Interview: Air Taxi Association President Joe Leader
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(continued) Obviously, you need more than technology to make a system like that work. You also need cooperation. How willing do you think the operators in your association will be to share things like booking and ground-support services once the industry matures a bit and they’re competing with each other for market share within the same region?

Joe Leader: If you look at each next-generation air-taxi company, you’ll find many different non-overlapping business models and value propositions . A carrier which prices by the seat, for example, doesn’t really directly compete with one which bases fares on a per-plane model.

The one term I would use to describe the industry at this time is coop-itition. Yes, there is more than one company in some service areas, but the amount of growth opportunity is so huge that our members see the benefits in working together. They honestly believe there’s room for everyone to grow concurrently. You use the phrase “next-generation air-taxi industry” a lot. How do you define that? Is it, for example, limited to operators using twin-engine VLJs?

Joe Leader: No, it’s not really about the type of aircraft, though the issue of safety is so important for the industry that I personally believe a ballistic parachute system is a necessary option for single-engine VLJs in air-taxi service.
The major defining point is that the next-generation air-taxi service offers on-demand, point-to-point transportation at a price that cannot be matched by traditional charter operators. To achieve this, the aircraft obviously has to operate very efficiently at a high utilization rate.

Air Taxi Association Interview with Joe Leader

That kind of defines the VLJ, but the definition can also fit other types of aircraft. At least one next-generation air-taxi operator is planning to use a very efficient light jet with a maximum takeoff weight of 13,000 pounds, well above the 10,000-pound weight-class line dividing Very Light Jets from Light Jets. Meanwhile, several operators in the Southwest are currently using single-engine, piston-powered Cirrus SR22s, which have a ballistic parachute, with next-gen air-taxi business and price models.

There’s definitely a very positive perception about jet aircraft, but I don’t think that customers are saying, “Gee, I’d like to fly at 40,000 feet instead of 25,000 feet.” Of course, that extra altitude is a major advantage when you have to get above weather and I think weather situations in their service area are one thing operators are carefully considering in placing their airframe orders.

The two other big hardware issues are speed and range. Speed doesn’t matter that much on regional trips, but range does. All the aircraft announced so far have ranges designed to replace car travel, but I think you’ll see aircraft with longer and longer ranges as the industry continues to emerge. There’s a lot of correlation between how often an aircraft has to be refueled and the number of trips it can make in a day, so I think a long-range VLJ would be a powerful contender. Why weren’t the pricing and service models being offered by next-generation carriers ever adopted by most traditional air-taxi or charter operators, particularly during the days of cheap fuel?

Joe Leader: That’s a great question. I wish I knew the answer.

When I started on my dissertation, I thought it was all about VLJ cost savings and that they were what was triggering the revolution, but the more I studied it the more I realized there were other factors involved. True, the Very Light Jet, compared to a traditional Light Jet, costs 30 to 35 percent less to operate and the acquisition cost is less than half, but there was also a huge utilization discrepancy. The projected aircraft utilization rate was more than double what was being achieved in the charter industry.

What I didn’t, and don’t, understand was why nobody was trying to utilize light jets more efficiently, which would have caused a lot of the initial benefits to go up and the costs to go down. If I understand you correctly, you’re saying that the nature of an operator’s business model has as much to do with whether they should be considered a next-generation air-taxi service as anything else.

Joe Leader: It’s really a combination of elements. If you’ve got next-generation aircraft that bring operating costs down by 30 percent or so and cut airplane acquisition costs by 50 percent and you have double the traditional utilization rate and you have a business model that pairs customers together to cut per-seat fares, you’re definitely a next-generation operator. Which means?

Joe Leader: Which means what you’ve really got is an unstoppable force for allowing people to fly who haven’t been flying so far.

Which is something that’s a demonstrated fact, not pure speculation. The vast majority of passengers on carriers like SATSair, which are using the new business models in conjunction with current aircraft, formerly made their trips by car.

That proves the market expansion theory that says next-generation air-taxi service is not a replacement for commercial aviation. It is a market expansion that will benefit everyone tremendously .

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