What with a whole new generation of highly-efficient, super comfortable VLJs and some revolutionary business models and service modes, it’s hard not to notice that air-taxi service — whether provided by traditional Part 135 operators, new VLJ operators, or operators offering a combination of VLJ/piston/turboprop scheduled and fly-on-demand service — is an industry poised on the edge of massive, sustained growth.
How massive? How sustained? Is the air-taxi industry’s potential mile high, sky high or truly astronomically high.
Our vote goes to “astronomically.”
A key reason for our confidence in the industry’s future is the robust health of the older, more established and vastly more expensive alternative to scheduled airline travel: the aircraft charter business.
Believe it or not, America’s 2,500 air charter operators earned $8 billion in 2007. According to the financial reporting service Hoover’s Inc., that $8 billion — a full 40 percent of scheduled airlines’ aggregate earnings of $20 — was achieved by flying only 20 percent of the seat miles flown by the airlines.
To put a fine mathematical point on it, air charter operators derived twice as much revenue from each passenger carried as the airlines did.
Now consider just a few of the differences between jet charter and VLJ air-taxi services.
– The acquisition cost of aircraft used in charter service is typically 400 to 800 percent higher than that of the twin-engine VLJs in current and projected use by air taxi companies.
– VLJ per-mile operating costs are from 50 percent to 80 percent less than those of typical charter light and mid-weight jets.
– VLJ aircraft design and air-taxi business models have been 21st Century optimized to provide substantially higher equipment utilization rates and fewer/shorter maintenance and service downtime timelines than traditional charter aircraft.
– VLJs will eventually be able to service thousands of community airports not accessible by most charter aircraft.
How big is the potential VLJ air-taxi market? Will it eventually become the dominant commercial jet alternative to scheduled airline business travel and leave charter operators to handle freight and football teams traveling to bowl games?
Yes and no. VLJ air taxi operators will almost inevitably be someday carrying more passengers per year than traditional charter operators, but that won’t happen until at least two or three aircraft makers have been operating at full production for a couple of years. Realistically, it’s probably going to be four, five or even six years before enough VLJs are up and flying to offer a seat to everyone — or even almost everyone — who wants one. Even then, traditional business-passenger charters are hardly going to disappear. Corporations which can afford the bigger birds aren’t likely to trade 700mph trips between Factory A and Investment Analyst Meeting B for 375-400mph trips or, for cross-country or overseas trips, a 2500-mile or so cruising range for one a bit over a thousand miles. And, of course, distributing nine executives over three VLJs as opposed to stuffing them all into one Lear 45 pretty much wipes out the VLJ cost advantage while simultaneously creating logistical and communications havoc.
So, despite the VLJ revolution, charter companies are probably in no danger of losing the bulk of their current passengers. In good times and bad, despite energy crunches and hydrocarbon emissions angst, there will always be those who will, to reference the last thread in the AirTaxiFlights.com blog, prefer — and can afford — to take a limo rather than a cab.
The less positive note for charter operators is that they’re going to get relatively few of the masses of business travelers willing, able and more than ready to bail out of the no-longer-so-friendly scheduled-airline skies and migrate to the infinitely more user-friendly, convenient, time-saving and — in many cases — cost-effective world of personalized Very Light Jet air taxi service.
It is this vast new group of corporate middle-managers, independent business people, and professionals — travelers who never before had access to affordable personal air transport — who will fuel the VLJ air-taxi industry’s stratospheric growth and propel it past passenger air charter in miles flown, passengers carried, and return on investment.