Personal Jets Disrupt Aviation According to The Wall Street Journal,1 travel in private jets will triple in the next 10 years with the introduction of what is being referred to as very light jet, or VLJ, aircraft.
These new jets will introduce a whole new group of passengers and pilots to the convenience of traveling point-to-point.
In addition, they will make air taxi service at more than 10,000 smaller landing strips a reality.
That’s 20 times the number of destinations served today by commercial airlines.
In fact, Clayton Christensen, writing in the January/February 2004 issue of Harvard’s Strategy & Innovation2 newsletter, identified VLJs as a classic “disruptive technology.”
And, nearly two years ago, the Trends editors reached the same conclusion.
Not only are the VLJs less expensive than traditional corporate jets, they’re less expensive in many cases than propeller-driven aircraft.
Some VLJs will cost as little as $950,000 and they will range in price up to $3.65 million for the 10-seat Spectrum 33.
Compare that to a 2005 Beechcraft King Air 200 turboprop, with 10 seats, priced at $4 million.
The first VLJ to be commercially available is the Eclipse 500, the brainchild of former Microsoft executive Vern Raburn.
Customer deliveries are expected to begin by late 2006.
The fully loaded twin-engine jet requires only 2,200 feet of runway to take off, which is half to two-thirds of what most business jets require.
That opens up access to as many as 20,000 landing strips in the United States alone.
The Eclipse is priced at under $1.5 million, which is half the price of the cheapest twinjet now flying.
As a result of this, the air taxi industry is “chomping at the bit” to get their hands on these aircraft.
A company called DayJet in Delray Beach, Florida, has already ordered 309 Eclipse 500s and plans to begin flying point-to-point air taxi service, priced at between $1 and $3 per mile, later this year.
A very light jet is defined as anything under 10,000 pounds.
For comparison, a common four-seat propeller-driven aircraft, like a Cessna 172-RG, weighs about 2,500 pounds when loaded.
Meanwhile, the smallest traditional business jet, the Cessna CJ-1 weighs 10,700 pounds.
The Eclipse 500 falls right between these two categories with a weight of 5,600 pounds.
However, the big difference between VLJs and propeller-driven aircraft comes in performance.
The King Air 200 can go 272 knots at 30,000 feet. The Eclipse can go 375 knots at 41,000 feet.
As you would expect, such a revolutionary market has attracted plenty of competition.
According to Aviation International News,3 close on the heels of the Eclipse are two other jets.
The first is the Adam A700, the creation of another high-tech millionaire, Rick Adam, formerly of Goldman Sachs, which is a major investor in the project.
The A700 is almost as large as a regular business jet, providing room for a lavatory.
While it will go as high as the Eclipse, it won’t go as far or as fast. The A700 is priced at $2.2 million.
The other VLJ that will debut at about the same time as the A700 will be Cessna’s entry into the field, the Citation Mustang. Like the A700, it’s roomier than the Eclipse.
It won’t carry quite as much as the A700, but it will carry it farther and at about the same speed.
The Mustang is priced at $2.5 million.
Following these VLJs to market will be a new class of single-engine jets priced from $950,000 to $1.2 million.
Expected in 2008, these will include the Excel-Jet Sport-Jet, Maverick Leader II, and the Diamond D-Jet.
And, like all VLJs, these single-engine planes will be certified under FAA Part 23, which permits single-pilot operation.
But, unlike the twin-jet planes, the single-engine VLJs will be easier to fly, making them particularly attractive to the owner-operator with only a “single-engine type-rating” on his private pilot’s license.
For example, with a maximum speed of 472 knots, the $1.1 million, single-engine Maverick Leader II is clearly aimed at the high-income thrill-seeker who might also own a Ferrari or Lamborghini.
In the same category for size, speed, and cost is the Excel-Jet Sport-Jet, which first flew on May 15, 2006.
Bob Bornhofen, the aircraft’s designer, assured the Trends editors that it would be certified and ready for delivery in two years at a firm 2008 price of $1.2 million.
Before he founded Excel-Jet, Bornhofen designed Maverick’s Leader I twinjet, which is sold only in kit form.
Since single-engine jets cannot continue flying in the unlikely event of an engine failure, the planes will feature BRS whole-plane parachutes as standard or optional equipment.
If the engine fails, the parachute is deployed, lowering the aircraft safely to the ground. This feature, pioneered in prop planes by Cirrus Aircraft, has already saved nearly 200 lives.
We’ve so far discussed only a few of the numerous VLJs out there. And they are truly numerous.
But the dark horse is HondaJet, which made headlines last summer when it was displayed at the Experimental Aircraft Association Convention in Oshkosh, Wisconsin.
Honda has been “secretly” developing the six-seat jet at a skunkworks in Greensboro, North Carolina.
It isn’t saying when or how ? or even if ? it plans to commercialize the jet.
It is so secretive about the whole endeavor that it allowed its jet to appear in Oshkosh for only three hours; then the HondaJet flew off into the sunset to vanish from sight once more.
The nominal specs show it to be a fairly large jet by VLJ standards, at a maximum take-off weight of 9,200 pounds.
Its performance is near the high end of the range with a 44,000-foot ceiling and a cruise speed of 420 knots.
The cabin is truly spacious for a VLJ, and the innovative design allows seating for six people in addition to a relatively spacious lavatory.
Honda has a new partnership with General Electric to manufacture the turbofan engines that Honda designed.
Aviation experts who have seen the HondaJet report that it’s a very refined prototype ready to begin certification whenever Honda decides to make its move.
Honda, for its part, continues to insist that the HondaJet is just a research project.
Honda is the only VLJ manufacturer that has designed its own engine.
The others are based on a Williams or Pratt & Whitney engine.
After an effort like that, most experts doubt the company will simply shelve the project.
The consensus says, “There is every reason to believe that Honda is preparing to enter the VLJ market.”
According to a recent analysis in Plane & Pilot Magazine, Honda may be aiming somewhere between the traditional light jet market and the very light jet market.
For example, the HondaJet is 3,500 pounds heavier than the Eclipse 500 and 1,600 pounds lighter than today’s most popular light business jets.
With a projected price of roughly $3.5 million, the HondaJet would be just another entrant in a crowded field.
On the other hand, if Honda dropped the price to go head-to-head with the $2.5 million Cessna Mustang, it could dominate the market. In light of this trend, we offer the following eight forecasts for your consideration:
First, with this market already crowded with entrants before the first customer has had a chance to take delivery of a VLJ, expect a competitive shakeout to run for at least five years.
Aviation International News has already begun publishing lists of VLJ casualties.
As of April 2006, it had already reported the demise of Safire Aircraft, Century Aerospace, and Avocet Aircraft, all of which folded before getting a plane out the door.
Second, the VLJ market will divide into three parts, based on customer economics:
(1.) Downsizing traditional business jet owners, including fractional ownership fleets;
(2.) The explosively growing air-taxi operator market; and
(3.) Private owner-pilots who have traditionally bought prop planes.
Third, the traditional business jet owners who downsize will be drawn to the large-cabin models.
These models include the Adam A700, Cessna Mustang, Embraer Phenom 100, Eviation EV-20, HondaJet, and the Spectrum 33.
The Spectrum 33 is a particularly interesting offering and has a good chance of being a winner if it lives up to its promised specifications.
The 10-seat, $3.65 million, all-composite aircraft is being touted as a “full-size airplane at half the weight.”
At 7,300 pounds maximum take-off weight, it promises to carry passengers for an incredible 11 cents per seat-mile.
That will be very hard to beat in the large-cabin class.
Even so, Spectrum, whose planes will not be available until 2008, will have to overcome the advantage Adam and Cessna will have when they start delivering the A700 and Mustang as early as the end of 2006.
Cessna’s best chance in the VLJ business seems to be leveraging its 60-plus years of reputation in prop planes and light jets versus all the startups.
Fourth, in both the air taxi and traditional business jet markets, watch for Eclipse Aviation to stake out an early lead and to become a major player.
With more than 2,400 orders on the books, Eclipse Aviation began manufacturing the $1.4 million jets just a few weeks ago, putting it well ahead of the nearest competition.
The low costs of the Eclipse will open up fractional ownership for a whole new class of professionals and entrepreneurs.
For example, you can buy one-sixteenth of an Eclipse 500 for under $100,000, which you can borrow at about 7 percent.
Add the $7,000 in interest to roughly $16,000 in fixed charges covering aircraft maintenance, insurance, and the pilot and you’re left with five seats for $715 per occupied hour.
Assuming you have four or five people on your team, you can get them from any field in the Chicago area to any field in the New York City area for about the same cost as last-minute coach tickets from O’Hare to LaGuardia.
And, since your plane is part of a fleet, your seats are available 24/7, 365 days a year, on a few hours’ notice. Suddenly, private jets become attractive for a whole new class of small and mid-sized businesses.
Fifth, the owner-pilot group will gravitate toward the single-engine planes, such as the Diamond D-Jet, the Maverick Leader II, and the Excel-Jet Sport-Jet, because they are easy to fly and relatively inexpensive to buy and operate.
In the single-engine, owner-pilot segment, it’s too early to pick a winner.
The Diamond D-Jet flew for the first time on April 20, 2006.
If Diamond can actually deliver the D-Jet for $200,000 less than the Maverick Leader II or the Excel-Jet Sport-Jet, it looks like a very competitive entry.
Like all of the likely players in this segment, Diamond is a small and relatively unknown company.
But Diamond and Cirrus have been winners in the high-performance light prop market that has emerged in the past decade.
The big question is when and what Cirrus will be offering.
It has yet to even unveil its design, which is called the “Cirrus Personal Jet.”
Sixth, as a truly disruptive new technology, VLJs are going to pose challenges to commercial airlines, the manufacturers of conventional business jets, and even the resale market for jets and turboprops with 12 seats or less, like the Beech King Air, the various Learjet models and the various Cessna Citation models.
Pre-owned light jets have traditionally held their value very well over time.
However, the Trends editors expect this to change quickly, since these jets are only slightly larger and faster than VLJs, but burn far more fuel and require two pilots with multi-engine-type certificates.
In terms of the airlines’ woes, chartered business jets already steal some of their most lucrative passengers: those flying first class, business class, or buying last-minute, full-fare tickets.
If you include the regional carriers, the airlines lost almost $13 billion in 2005.
VLJs aren’t going to help the airlines stop the bleeding.
If the air taxi business proves itself viable and reliable, as the Trends editors expect, it could further erode the airlines’ position.
The last thing United, American or US Airways needs is someone offering convenient, hassle-free, point-to-point travel options at affordable prices.
Seventh, once the market is established and the initial shakeout has occurred, larger competitors will enter the VLJ market. Odds are that Honda will be among them.
The other likely Japanese entrant is Mitsubishi, which made a business jet until the early 1980s and still makes aircraft sub-assemblies for Boeing and Airbus.
As Christensen observed in Harvard’s Strategy & Innovation4 newsletter, Boeing and other aerospace leaders may be “shooting themselves in the foot” by staying away from this market.
However, the Trends editors believe that these firms are waiting for confirmation that the market really exists.
Once the answer is clearly “yes,” they will simply buy their way into it by acquiring one of the more successful VLJ manufacturers.
Eighth, vested interests will try to delay the VLJ boom by fear-mongering, but it won’t stop this revolutionary technology.
If the VLJ market takes off as expected, it could put 15,000 or more new planes in the sky by 2020.
This has led some observers to forecast nightmarish problems for air traffic control, noise pollution, and airport delays.
Even the FAA is worried about congestion on runways and in the air.
But, these worries are largely unfounded, especially if the right steps are taken now.
There are at least three points to consider:
First, for the most part, VLJs will be using airports that the airlines don’t use ? avoiding places like Chicago O’Hare and Atlanta Hartsfield will be a big part of the rationale for buying one of these planes in the first place.
If anything, we expect VLJs to reduce the amount of traffic flowing through such “system choke points.”
Second, by 2015, the SATS system will dramatically increase the volume of traffic the system can handle without jeopardizing safety or adding air traffic controllers.
NASA and The National Consortium for Aviation Mobility are developing the Small Aircraft Transportation System, or SATS, which will create a new high-tech environment specifically designed to integrate large numbers of small aircraft into the national airspace system.
This will include separating and sequencing multiple aircraft at airports, without the traditional ground-based terminal radar and communications systems.
It will eliminate the need for control towers at small and medium-sized airports and it will be designed with the single pilot in mind, focusing on safety, accuracy, and ease of use.
SATS will ultimately make flying in small planes as safe as flying in airliners and a lot more enjoyable.
Third, by 2020 SATS will be upgraded to include a peer-to-peer aircraft network that will enable planes to fly much closer together without compromising safety.
This will increase the capacity of the airways far beyond the capabilities of the initial SATS concept.
The whole new generation of low-cost, peer-to-peer networking technology is now being tested for automobiles that enables every car to know the position and speed of every other nearby car and to use that information to respond to avoid collisions.
A similar, but dramatically more expensive technology that will permit every plane to know the position and direction of every other plane is already being deployed on military aircraft and evaluated for commercial airliners.
The Trends editors expect these two efforts to converge, creating a new Air Traffic Control system, in which the system essentially flies the planes with human pilots on board only for emergencies.
References List :
1.The Wall Street Journal, March 1, 2006, The Next Thing in Jet Travel,” by Laura Meckler and Avery Johnson. ⓒ Copyright 2006 by Dow Jones & Company. All rights reserved.
2.Strategy & Innovation, January/February 2004, “Cheaper, Faster, Easier: Disruption in the Service Sector,” by Clayton M. Christensen and Scott D. Anthony. ⓒ Copyright 2004 by the President and Fellows of Harvard College. All rights reserved.
3.Aviation International News, March 2006 “VLJs Fly in the Face of Critics,” by Chad Trautvetter. ⓒ Copyright 2006 by The Convention News Co., Inc. All rights reserved.
4.Strategy & Innovation, January/February 2004, “Cheaper, Faster, Easier: Disruption in the Service Sector,” by Clayton M. Christensen and Scott D. Anthony. ⓒ Copyright 2004 by the President and Fellows of Harvard College. All rights reserved.
