Mini-Jet Revolution, or Dot-Com with Wings?

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KEYWORDS

• Very Light Jets
• Cessna
• Eclipse
• aviation
• aircraft
• FAA

The FJX-2 caught the eye of Vern Raburn, a former Silicon Valley entrepreneur and flying buff who had long nurtured a vision of a small, affordable jet plane. Partnering with Williams in 1998, Raburn’s company, Eclipse, started development of the Eclipse 500 — a five-seater to be powered by two FAA-certified commercial versions of the FJX-2. With a projected price tag of just $837,500, the Eclipse 500 had more than 2000 advance orders as it prepared for its first test flight in the summer of 2002. The dawn of the VLJ age appeared imminent.

But early prototypes of the EJ22, the commercial version of the FJX-2, proved troublesome. It took Eclipse six weeks to get two of them running at the same time, and the engines could not achieve their expected thrust without overheating. After one anemic flight, Eclipse reluctantly concluded the EJ22 wasn’t going to hack it. It hurriedly signed a deal with Pratt & Whitney to develop a smaller version of a more conventional engine. The reborn Eclipse 500 flew with 900-pound-thrust PW610Fs in 2004; the FAA certified the design in September 2006. After frustrating delays because of persistent glitches with the plane’s complex avionics, as well as startup manufacturing problems, the first Eclipse 500 was finally delivered to a customer in December 2006. The price tag has now grown to $1.5 million — still only a third of the price of a new CitationJet.

Eclipse’s bulging order book spurred a number of other manufacturers to build Very Light Jet prototypes. Cessna delivered the first of its 390-mph six-seat Mustangs in February 2007. Nine other VLJs, including the Adam A700, are currently undergoing FAA certification testing. The largest customer for the Eclipse 500 is DayJet, a startup “per-seat, on-demand” air-taxi service that will initially link five medium-size Florida cities. DayJet founder Ed Iacobucci, another tech-industry veteran, ran into Vern Raburn at a technology conference in 2001, and the two hit it off. Iacobucci has ordered 239 Eclipse 500s. This summer, DayJet passengers should be able to fly between Boca Raton, Gainesville, Lakeland, Pensacola and Tallahassee.

The economic key to the DayJet service is a complex suite of flight-optimization software called Astro. When a customer makes a reservation, Astro calculates the most cost-efficient routing for one of 10 Eclipse 500s shuttling among the five cities. In a flexible-fare system that Iacobucci calls “time arbitrage,” Astro then offers a rate between $1 and $3 per mile, depending on departure and arrival times. (By comparison, unrestricted coach fares for scheduled commercial flights within Florida typically run between $1.50 and $2.00 per mile. The restricted discount fares that most of us fly are typically 5 to 30 cents per mile.) DayJet hopes to fly 300 Eclipse 500s and to serve 40 regional airports in the Southeast by the end of 2008.

Other hopeful VLJ air-taxi services include Pogo Air (whose CEO is former American Airlines boss Robert Crandall) and Linear Air, which already operates in the Northeast with Cessna Caravan turboprops as stand-ins for its long-awaited Eclipse 500s. Nascent air-taxi businesses have placed more than half the Eclipse orders — some 1500 in all. It remains to be seen how many of these startups will be able to raise their share of the $2 billion-plus required to pay for the planes they’ve ordered.

In fact, some doubters are calling the VLJ boom a “dot-com with wings.” Vaughn Cordle, the CEO of AirlineForecasts, an industry research and analysis firm, says, “I’m very skeptical of the numbers the VLJ upstarts and the FAA are throwing around.” He sees the VLJ/air-taxi business model, with its high operating costs (especially with two pilots) and low daily utilization, as a financial house of cards.

His take on the Very Light Jet/air-taxi business for potential investors: It will be “a fun and exciting opportunity to lose money.” But even the skeptical Cordle sees a private-sector market for 300 to 400 VLJs a year, which would still make them the best-selling jet category ever.

If Very Light Jets live up to their hype, engine and airframe manufacturers may be tempted to raise the private-jet bar — by lowering the weight and cost — yet again. An Extremely Light Jet, powered by a theoretical 500-pound-thrust high-bypass turbofan engine, could carry two passengers at 250 mph and get 30 mpg. At only $350,000, it would reduce the cost of a civilian jet to that of a brand-new loaded Bentley. Now that’s a real game changer.