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 While it's easy to blame the current and future mess of our outdated, antiquated and underfunded air traffic control system on the "blackening of the skies" hysteria of new very light jets, there is just no substantive data that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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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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FAA's 2008 Air Taxi/VLJ Industry Forecast: Sustained Growth

The 33rd Annual FAA Industry Forecast included some interesting information on VLJ and air taxi predictions. My last several posts have discussed the commercial and general aviation economic indications. The FAA's forecast written materials are insightful and positive providing specific air taxi and VLJ predictions. As posted and available on the FAA website, here are some of the highlights of the FAA Aerospace Forecast, Fiscal Years 2008-2025:

• The actual number of 2007 VLJ deliveries fell short of the FAA's 2007 prediction (143 vs. 350), but that does not temper future predictions.The 2008 FAA report projects that VLJs will enter the market at 450-500 per year for a total of 8,145 by 2025.
• "This is in the middle of a fairly wide range of industry predictions. Those who believe the time has come for the air taxi industry tend to have higher fleet forecasts. Those who are less sanguine about the prospects for the on-demand air taxi industry tend to have more conservative fleet forecasts. If the on-demand air taxi industry does gain widespread acceptance, it will spur the demand for VLJs and the general aviation active jet fleet and hours flown could be higher than forecast."
• VLJs/air taxis are expected to average 1,500 hours per year.
• Commuter/air taxi operations are predicted to fall 1.4% in 2008 and then increase 2.7% in 2009 as air taxis stimulate this marketplace with a total 2.7% increase over the entire duration of the FAA's 2025 projection period.
• "Over the forecast period, commercial aircraft instrument operations are forecast to increase at 2.5 per cent per year with increases in commuter/air taxi activity surpassing air carrier activity. General aviation instrument operations are projected to grow 2.1 per cent per year, reflecting in part the expected impact of the introduction of VLJs to the general aviation fleet. "
• "Partly because of the influx of new VLJs, the number of general aviation hours flown is projected to increase an average of 3 per cent per year through 2025."

The complete FAA Report is available with a number of supplemental charts and supporting documentation online. These US domestic market numbers obviously do not even take into account the European and worldwide market demand where we have already seen overseas interest in the Eclipse 500, the Cessna Citation Mustang (Blink and Bikkair) and the Embraer Phenom 100 (Jetbird). More positive aviation predictions in a time filled with otherwise negative economic news!

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No Recession In Aviation

Now that the news is out that the United States is in a verifiable economic recession, I wanted to discuss what I have seen in the aviation sector, in particular, the demand in the general aviation sector which of course includes platforms for air taxis and on demand air travel. For the foregoing reasons, there is no recession in aviation:

In a speech at the end of last year, acting FAA Administrator Bobby Sturgell talked about the records sales both in commercial and general aviation. The numbers are mind boggling. Sturgell stated: "Boeing and Airbus set sales records — 65 billion dollars in firm orders in the first two days of the Dubai air show. Dubai Aerospace alone is buying a hundred planes from each manufacturer at a total cost of more than 27 billion dollars. We’ve got a similar success story on our hands with business jets. There was a time not too long ago when North America accounted for 80 percent of biz jet purchases. The demand from Europe, Asia-Pacific and Latin America is soaring. Projections for next year point to deliveries of more than 1,300 business jets worth a record 22 billion dollars. That’s up from 506 deliveries worth $8.2 billion in 2003."

Last month, a similar exuberant forecast was emphasized at the General Aviation Manufacturer's Association ("GAMA") Annual Industry Review and 2008 Market Outlook Forecast by GAMA Chairman and Cirrus founder Alan Klapmeier. The GAMA press release discussing Klapmeier's comments noted that in 2007: "Record industry billings totaled $21.9 billion, eclipsing last years’ figure by 16.5 percent. Year-end, worldwide shipments of general aviation airplanes totaled 4,272 units, the most in more than a quarter century and up 5.4 percent over the previous year's total of 4,053 units. Aside from the record set for year-end billings, the industry also experienced an all-time high in business jet shipments, delivering over one thousand units for the first time in history.The piston airplane segment was down 2.9 percent in 2007, but still posted the second best year in over two decades. Total units decreased from 2,755 in 2006 to 2,675 in 2007. Shipments of turboprops increased 11.4 percent, up from 412 units in 2006 to 459 units in 2007. Business jet shipments reached an all-time high of 1,138 units, up 28.4 percent over last year’s figure of 886 airplanes." GAMA's website has a great presentation and a pdf copy of the informative worldwide general aviation forecast which includes Part 135 numbers.

As further reported by Aviation Week also discussing Klapmeier's comments, "GAMA estimated that the economies of emerging markets are growing at rates that are three to four times that of the U.S. economy, and U.S. GA exports jumped 28.2 percent in 2007. Europe accounted for almost 25 percent of the business jet market in 2007. . . This international growth helped fuel a book-to-bill ratio of 1.9 for business jets and helped bolster the estimated industry backlog to $58.1 billion - almost three times the amount manufacturers billed in 2007. Klapmeier also pointed to the employment base as another sign of the strength of the industry. While U.S. employment overall was down .8 percent in 2007, U.S. GA manufacturers increased their employment base by 9.8 percent."

The worldwide excitement and growth related to commercial and general aviation only further fuels the prospects for the air taxi industry as the benefits of air travel become more available. The prospects for the vlj and air taxi market are likewise favorable and are surely part of the general aviation numbers, orders and predictions.

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Jetpool's VLJ Show in the Carolinas

Last year, I attended the Jetpool VLJ Show in Charlotte, North Carolina. As far as I know, it really was the first VLJ-specific show where the focus was exclusively on VLJ platforms. While VLJs can be seen at the NBAA Convention, they can also get lost in the thousands of attendees and the hundreds of thousands of square feet of exhibit space. Not so with the Jetpool Show. It was in an FBO hangar with easy access and close parking. And best of all, it was free.

Jetpool is another innovative company focusing on VLJ management and operations. I first met its CEO Ryan Stone several years ago. Like me, Ryan has a Navy officer background. Unlike me, Ryan went to the Naval Academy and was a submarine officer. Anyone who can run a nuclear reactor and drive a submarine is a smart person. Like me, Ryan went to a fine institution - UNC-Chapel Hill (my undergrad alma mater) -- later in life for his MBA. His partner and Jeptpool President Paul Sameit is also a former Navy officer. Like Ryan, Paul also went to the Naval Academy and has an MBA. Like me, Paul got his aviation start in the P-3 Orion chasing submarines and those in submarines. Perhaps that's why I admire Jetpool so much. Smart, innovative, and a relatively young group of veterans and entrepreneurs with graduate degrees and a passion for the future of aviation. Jetpool's leaders have put together a business plan and are executing it with a great deal of mission, vision and success. And, look for Jetpool to get its Part 135 charter application approved in the near future so they can begin charter operations in the Carolina blue skies.

In the meantime, they are spending a great deal of time planning and executing a great show and a forum to educate others in that Jetpool is again putting on The Future of Business Aviation VLJ Show in Charlotte on Friday afternoon March 7 and Saturday March 8. It's a great opportunity for those who are interested to see and touch these platforms or mock-ups of next generation aircraft at a convenient, focused venue. It's being supported by the Air Taxi Association. If you see anything you like there, give me a call and we can help you out. Otherwise, it's a great excuse to visit an airport in the spring (almost) in the Carolinas.

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