Thursday, May 24, 2007

A new way to fly...maybe

Eclipse Aviation has recently beefed up its order books with yet another air taxi order, this time from ETIRC Aviation which ordered 120 of the jets with options on another 60. Eclipse now has 2,700 orders and options for their innovative product, and approximately 1,700 are from air taxi firms. 1,400 of those 1,700 are from DayJet alone! Those are impressive numbers and shows that there certainly is interest in supporting such air taxi services. There is only one problem, the economics of success are deceptive and it will be a real struggle to create a viable enterprise out of such a venture. As Richard Aboulafia notes in his blog, if there are 10,000 air taxis by 2020 that produce 21 billion ASMs that will only replace 1.2% of the planned ASMs in 2020. That sure isn't a capacity dent. Then of course there is the cost of transportation. Today most passengers can fly nearly everywhere in the US, on low-cost airlines, network airlines, regional airlines, "commuter" airlines. Then there are those that can afford their own private charter. Granted this can sometimes take you to closer where you want to go, but that convenience comes at a price. As you can see in the slide below the cost of using the service of an air taxi is going to far outweigh that of an airline.

And what does an airline offer its customers? Frequent departures, an integrated network, global reach, etc. Right now DayJet only has operations planned for Florida. Of course, that will expand as the fleet grows. But the air taxi is promising a maximum 30 minute wait for your flight. It all sounds great but I was not able to find anything about price on the site. I will admit that the concept is novel, it has the theoretical potential to be a radical innovation in the air transport industry, I am concerned about the economics of it though. We'll have to watch and see what happens, both in the US and Europe.

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