Will it work?

[Ken Ibold]

DayJet launches ...

DayJet Corporation announced today that its subsidiary, DayJet Services, LLC, received authorization from the Federal Aviation Administration (FAA) to use Eclipse 500™ very light jets (VLJs) in its operations. DayJet Services is the holder of an on-demand air carrier certificate from the FAA authorizing operations under Part 135 of the FAA’s regulations. The company is preparing to use its fleet of VLJs to launch the world’s first “Per-Seat, On-Demand” jet service.

What's the ancient Chinese curse? "May you live in interesting times"?

 

[RotaryWingBob]

I dunno, Ken. I hope it does work -- if I were still traveling on business (instead of being happily retired) I'd sure think about using them (depending on pricing, etc). Besides, I'd like to see somebody stick it to the airlines...

 

[steingar]

How are the existing air taxi companies doing? If they can do it with Cirri, I have little doubt it can be done with jets.

 

[KennyFlys]

It's a neat concept. But, I don't think the demand is high enough; at least for the near-future. At the same time, I also don't think the demand is there to fill up a mass cattle mover; referring to the A-380.

 

[Ken Ibold]

I dunno, Ken. I hope it does work -- if I were still traveling on business (instead of being happily retired) I'd sure think about using them (depending on pricing, etc). Besides, I'd like to see somebody stick it to the airlines...

I hope it works, too. But I have a hard time believing it will. Pricing is $1 to $4 per seat per mile. Price depends on advance purchase, size of the travel time window, and whether you're going to a "dayport" or elsewhere.

I think it will depend on what Eclipse 500s actually cost to run in the real world, both mx costs and downtime, and whether pax will accept the small cabin and lack of a lav.

 

[astanley]

I hope it works, too. But I have a hard time believing it will. Pricing is $1 to $4 per seat per mile. Price depends on advance purchase, size of the travel time window, and whether you're going to a "dayport" or elsewhere.

I think it will depend on what Eclipse 500s actually cost to run in the real world, both mx costs and downtime, and whether pax will accept the small cabin and lack of a lav.

This would be cheaper than DAY/CVG to RIC, faster, and better than the airlines. Holy crap.

Cheers,

-Andrew

 

[Teller1900]

I hope it works...such a great idea, and this may be what it takes to force the airlines to figure out a new way of doing business. That, and I think it would a cool company (and plane) to fly for!

 

[Ken Ibold]

I hope it works...such a great idea, and this may be what it takes to force the airlines to figure out a new way of doing business. That, and I think it would a cool company (and plane) to fly for!

DayJet's Pilot's Corner: http://www.dayjet.com/Careers/Pilots/Default.aspx

 

[Teller1900]

DayJet's Pilot's Corner: http://www.dayjet.com/Careers/Pilots/Default.aspx

Ohhh ya, I've read through that a few times...I'm still a ways away from their mins B)

 

[mikea]

I hope it works, too. But I have a hard time believing it will. Pricing is $1 to $4 per seat per mile. Price depends on advance purchase, size of the travel time window, and whether you're going to a "dayport" or elsewhere.

I think it will depend on what Eclipse 500s actually cost to run in the real world, both mx costs and downtime, and whether pax will accept the small cabin and lack of a lav.

By ramping up first they have a better chance of cornering the volume needed to have the most planes going the most places so they have more paid for seats.

That air-taxi industry is at the "pre-eBay" stage. There's real potential for a company that could become the eBay, meaning they corner the market to get the volume to make it work.

 

[gibbons]

I hope it works, too. But I have a hard time believing it will. Pricing is $1 to $4 per seat per mile. Price depends on advance purchase, size of the travel time window, and whether you're going to a "dayport" or elsewhere.

I think it will depend on what Eclipse 500s actually cost to run in the real world, both mx costs and downtime, and whether pax will accept the small cabin and lack of a lav.

I don't think it's possible for them to make money at those prices. The Elipse won't carry enough people to get the per mile revenue up where it will have to be at the $1 - $4 per seat mark. I don't believe those prices will hold.

 

[astanley]

I don't think it's possible for them to make money at those prices. The Elipse won't carry enough people to get the per mile revenue up where it will have to be at the $1 - $4 per seat mark. I don't believe those prices will hold.

Two seats full... two pilots....

Let's see. Assume $2.50 per mile, 650 mile flight. Revenue for the trip is $3,250.

650 mile flight, that's going to be 2hr block to block (taxi time, etc), which is generous. PIC is probably going to be making $75/hr and SIC $45. $240 for the trip. Add in $20/hr/pilot for benefits and back-office support (not SG&A), so another $80.

Fuel costs? Estimate 150gph fuel burn across the trip. 300G * $3 = $900.

Amortization of the aircraft? Assume $17,500 (8 year note, ~9% interest) per month, and assume 80 flight hours / month. This is probably a gross over-assumption, but works for "steady state". $218 per flight hour, or $437

Maintenance reserves. I'd expect one hour of maintenance for every 5 hours of flight. Probably extreme, but these aircraft should be high cycle, low flight time, and you've got people who don't care about the plane on it (i.e. they won't be nice to things). Assume a fixed maintenace cost of $175 per hour, not including major maintenance. $35 per hour, or $70.

Major maintenance reserves. I'd put my finger on $250 per flight hour. That's a lot of cash, but these babies will cost them lots of money very quickly, especially if they see high cycle work. $500 for the trip.

Corporate overhead. 20% of revenue. $650.

So...

$3250 - ($320 + $900 + $437 + $70 + $500 + $650) = $3250 - $2857 or $373 on the trip. That's 11% margin.

Chip's right. The numbers suck.

Cheers,

-Andrew

 

[Ken Ibold]

Two seats full... two pilots....

Let's see. Assume $2.50 per mile, 650 mile flight. Revenue for the trip is $3,250.

650 mile flight, that's going to be 2hr block to block (taxi time, etc), which is generous. PIC is probably going to be making $75/hr and SIC $45. $240 for the trip. Add in $20/hr/pilot for benefits and back-office support (not SG&A), so another $80.

Fuel costs? Estimate 150gph fuel burn across the trip. 300G * $3 = $900.

Amortization of the aircraft? Assume $17,500 (8 year note, ~9% interest) per month, and assume 80 flight hours / month. This is probably a gross over-assumption, but works for "steady state". $218 per flight hour, or $437

Maintenance reserves. I'd expect one hour of maintenance for every 5 hours of flight. Probably extreme, but these aircraft should be high cycle, low flight time, and you've got people who don't care about the plane on it (i.e. they won't be nice to things). Assume a fixed maintenace cost of $175 per hour, not including major maintenance. $35 per hour, or $70.

Major maintenance reserves. I'd put my finger on $250 per flight hour. That's a lot of cash, but these babies will cost them lots of money very quickly, especially if they see high cycle work. $500 for the trip.

Corporate overhead. 20% of revenue. $650.

So...

$3250 - ($320 + $900 + $437 + $70 + $500 + $650) = $3250 - $2857 or $373 on the trip. That's 9% margin.

Chip's right. The numbers suck.

Cheers,

-Andrew

650 is way too high for an average leg length. DayJet is starting by flying among the Florida cities of Boca, Lakeland, Gainesville, Tally and Pensacola. The longest of those legs is 450 nm.

They'll get some additional flights by going outside those hubs, which is what pushes up the seat mile price. But when you start getting into $4 per mile per seat, you're into traditional charter territory, which is really on demand rather than share the cab.

If anything, the shorter stage length will make the numbers even worse than your estimate here, because there will be less time in cruise and more cycles.

 

[astanley]

650 is way too high for an average leg length. DayJet is starting by flying among the Florida cities of Boca, Lakeland, Gainesville, Tally and Pensacola. The longest of those legs is 450 nm.

They'll get some additional flights by going outside those hubs, which is what pushes up the seat mile price. But when you start getting into $4 per mile per seat, you're into traditional charter territory, which is really on demand rather than share the cab.

If anything, the shorter stage length will make the numbers even worse than your estimate here, because there will be less time in cruise and more cycles.

With the VLJs revolution supposed to lead the air taxi industry, has anyone tackled the actual taxi portion of it? Lots of cycles - pressure changes, gear up/down, flaps, more time in ice (assuming that sort of weather). More time at high power (when compared to flight time)

My guess is "somewhat, but not entirely".

I wonder if BostonCoach has looked at this model for investment. They have the cash and the network of willing participants who just might leverage a service like this...

Cheers,

-Andrew

 

[Ken Ibold]

With the VLJs revolution supposed to lead the air taxi industry, has anyone tackled the actual taxi portion of it? Lots of cycles - pressure changes, gear up/down, flaps, more time in ice (assuming that sort of weather). More time at high power (when compared to flight time)

**Supposedly** the EA 500 is designed with high cycles in mind. Somewhere on the Eclipse web site is a white paper that outlines the things in the design of the gear, flaps, engines, electronics etc that will accommodate taxi-type use. Of course, then you have the ridiculous cycle times on the windows, so who knows if it will really work as intended.

 

[Teller1900]

Two seats full... two pilots....

Let's see. Assume $2.50 per mile, 650 mile flight. Revenue for the trip is $3,250.

650 mile flight, that's going to be 2hr block to block (taxi time, etc), which is generous. PIC is probably going to be making $75/hr and SIC $45. $240 for the trip. Add in $20/hr/pilot for benefits and back-office support (not SG&A), so another $80.

Fuel costs? Estimate 150gph fuel burn across the trip. 300G * $3 = $900.

Amortization of the aircraft? Assume $17,500 (8 year note, ~9% interest) per month, and assume 80 flight hours / month. This is probably a gross over-assumption, but works for "steady state". $218 per flight hour, or $437

Maintenance reserves. I'd expect one hour of maintenance for every 5 hours of flight. Probably extreme, but these aircraft should be high cycle, low flight time, and you've got people who don't care about the plane on it (i.e. they won't be nice to things). Assume a fixed maintenace cost of $175 per hour, not including major maintenance. $35 per hour, or $70.

Major maintenance reserves. I'd put my finger on $250 per flight hour. That's a lot of cash, but these babies will cost them lots of money very quickly, especially if they see high cycle work. $500 for the trip.

Corporate overhead. 20% of revenue. $650.

So...

$3250 - ($320 + $900 + $437 + $70 + $500 + $650) = $3250 - $2857 or $373 on the trip. That's 11% margin.

Chip's right. The numbers suck.

Cheers,

-Andrew

That's still a lot better than most airline flights. A fully loaded 757 trans-con flight is VERY lucky to clear 11%. It may not be massivly profitable, but what in aviation ever is?

 

[astanley]

That's still a lot better than most airline flights. A fully loaded 757 trans-con flight is VERY lucky to clear 11%. It may not be massivly profitable, but what in aviation ever is?

Here's the problem, though:

You've got an unproven airframe, designed as a light jet, not as a transport category jet, on an unproven operating platform from a new manufacturer, in a new business paradigm. Risk, risk, risk, risk.

But the margin doesn't show it. They would have to pay considerably less for each airframe, be on a bulk maintenance plan through Eclipse and P&W, and have the opportunity to bulk buy fuel to control margin performance. Except for # 1, and maybe # 2, they don't have that right now.

This is a great business concept. I love it. I can't wait to use it for my work, since I spend so much on regional travel through the airlines. But the risk inherent in the investment does not pay back at 11% margin. Maybe at a 11% NI basis, but not at OI/BT basis.

Airlines make 11% on a proven platform that they can forecast and reasonably control; the types of airports and volume they put out in fuel consumption allows them to control margin performance (to some extent!), and if one person cancels, they don't lose 50% of their revenue.

I think this idea could really fly, and they could make it work. It will take some great legal agreements and service contracts, along with a strong partnership from everyone involved. That said, as it stands right now, it doesn't all add up.

Cheers,

-Andrew
Now a member of the 4 digit post club

 

[smoore]

I hope they make it work. If they can have business people step out of their (hired) town car onto the tarmac (never touching their bags) and step onto the plane the movers and shakers will eat it right up. They will get there quicker than airlines and get to feel like real big shots all at once.

It just has to come in a little lower cost than charter, IMO. I have no clue what that price point would be in dollars.

Does anyone want to speculate why they are doing this in FL rather than the business districts of our country? I'd think NYC -> DC metroplex and out to Chicago are where the target market would be. Of course, that's why I install carpet and those guys run businesses!

 

[gibbons]

I didn't see insurance in your numbers. I'd guess between $40,000 and $60,00 / year. Forget the margin, I don't see how they can possibly make any profit. They're going to do what the airlines have done, run the price so low it's just impossible to make any money.

 

[Teller1900]

Here's the problem, though:

You've got an unproven airframe, designed as a light jet, not as a transport category jet, on an unproven operating platform from a new manufacturer, in a new business paradigm. Risk, risk, risk, risk.

But the margin doesn't show it. They would have to pay considerably less for each airframe, be on a bulk maintenance plan through Eclipse and P&W, and have the opportunity to bulk buy fuel to control margin performance. Except for # 1, and maybe # 2, they don't have that right now.

This is a great business concept. I love it. I can't wait to use it for my work, since I spend so much on regional travel through the airlines. But the risk inherent in the investment does not pay back at 11% margin. Maybe at a 11% NI basis, but not at OI/BT basis.

Airlines make 11% on a proven platform that they can forecast and reasonably control; the types of airports and volume they put out in fuel consumption allows them to control margin performance (to some extent!), and if one person cancels, they don't lose 50% of their revenue.

I think this idea could really fly, and they could make it work. It will take some great legal agreements and service contracts, along with a strong partnership from everyone involved. That said, as it stands right now, it doesn't all add up.

Cheers,

-Andrew
Now a member of the 4 digit post club

Oh I don't deny it's MASSIVLY risky. But like you said, it's a great idea, at least on paper. I know less than nothing about business models, so all I know is, if it works for the first year or two, they're going to be getting a resume and a few phone calls from me...

 

[Ken Ibold]

Does anyone want to speculate why they are doing this in FL rather than the business districts of our country? I'd think NYC -> DC metroplex and out to Chicago are where the target market would be. Of course, that's why I install carpet and those guys run businesses!

Several reasons, I think. One is that I believe Iabucci lives in Boca. Also Florida is a verrrry long state with really lousy intra-state airline service. To fly from Fort Lauderdale to the state capital in Tallahassee you are almost forced to fly through Atlanta, and so it takes 5-6 hours to fly between cities -- about the same time it takes to drive the distance. And now you're talking 1.5 hours and, more importantly, no overnight stay for business travel.

I could be a wag and say Florida makes sense since you can't fly the Eclipse IFR, but I won't.

 

[smoore]

Ah, so an untapped market. That makes more sense now. Hub-n-spoke strikes again for FL residents. It wouldn't make any sense to fly if it took as long as driving.

I could be a wag and say Florida makes sense since you can't fly the Eclipse IFR, but I won't.

That's shocking. I haven't really looked into these VL jets. So it's got deice but no IFR? Are they just waiting on certification or something?

 

[astanley]

I didn't see insurance in your numbers. I'd guess between $40,000 and $60,00 / year. Forget the margin, I don't see how they can possibly make any profit. They're going to do what the airlines have done, run the price so low it's just impossible to make any money.

I assume that the 20% allocation to corporate will cover such things. It's $62.50 an hour based on 960 air hours a year at $60,000. SG&A in their model will be much higher because of insurance and carrying costs...

Cheers,

-Andrew

 

[Teller1900]

That's shocking. I haven't really looked into these VL jets. So it's got deice but no IFR? Are they just waiting on certification or something?

They're working on it. They were well on their way to certification but then ran into a few problems with a couple of their test a/c and ended up getting restricted to day VMC for a while, then night was allowed, but they still havn't gotten their IMC certification re-approved. Soon, though, in theory...

 

[gibbons]

Soon, though, in theory...

That's what they said at OSH (2006).

 

[Ken Ibold]

They're working on it. They were well on their way to certification but then ran into a few problems with a couple of their test a/c and ended up getting restricted to day VMC for a while, then night was allowed, but they still havn't gotten their IMC certification re-approved. Soon, though, in theory...

Specifically, there was a problem with pitot icing only under certain conditions of high humidity. It wasn't detected in the flight test program (in/around New Mexico). So they had to design a fix and then certify it. The fix has been designed and is in certification now.

The upshot of flying it VFR, of course, is that you have to stay out of Class A, and the fuel burn penalty for staying low is extreme.

 

[flyingcheesehead]

That's what they said at OSH (2006).

And we all know what happened at OSH 2007:

Press: "So what's up with all of these problems remaining on the Eclipse 500?"
Raburn: "Hey, look at this shiny new airplane!"

 

[Teller1900]

Specifically, there was a problem with pitot icing only under certain conditions of high humidity. It wasn't detected in the flight test program (in/around New Mexico). So they had to design a fix and then certify it. The fix has been designed and is in certification now.

The upshot of flying it VFR, of course, is that you have to stay out of Class A, and the fuel burn penalty for staying low is extreme.

Oh please, turbines love low altitude and high heat. Besides, they're gonna be in Fla...the humidity isn't that bad there. Wussy turbines.

 

[AWACSEng]

Just out of curiosity, if the pitot tube is heated, how can there be an icing problem?