The article states:

"Linear Air, the leading air taxi service in the Northeast, didn't cancel any flights yesterday. Linear has an Eclipse 500 stationed at Manassas Regional Airport. The company said it learned of the inspections at 8 a.m. and completed the FAA requirements on all four of its Eclipse 'very light jets' in three hours.

'It was quick and simple for us to put the additional pages into the aircraft flight manuals and do the simple test of the throttles,' said William Herp, Linear's chief executive."

DayJet fared much the same with its 28 Eclipses according to the Sun Sentinel article, "Boca Raton-based DayJet's 28 planes OK to fly after FAA orders inspections." All inspections were completed on third shift late Thursday and all planes were ready to fly as scheduled Friday morning.

According to Eclipse, physical inspection of the throttle takes about 10 minutes per aircraft and the order required the insertion of new emergency procedure pages into the aircraft's flight manual for procedures for dual engine-control failure.

Yesterday's online version of the Wall Street Journal has an informative article entitled, "Eclipse Says Its Jets Haven't Been Grounded." Interestingly, that article stated:

"Investigators are concerned because such a failure was not anticipated during testing of the very light jet, which is aimed at private pilots who are ready to move into jet airplanes from lower-performance propeller planes.

Mr. Raburn said Eclipse believes it can fix the problem with a change in its software, but he said the company will make additional design changes if necessary. 'I don't want to downplay this. There is a condition here that we did not anticipate,' he said."

Anyone involved in aviation knows that with any new model of an aircraft there will be failures, malfunctions and challenges that will indeed never be experienced in thousands of hours of testing, simulation or certification of the aircraft, but will inevitably occur once the aircraft becomes operational and matures. While the FAA order based on advice from the NTSB Board appeared a little conservative and was most likely due in part to the political pressure of the current environment, any new platform can expect such development and maturity "events" once it becomes fully operational. For that matter, any mature platform can expect the same as the airframe ages.

In the active duty Navy and the Reserves, I flew in some P-3 aircraft from 1987 through 2005 that were older than me. During those years, we received countless official changes to various "emergency procedures," on an aircraft that had cumulatively millions of hours of operational flight time. That's not unexpected during an aircraft's lifetime. The Airworthiness Directive issued this past week for the Eclipse June 5 incident is just part of the process.

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Unsubstantiated "Safety Concerns"

I am sitting at New York's LaGuardia Airport (my flight is delayed) after a couple days of business in New York City and having attended the American Bar Association's Section of Aviation Litigation Seminar. Yesterday's USA Today's article entitled "Small Jets Spur Concerns" was rather disappointing. It demonstrates the continued lack of understanding of the very light jet industry and air taxis flying vljs. While it's easy to blame the current and future mess of our outdated, antiquated and underfunded air traffic control system on the "blackening of the skies" hysteria of new very light jets, there is just no substantive data that supports those concerns. Reporter Alan Levin begins the article with the following: "A new generation of small jets is threatening to clog congested airline routes and is raising safety concerns, according to air-traffic controllers and airline pilots." That's a little misleading. Here's why:

The truth of the matter is that the prediction of a massive wave of vljs taking to the sky has just not materialized. First, manufacturer output has not come close to meeting production projections. Second, the economy and fuel costs have further dampened the acceleration of the market. Third, it's hard not to question the potential bias in the article related to the adverse comments from the member of the air traffic controllers' union and the Airline Pilots' Association. Both of those groups are good groups, but they clearly have their respective agendas. They also surely have some self interest in promoting the bleak message if "hundreds of the jets begin filling the skies."

Most unsubstantiated is the safety concern of ALPA's Safety Chairman as summarized by the author: "Pilots are also concerned because the small planes made by Eclipse and several other manufacturers are exempt from having to carry several major safety systems required in airliners. . . . For example, the DayJet planes do not carry the warning system designed to prevent mid-air collisions, even though the planes can be flown at high altitudes with other jets."

True, the vljs like Eclipse do not carry the same "warning system designed to prevent mid-air collisions," but the large planes likely flown by the ALPA Safety Chairman probably do not have near the state of the art, new, highly sophisticated avionics equipment in the Eclipse and even in the Cirrus SR-22 for that matter. That advanced avionics equipment makes these aircraft capable of NextGen and precision RNP guided flights. And, the concern over the slower speed of the vljs clogging the airways is also a little extreme. That's why there is vertical altitude separation. How is controlling tomorrow's vljs in congested airspace any different or more challenging than controlling the hundreds of piston driven and prop general aviation and air taxi aircraft already flying?

The vljs are indeed sophisticated aircraft. They will be faced with the same safety issues as any other aircraft. They will have incidents and accidents just as any other aircraft. Without any valid data substantiating safety trends or congestion concerns, it is most prudent to avoid the hype and withhold judgment about how they will impact the future. Anything else - at this stage - is just pure speculation.

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DayJet's Friends & Family Promotion

In addition to offering 50% off flights at its two newest DayPorts - Jacksonville and Sarasota - DayJet is also offering a Friends & Family Program during the month of June. With the addition of these two locations, 62 percent of Florida's 18 millions residents now live within 35 miles of a DayPort. For those of you who have an acquaintance, business colleague or a family member who is a DayJet member, the Friends & Family Program allows you to get a waiver of the $250 membership fee. Many folks are getting notice of the Program by email and a referral code in that email allows waiver of the fee. Otherwise, you can also contact DayJet for a referral code.

Expanding within its home state of Florida makes a tremendous amount of sense, and these are two great business centric cities. Further, as the DayJet press releases note, both cities have experienced a decrease in scheduled air carrier flights in the past seven years. With the tremendous economic pressure on air carriers as a result of fuel costs, we are going to see a great number of airports seeing a decrease or a total loss of scheduled air carrier service.

In a post earlier this year, I stated that the best marketing for air taxis is viral marketing. The DayJet Friends & Family Program is an excellent example of such.

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The Need for Sustainable Business Models (Lower Fuel Costs)

There is a good article in yesterday's New York Times discussing a number of US operators entitled "Air Taxis Fly Into Financial Turbulence." It includes a discussion on Dayjet's recent inability to secure another round of financing and its need for market expansion to obtain a critical mass for continued future operations. The most interesting part of the article confirmed that need for additional funding for DayJet's sustainability:

Can DayJet make it without expanding to that critical mass? '"Absolutely not," Mr. Iacobucci conceded. He said he nevertheless believed that critical investment would materialize as it became more clear that air taxis were practical and would become more so in the future. "For us, it’s all a matter of timing," he said.

However, the article also discusses current operators SATSAir and Linear Air who are both expanding their services. Joe Leader, the President of the Air Taxi Association (of which I serve as General Counsel), is mentioned and quoted throughout the article in addition to article providing a link to the Association's website.

Speaking of trade associations, the Air Transport Association ("ATA") represents almost all of the major Part 121 air carriers. It is a well run organization with significant influence in DC. While in Washington last week, I had lunch with one of its senior executives and a long time friend. The ATA sends out a great, free daily email news update ("SmartBrief") with summary descriptions and links to aviation news primarily focusing on its air carriers. Yesterday's ATA SmartBrief included a mention to the Times air taxi article. The Times article closes with a recognition by Joe Leader that the current Part 121 major airline market is cutting service and leaving some markets all together thereby presenting an opportunity for the air taxis to provide services to these areas.

Also on yesterday's ATA SmartBrief was a link to a Business Travel News Online article discussing a recent speech by William Ris, the Senior Vice President of Government Affairs at American Airlines. Mr. Ris is a fellow attorney and a very well respected spokesperson for American Airlines who is resident in DC. According to that article, "American Airlines is losing $3 million per day under the current fuel prices and the industry should expect further capacity cuts and the introduction of new airline revenue streams as fuel is now the carrier's largest expense." Likening the rising fuel prices to a tidal wave, here is what Ris said:

"We are not in a perfect storm," Ris said. "That's where all the storms come from different directions at once. We are used to a lot of headwinds in our business. We are not in a perfect storm. We're in a tidal wave coming from one direction and that's the price of fuel."

. . . . .

"For every $100 dollars of revenue that an airline takes, right off the top $20 or $25 go to taxes and fees," Ris said. "Now with the fuel prices, $40 goes just to fill up the tank. That leaves just 40 more dollars to buy airplanes, maintain the fleet, pay our people, fund pensions and healthcare, pay rent and a variety of other expenses. That is not a sustainable business model."

I have said it repeatedly, the fuel prices and tightening capital markets are hurting everyone in the aviation business. It's not just air taxis that are adversely impacted. Unfortunately, it appears it will get worse before it gets better with no end in sight to the soaring fuel prices. Let's hope the air taxis and the air carriers get some relief as both provide important services to our national economy and can work to compliment each other by increasing air travel options.

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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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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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"Trip Reports" on DayJet

There have been two more informative write-ups on DayJet recently. The April issue of Flying Magazine has a nice article by Dick Karl entitled "Hey! Taxi!" and Esther Dyson's Flight School Blog (more on Esther later) described her recent visit in an entry entitled "Trip Report: DayJet." Both took rides on the Eclipse aircraft and were impressed with the DayJet operation. Both analogize the company to the early days and vision of FedEx. Here are some of the details from those articles:

• DayJet pilots make $50,000 per year and many are in fact former airline pilots.


• As of January, more than 1,000 individuals had paid the $250 to be members to book flights.


• One third who had made a trip had already booked another one.


• Those buying more than one trip average 12 days between trips.


• Of the all the DayPorts, Lakeland and Tallahassee, Florida have proven to the best with the state capital of Tallahassee drawing its share of legislators and lobbyists as customers.


• The most passengers flown in a single day were 50.


• 35% of all flights are empty leg positioning flights.


• DayJet has 260 employees.

Look for more mainstream press in the upcoming weeks as I understand a national financial magazine is considering an article on air taxi operators.

On a different note, in my travels this week to visit a client in Columbus, Ohio, I experienced the impact of the national MD-88 grounding events and took a 36 hour delay in getting home arriving back at 2am this morning. While I saw many yelling and complaining in the airports about the actions that led to the hundreds of cancelled flights, I never have been one to complain about an air carrier's desire to inconvenience me to make sure the plane I am flying on is safe. In fact, I typically applaud those actions. Perhaps because in my profession, I have seen the results of those who did not exercise such sound, safety-conscious discretion, I am much more appreciative when I see those operators who do. Reminds me of a pearl of wisdom I learned in Naval Aviation and have come to appreciate more with age and maturity: "If there's doubt, there's no doubt."

To that extent, I will also be discussing FAA compliance and FAA investigations in the future. It is a matter that every Part 135 operator must be prepared to address.

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Good Week for Air Taxi News Coverage

I continue to see articles that discuss the "fledging" air taxi industry. The same articles often quote national aviation industry analysts, pundits and experts who consistently provide negative comments about the future of the air taxi market. So, favorable news coverage this week was indeed welcome.

This week was a good news week for air taxi visibility bolstered by favorable coverage of Eclipse, Dayjet and LinearAir by Aviation Week/Aviation Daily in addition to national CNN coverage of ImagineAir.

As I discussed earlier this week, the week started with some positive growth predictions at the FAA Forecast Conference. There was also an insightful writeup on Dayjet published on Tuesday by Aviation News. Claiming to now to have 28 aircraft and 1,200 members, Dayjet stated they are getting some interest from corporations who are asking for service into cities that are not currently DayPorts or DayStops. That indicates to me that the word about the value proposition of air taxi travel is indeed spreading. Frequent customers tend to be no surprise: "attorneys, lobbyists, a fair number of middle managers in real estate or engineers, higher end sales in IT and medical, and top execs for smaller companies." They all fit the profile of individuals whose efficient utilization of time matters to the client (and them) and who understand the "time value of time" that I have discussed before. Dayjet's average flight length is running about 300 miles with 90 percent of the flights being less than 600 miles. In terms of future aircraft acquisitions, Dayjet expects 60 to 70 additional Eclipse 500s by late spring. It says it will have 300 aircraft by the end of 2009.

The week concluded with additional positive exposure and awareness of the VLJ and air taxi marketplace. Here are the highlights:

LinearAir's partnership with Virgin Charter received a lot of coverage including an article in Aviation Daily today. The Aviation Daily article opens: "The on-demand air taxi market soon will not be able to keep pace with the demand, small aircraft manufacturers and and air taxi operators say, and this segment of the industry will be expanding worldwide." Claiming to be the first and only company to provide Eclipse 500 services as a partner with the new Virgin Charter enterprise, LinearAir continues to demonstrate its multi-faceted marketing approach to its services. I have previously discussed LinearAir's great referral program. In addition to the Virgin Charter partnership, according to LinearAir's Andrew Locke, they are also experimenting with variable pricing models whereby the longer you fly, the greater the percentage reduction in the cost you can receive. Here's how it works: For flights over 3 hours, you get a 5% discount and then a corresponding additional 5% discount per hour for flights of up to 8.1 hours receiving a 30% discount. Perhaps a refueling stop will be needed, but this pricing model is another incentive to give them a try.

Eclipse was also represented at the FAA Forecast Conference and covered by Aviation Daily today. According to Eclipse's Matt Brown, the VLJ market is growing by an average cumulative rate of 21%. Eclipse has already delivered 31 aircraft this year and hopes to be producing one airframe per month by the end of this month. Currently, 78% of the aircraft orders are from the domestic United States, but Eclipse projects that half of the orders will be from international sources by 2010. According to the Aviation Daily article, Eclipse "sees India, China, Australia and possibly South America as growth markets." With their contributions to technology and international business, can anyone doubt that India and China are ideal markets for the Eclipse? Eclipse's current customers includes owner/pilots, corporations that before could not afford an aircraft, Part 135 air taxi and charter companies and a potentially emerging new sector of pilot training businesses that provide multi-crew/turbine time.

ImagineAir's 24 year old CEO Aaron Sohacki (some twenty years my junior) received some great exposure this week by being featured on CNN's "Young People who Rock" series. Aaron is a Georgia Tech graduate as is ImagineAir's President, Ben Hamilton. Both are pilots. Like me, Aaron as a child enjoyed going to the airport with his father to watch airplanes. According to CNN's website, "'Young People Who Rock' is a weekly interview series focused on people under 30 -- from CEOs to entertainers to athletes to community and political leaders -- who are doing remarkable things." ImagineAir's leadership team includes some bright young men like Aaron and Ben in addition to some more "mature" members like its Director of Operations, Ken Phelps, who has over 35 years of experience with major airlines and over 16,000 flight hours. Ironically, Ken and I were at one time employed by the same great major air carrier based in Atlanta.

There are a number of air taxi operators who have announced they will be airborne before year's end. The positive press is encouraging and is more than mere irrational exuberance. It's proof of the demand for the platform driven by delivery of time savings and quality of life improvements and fostered by further education of the target customer both here and in the international marketplace. Overall, a very positive week.

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Florida:Next Gen's Testbed & ADS-B Update

At the 33rd Annual FAA 2008 Forecast Conference in Washington DC today, it was very positive that both Acting Administrator Sturgell and DOT Secretary Peters continued to discuss the mandate and urgent need for implementation of NextGen and ADS-B. This type of support and advocacy from the top of the DOT and FAA will be critical because it is clear from many of the comments filed in response to the ADS-B NPRM, that the proposed change is not welcome by many. At the Conference, Secretary Peters announced the following about NextGen:

"And I am announcing today that we have selected Florida as the test-bed for this transformational technology. The Southeast has a good mix of traffic and a good mix of weather – just the kind of place to put NextGen through the paces . . . . By putting the latest technology in our towers instead of the state’s theme parks, we’re going to make getting to and from Florida a model for the future. Starting this summer, we are going to roll out NextGen technology at Daytona Beach. In Miami, we will be employing a descent technique that saves fuel, noise, and emissions. The national debut of ADS-B technology – the backbone of NextGen – also will begin in Florida. Adding ADS-B coverage in the Gulf will allow planes to fly closer together without compromising safety. Today, we have to keep the planes far apart – anywhere from 10 to 15 miles. But with ADS-B, we can reduce that down to 5 miles, freeing up capacity."

I have previously discussed Florida as one of the states leading the way, so Secretary Peters' announcement is consistent with Florida's support of aviation innovation. Based on public comments and filings in the official FAA Docket, the FAA, the DOT, GAMA, the NTSB, Dayjet, Linear Air and SATSAir all are generally supportive and in favor of ADS-B. In fact, Dayjet and the NTSB urged the FAA to also consider the implementation of "ADS-B In" technology which would provide the cockpit with a multitude of information.

At the Forecast Conference, Secretary Peters today further stated: "We know the passengers are coming – over 1 billion by 2016. We know that, by 2025, revenue passenger miles are expected to more than double, increasing by an average of 50 billion a year. That is the equivalent of adding a carrier the size of Northwest to the system every 18 months."

Based on the large number of comments filed on the docket opposed to ADS-B, it will take some vision, insight, and fortitude to continue to move forward with its timely development and successful implementation. To sit idly by and not move forward or acknowledge the advantages of ADS-B in light of those staggering numbers would not be prudent. Air taxi operators, many of whom have leveraged the advantages of computer technology and software, surely understand that. At last year's FAA Forecast Conference, the air taxi industry was well represented by SATSAir's Steve Hanvey being a panelist. It's good to see that Dayjet's Malcolm Murphy is likewise scheduled to be a panelist tomorrow morning at the Conference. More on the FAA's 2008 air taxi forecasts soon.

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States and Municipalities Leading the Way

Several states and municipalities have shown an understanding of the multi-faceted impact that an air taxi can have on viable economic development. Air taxi services are opening geographic regions to convenient and reliable air access and providing options for business travel that have never before been available. I want to highlight some of those initiatives. Here are some forward looking states and examples of a few municipalities who are leaders in their understanding and support of air taxi programs.

Virginia was the first to lead the way as the home state of the original NASA SATS program. Today, it has a lively and engaged Department of Aviation which has made a strong commitment to the further development of air taxi transportation. Virginia is visibly present at every event where air taxis are discussed including NBAA and the recent International Air Taxi Convention. Because of Virginia's insightful and proactive leadership, it is no surprise that SATSAir, Linear Air and ImagineAir all frequent the Virginia skys and airports. In the upcoming months, look for Skyway Air Taxi to join the sky as another air taxi operator there.

North Carolina is another leader. In October of last year, the state was the first to receive a significant federal grant award based on a novel application pursuant to the Small Community Air Service Development Program. The award of $573,278 was received based on an application developed in partnership with SATSAir with the specific purpose of increasing air taxi services to 11 of the state's underutilized municipalities. It was a smart application based on teamwork and vision.

Florida, DayJet's home, is also a leader. Florida has welcomed DayJet and plans to have a Very Light Jet Center of Excellence in Tallahassee. Even more important, last November Florida announced a specific program whereby state employees can use an existing Air Taxi Services state contract to fly SATSAir, DayJet or ImagineAir on official business trips at pre- approved and negotiated rates.

Cities all across Florida are receiving the benefits of air taxi service. For example, Naples, Florida claims to have already enlisted over 70 DayJet members from 33 companies who have flown since its opening as a DayPort in early January. In a February 13th article in the Naples News entitled "DayJet Trippers," Naples Mayor Bill Barnett stated: “This city has just been waiting for a service like DayJet.” “This is a great day for the business community. What this means to the business community is just phenomenal,” said C.J. Hueston, incoming board chairman of the Greater Naples Chamber of Commerce. By the way, at the Naples' event, DayJet claims to have made over 1000 takeoffs and landings in January.

In terms of other municipalities, I have also been impressed with the City of Savannah. Named Georgia's first DayPort, Savannah has recognized the business and economic impact of all aspects of general and commercial aviation. It is no mistake that Gulfstream makes its home in Savannah and continues to move forward with a $300 million, 7 year expansion plan there. It's also no mistake that the Savannah airport is called the Savannah Hilton Head International Airport even though Hilton Head Island is an hour drive north of Savannah in my home state of South Carolina and has its own airport. But while the Town of Hilton Head Island passed an anti-aviation and short sighted local zoning ordinance last December purposefully limiting the length of its airport's 4200 foot runway (that I worked hard to prevent) and which the Aircraft Owners and Pilots Association also vocally opposed, Savannah understands the power of aviation commerce. Several weeks ago, DayJet was in town speaking to over 50 leaders of Savannah corporations and businesses at a meeting apparently arranged by the local Chamber of Commerce. For municipalities that want to be a DayPort, follow Savannah's lead. They understand.

Other municipalities are hoping -- and dreaming -- to get air taxi services. For example, in an article this past week in the Athens Messenger, entitled "Seeking a Lift for the Local Economy, the Ohio University Airport in Athens, Ohio, stated that it hopes to attract an air taxi service by next year. "On-demand air flight makes it more feasible to run a national business out of Athens," said a local businessperson whose employees are spending hours on the road on business trips. The Ohio University President stated that the University's efforts to bring on-demand air travel are centered on increasing the local economy.

Business people understand. So do academics. Air taxis do not demand government subsidies, but they do ask for passionate, vocal, and meaningful support from the state and local politicians and the business community so that the private/public partnership can thrive. Here's to Virginia, North Carolina, and Florida who are leading the way, and in so doing, reaping the benefits and rewards of air taxi service.

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Choices: Air Taxi "Per Seat" Pricing Models

Not all air taxi operations are the same. They use different aircraft and different pricing models. I am frequently asked how much they cost when I explain to others their tremendous time savings advantages. In the United States, there are several different emerging pricing models for such "per seat/on demand" travel. Regardless of the model, if you place a value on your time, air taxis are affordable. Here is a brief discussion of the models of current operators:

The true "air cab" model – Currently employed by SATSAir using the Cirrus SR-22 aircraft, just think of hailing a nice taxicab in New York City. The passenger gets the whole cab, with one driver and 3 seats – one seat in the front and two in the back. The passenger pays by the meter for the time in the cab. If there is a traffic delay, the passenger pays for that. The pricing is based on the aircraft's Hobbs meter. Prior to flying, SATSAir will quote an estimated price, but the actual price depends on the actual "engine on" time. Therefore, the quoted price might increase if there is an ATC delay or decrease if the aircraft arrives at that destination quicker than anticipated perhaps due to a significant tailwind. With SATSAir, the price per hour ranges between $495 to $595 if the passenger purchases a "package of time" between 5 to 20 hours. Normal non discounted package time runs $695 per hour.

Because the passenger is buying the whole aircraft, this can be an extremely economical pricing model for travel for a group of more than one. For example, a trip from Charleston to Savannah would be an approximate 111 mile, 2 hour car trip. On the other hand, it would be an 81 mile direct flight and probably take about 46 minutes in the Cirrus with an additional 4 minutes for runway taxi time. With a flight time package, one passenger would be charged between $412.49 to $495.83. If three people go on the same trip, the price drops to $137.50 to $ 165.28 per person. The cost does not change depending on the time of the flight, but if the aircraft is delayed on the ground, the passenger will pay more. Finally, the cab will go just about anywhere 7 days a week and if you want the cab to wait for you, the charge is $100 per hour.

The fixed price/full plane model - Like SATSAir, ImagineAir flies the Cirrus; however, ImagineAir sells the aircraft at a fixed price, not based on time. Pricing is available on line. ImagineAir sells flight cards that provide a discount from 5 percent ($3000 card) to 20 percent ($50,000 card) depending on the amount of the card. Assuming availability, ImagineAir quotes the Charleston to Savannah flight with an early morning departure at $420, but as low as $366 with the 20% discount flight. Here again the passenger purchases the entire aircraft, so the price goes down per passenger. Cost does not change if there is a delay nor does it change based on the time one wants to fly.

The single seat/gate time dependant model - DayJet is currently using this model in the Eclipse. On its website, a Charleston to Savannah trip would take 54 minutes. If one requests a 1 hour gate or window desiring to leave at 7AM and arrive by 8AM, the trip price is a premiun at $850. However, if one increases the size of that window, the price drops dramatically. By requesting to depart by 7AM and arrive by 9AM, the price is $628. The price drops further as the window expands: 3 hours - $454; 4 hours - $385; 5 hours - $313; 6 hours - $313.

DayJet calls it "Time Value Pricing "whereby the passenger can adjust the departure and arrival time gate. The larger the gate, the lower the fare will be because in effect the passenger is providing DayJet more flexibility in the scheduling and operations of its aircraft. All these quotes are "truly per seat." The passenger might share the 3 seat aircraft with someone else and with a large window, there might be one intermediate stop en route to your destination. The price is per person, so if a party of three buys all three seats and therefore buys the aircraft's full capacity, each person still pays per seat. In other words, there is no costs savings by aggregating the numbers in your party. Finally, with DayJet, one is limited to their selected destinations and weekday flying, but the list of destinations is increasing rapdily to include a significant geographic spread in 5 southeastern states. I expect the demand will ultimately lead to weekend flying, too.

Conclusion

In the future, the greater availability of air taxis in different aircraft and different pricing models will provide an incredible number of options for air mobility, thereby replacing hours on the interstate. Air taxi operators with multiple aircraft types -- including the Caravan, the Cirrus and the Eclipse -- will provide those options. There might be business trips when time is of the essence, speed is important and price becomes less of a concern. Book an Eclipse. On the other hand, a weekend getaway with flexibility in departure times for a small family is another scenario. Take a Cirrus. The key is that the different models and different aircraft provide new choices. Choices that before now were not available. And, there is no requirement for a Saturday night stay nor does the price decrease for round trips or depend on how far in advance you book the flight.

Quality of life, time savings and new choices are the key. A typical trip might be: Travel from Charleston to Chapel Hill, NC with 2 friends on Friday afternoon in a Cirrus to see a basketball game; drive from Chapel Hill to Charlotte Saturday afternoon by yourself in a rental car to visit relatives; fly from Charlotte to Peachtree City south of Atlanta Monday morning in an Eclipse for a business meeting; and fly back from Atlanta to Charleston Wednesday on a traditional commercial air carrier. Some states and municipalities see the clear advantages to an air taxi service. That will be the subject of a future post. In the meantime, I also expect the different pricing models to evolve somewhat. In the short term, considering the alternative means of getting there, air taxis are affordable, comfortable and highly efficient.

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More Insight on DayJet

This week, I attended the American Association of Airport Executives (AAAE) Finance and Administration Conference in Melbourne, Florida. There I participated on a vlj and air taxi panel discussion with Traver Gruen-Kennedy of DayJet. Traver has been with DayJet founder Ed Iacobucci for some time including his days at Citrix. Traver reminded the attendees that any new technology takes about 15 years for market acceptance. Consider the various stages of acceptance and use of the cell phone, iPods, laptop computers and portable automobile GPS systems. He provided more interesting insight about DayJet's start up, initial operations and future expansion plans. The details and roll out continue demonstrate the purposeful and thoughtful execution of an impressive business plan. Here is some of the information he shared with the group:

• In the next 2 weeks, he expects they will announce 3 more DayPorts.
• They are experiencing a 98% customer satisfaction rate and a large number of repeat fliers.
• About half of the initial fliers book a second flight within a week of the first flight.
• They have approximately 75 pilots now and are aiming for a ratio of 5 pilots per aircraft.
• Pilots fly in 2 daily shifts, come home every night and do not fly on weekends.
• They have 28 Eclipse aircraft now and will take delivery of the next group of 70 in May.
• They expect to be in "100 markets and 7 states" by the end of the year.
• They have deposits and orders on 1400 Eclipse jets for delivery by 2012, which is two times as many aircraft as any other current or prospective operator.
• By the end of the year, they expect to have 100 aircraft and 500 pilots.
• Each aircraft is flying 6-8 cycles per day.
• They are working on an RNP approved route between home base of Boca Raton and the state's capital, Tallahassee.
• They are hiring on average of 1 pilot per day. Pilots hired so far have an average of 15,000 hours.
• "Customers are more focused on the value than they are on what it costs."

By the way, because weight and balance issues are important to this small jet, they weigh baggage at check in. They weigh customers, too, on a scale.

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International Air Taxi Convention

The first day at the International Air Taxi Convention was full of information on this "disruptive and emerging" industry. Leading operators and manufacturers from the US and Europe were present with over 150 registered attendees. There were presentations from ETIRC, Eclipse, DayJet, SATSAir, Blink (London) and Bikkair (The Netherlands). Today, some of the most useful industry information came from the "up and running" domestic US operators, and there was also a good update by Eclipse. Here is what was put out by Ed Iacobucci of DayJet and Steve Hanvey of SATSAir.

DayJet Update

DayJet officially launched in Oct of 2007 with 650 paid memberships and 250 company members. The biggest challenge has been managing the operational planning of a highly dynamic and flexible flight schedule in that "human beings" are not injected into the software-driven scheduling equation until about 40-45 minutes before an aircraft's takeoff. They have achieved over 95% on-time performance (within 30 minutes of what the customer negotiated when tickets were purchased). Today, there were 37 revenue flights and 52 total flights including their training flights. All flights are tracked in real time by DayJet and Ed actually did so during his presentation.

They are currently operating 45 DayStops and 7 DayPorts. They are adding about 50 new members a week with approximately 392 existing corporate contracts. Their sales strategy consciously focuses on a client base within 25 miles of a DayPort. Customer feedback is that they are "very pleased" on what DayJet is doing. Customers have also stated that the aircraft is "bigger, quieter, and easier" than they thought it would be. There is never a change of planes, but there might be an intermediate stop based on the window of time for desired travel provided by the passenger. So far, frequent users are attorneys, lobbyists, professional services groups, engineers, and mid level site managers for developers. They modeled for 1.3 to 1.2 passengers per revenue flight and are running a "little under 1.2" right now.

If you want to see DayJet flights in action, the Flight Aware website is a great real time tracking website.

SATSAir Update

Many people including some customers, the media, and investors still do not understand the air cab market. SATSAir has been operating now for 3 years. Providing reliable and outstanding customer service remains very important with delivery of a true customer "value proposition." They will fly into over 500 different airfields this year with less than 5% being major hubs. They are currently operating 26 airplanes and their studies project at least 1000 air taxi aircraft could operate in the southeast area of operations.

More than 50% of their clients are coming "out of cars" or a typical 3-4 hour car trip with only about 20% previously using air charter services. Passengers pay on average $500 per hour. Their flight profiles started with about 99% being business trips and now have evolved to about 85% business trips with the rest being discretionary, pleasure-related travel including college sports games, blind dates, and the Super Bowl. The average flight is 1.5 hours and they will fly about 1500 passengers per month.

Eclipse Update

Eclipse expects its full Part 142 FAA certification within days/weeks. As such, pilots will be able to receive complete Eclipse aircraft training in ground school and full motion simulators. By April, they expect to have 3 certified full motion simulators. Current service centers are located at Gainesville, FL, and Albuquerque, NM. Future service centers will be located in Albany, NY and Van Nuys, CA. The ETIRC partnership results in full service and support implementation for European and Eastern European customers. The ETIRC partnership does not move any aircraft production out of New Mexico (they have reassured politicians of that) where there are 1600 employees and plans to hire 700 more this year. The partnership simply provides a platform for international acceleration and delivery of the product. They have a 2600+ order backlog and 444,000 square feet of facilities. They have delivered more than 100 aircraft to date. The focus this year centers primarily on volume production.

So far, a lot of good information and networking and a shared vision -- and execution -- that is indeed global. On the lighter side, Bikkair showed a very entertaining, humorous and effective marketing animation video that has just been posted on their new website. It captures the concept of the benefits of air taxi travel for the business industry.

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DayJet on NPR and My First Air Taxi Experience

Today, DayJet was featured in a great story on "All Things Considered" on National Public Radio. I found the four minute show a great primer on air taxi operations, in particular DayJet and Ed Iacobucci. Like the other visionary air taxi industry leaders, Ed is a true believer and has spent millions of dollars and five years developing the product. Just last week, I was elated to learn that DayJet is now flying into South Carolina, including Charleston.

The NPR commentary includes the usual industry analyst skepticism, and perhaps I am overly optimistic. But, like Ed, the first time I took an air taxi flight, I became an instant believer. I know many others now feel the same. Ed's comments on NPR today reminded me of that first flight and why an air taxi makes so much sense to a business traveler. Here's the story I have shared with many others:

In the summer of 2006, my first flight was on SATSAir in a Cirrus from my hometown of Mount Pleasant, South Carolina to Greenville, South Carolina. Traditional airline travel for that one day trip and route was out of the question in terms of cost and the inefficiency of hub and spoke connections. I had to go to Greenville for a day trip and a meeting involving an all-day mediation of a case that I was working on. In the past, I would have gotten up at 4am to get on the road by 5am for the 220 mile, 4 hour interstate drive hoping not to spill my Starbucks coffee along the way. I would not have had time for my usual morning routine which includes reading the local paper and the Wall Street Journal. I also would have had to prepare for the mediation the day before. Assuming no accidents or traffic on the interstate, leaving at 5am would get me to Greenville by 9am for the mediation to commence by 930. At day's end, I would have opted to drive back around 5pm getting home at 9 or 10pm with some departure traffic, enjoying a fast food, drive-thru meal en route. Worst case, if the client wanted to meet early in the morning before the mediation and the mediation lasted too late, this easily could have turned into a three day evolution with two nights in the hotel.

In terms of dollar costs and hard expenses, that's a few meals, two tanks of gas and perhaps one to two nights in a hotel room (maybe $400.) In terms of professional and personal costs and value of my time, that's a long 8 hours on the road. Since my retention agreement with the client provided billing for travel time, that's easily over $2200 in billable time. Regardless, that routine makes for an exhaustive day. Pulling it off in one day results in another "dark to dark" day when I don't see my family and children in an already overly-traveled life.

In comparison to the traditional routine of vehicular travel, the air taxi experience was unbelievable. I woke up around 530am, read the newspapers, got my Starbucks and arrived at the sleepy Mount Pleasant Regional Airport (no hassle parking), a few miles from my home at 645. By 650am, I heard the overhead buzz of the Cirrus as it circled the field for landing. I walked out of the FBO to the aircraft and met the pilot. Within 10 minutes of his landing, we were airborne arriving at the Greenville Downtown Airport a little after 8am. There, a rental car was waiting for me, pre-arranged by SATSAir. The ride in the front seat was smooth, comfortable and fun. While I opted to chat with the pilot en route, I was free to listen to the available satellite radio, to review file materials or to just sleep.

I was at the mediation location in 15 minutes after landing and ready to go by 830am. I had an hour to collect my thoughts and prepare for the mediation. Fortunately, we settled the case and I was back at the Greenville airport by 430pm. Ironically, the impending aircraft departure time had the added benefit of actually pressuring the parties to reach closure. Plane and professional pilot ready and waiting, we were airborne by 445pm. Enjoying a good tail wind, we landed around 530 pm and I was at my house by 545pm in time for dinner with my family.

How much did air travel cost? Utilizing a traditional mindset focusing solely on the dollars and cents, it was not inexpensive (good lawyer double negative). It was about $500 per hour from engine start to engine shutdown for a total of a little over $1000. The rental car was about $30. The trip was worth every penny and at the end of the day, an overall costs savings that made it more economical to the client!

The success of the air taxi model requires a more practical analysis of the intrinsic "time value of time," a focus on one's quality of life, and an acknowledgement of opportunity cost savings. I was able to convince the client to pay for the ticket because it was cheaper than paying for 8 hours of billable travel time, hotel rooms, meals and gas. As a further incentive to the client, I offered not to charge for the travel time in the aircraft. I was home not nearly as exhausted as I would have been after driving. Instead, I got a good night's rest at my home, in my own bed. Most importantly, I was able to tell my children "good night."

For business travel, air taxis surely make sense. I acknowledge that the economic model is not for everyone and not for every trip. (I will discuss the various methods and models the existing air taxi services use to charge for travel in a future post.) But for many, if you focus on the value of your time and your quality of life in a fast-paced business world, it is a great new life-altering choice. A new alternative. That flight, on hot summer day in 2006, was an eye opener for me. It all made sense.

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The Year of the Air Taxi

This will be the "Year of the Air Taxi." I am confident that 2008 will be an exciting year for air taxi development and operations. Last year, we saw the emergence and success of several air taxi companies including SATSair, Linear Air, ImagineAir and Dayjet - all ironically up and flying on the East Coast. Even more exciting, the newly formed Air Taxi Association grew exponentially -- not only domestically, but also internationally.

This year there are a multitude of new Part 135 operators forthcoming in addition to several new aircraft being certified by the FAA and entering full scale production. In the meantime, the Cirrus SR-22 has already proven to be a reliable air taxi platform for SATSair and ImagineAir and the end of 2007 saw the Eclipse 500 emerge as an operational air taxi platform for Dayjet.

The year starts off with a bang: The first International Air Taxi Convention to be held in Fort Lauderdale, Florida from January 23rd-25th. This three day forum will bring together operators and manufacturers from the domestic and international markets. Historically, it appears to be the largest convention focusing solely on international air taxi operations. As General Counsel of the Air Taxi Association, I am excited to be a part of the Convention chairing the third day which will focus on some interesting legal and operational issues.

Regardless, I will join a multitude of folks there who are firm believers that the further emergence of viable air taxi options this year will in fact revolutionize air travel and more so - automobile travel - making 2008 The Year of the Air Taxi.

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