Plane Conversations

There is recent news about the development of algae-based biofuel to be refined into jet fuel being promoted by the Defense Advanced Research Projects Agency (DARPA), an office of the US Department of Defense. In addition to DARPA’s funding, Exxon is also investing heavily in the research and development of this alternative to fossil-based fuel. 

This holds promise for all aviation industries to provide a stable and environmentally friendly fuel source for jet aircraft.

Quoting from a post in the UK Guardian (guardian.co.uk, Saturday 13 February 2010): 

Unlike corn-based ethanol, algal farms do not threaten food supplies. Some strains are being grown on household waste and in brackish water. Algae draw carbon dioxide from the atmosphere when growing; when the derived fuel is burned, the same CO₂ is released, making the fuel theoretically zero-carbon, although processing and transporting the fuel requires some energy.

The industry received a further boost earlier this month, when the Environmental Protection Agency declared that algae-based diesel reduced greenhouse gas emissions by more than 50% compared with conventional diesel. The Obama administration had earlier awarded $80m in research grants to a new generation of algae and biomass fuels.

For Darpa, the support for algae is part of a broader mission for the US military to obtain half of its fuel from renewable energy sources by 2016. That time line meant that the Pentagon needed to develop technologies to make its hardware “fuel agnostic”, capable that is of running on any energy source including methane and propane.

Unlike corn-based ethanol, algal farms do not threaten food supplies. Some strains are being grown on household waste and in brackish water. Algae draw carbon dioxide from the atmosphere when growing; when the derived fuel is burned, the same CO₂ is released, making the fuel theoretically zero-carbon, although processing and transporting the fuel requires some energy.

The military anticipates testing of the fuel to begin next year with full scale production in 2013.

Commercial Aviation has been plagued with unstable pricing of both Jet Fuel and Aviation gasoline. The extreme price swings have wrought havoc on the profits of the airlines and air charter providers around the world.

DARPA is projecting that this fuel can be produced initially for around $3.00 per gallon which is not too far off the prices we are currently paying. Initially the fuel will be supplied to the military but if proven commercially viable, why can’t the rest of aviation benefit as well?

This makes sense for the United States to produce and develop fuel supplies domestically, keeping the money and jobs at home.  

Whether you are in the global-warming environmentalist camp or not, you have to agree that it would be great to have a fuel supply that is not based on buying fuel from countries that are not so friendly to the U.S. Let Hugo Chavez and the terrorist supporting states in the Middle East sell their oil to someone else.

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The airlines and congress can’t agree on who will pay for the cockpit upgrades that will be required to implement the NextGen Air Transportation System technology. While my belief that airlines create a lot of their own misery leaves me often unsympathetic, in this case, I believe that they seem to have a reasonable argument for help.

Melanie Trottman and Andy Pasztor of the Wall Street Journal  write that “despite years of industry lobbying, the proposal contains no provisions to help cash-strapped airlines pay for billions of dollars in new cockpit technology, a gap that could slow implementation and delay benefits to passengers for years.

Like legislation previously approved by the House, the Senate bill aims to chart a course for transforming the current system of ground-based radars and controllers into a new generation of satellite-based technologies able to handle larger numbers of flights more efficiently and with less environmental impact.

Dubbed NextGen, the network is designed to allow aircraft to fly shorter, more direct routes with pilots taking over some of the core functions of controllers.

The government already has pledged to spend some $20 billion on the new system’s backbone. According to the latest FAA projections, the system essentially would pay for itself through 2018 by reducing total anticipated flight delays more than 20% and saving airlines 1.4 billion gallons of fuel.”

 The article also says, “Gerard Arpey, the chairman and chief executive of AMR Corp.’s American Airlines, said at an FAA conference last week that he was “dumbfounded” that the stimulus bill didn’t provide financial help to install new aircraft equipment. Industry estimates peg such annual costs at $1.5 billion or so through the middle of the decade. If “we are willing to spend billions of general tax dollars for high speed rail,” Mr. Arpey asked, “why not a few for high speed aviation?”

The airline industry, with more than $30 billion of losses in the past three years, seems unwilling to bear the cost. “This is about the complete overhaul of an infrastructure, said Dave Castelveter, a spokesman for the Air Transport Association, a trade group continuing to lobby on the topic.

So far this government has been willing to save financial giants including AIG from their own incompetent and borderline fraudulent activity with a bailout which was big enough to have funded the NextGen system twice over!  The government is also planning to spend billions on high speed rail which will be a direct subsidy to the companies providing passenger train service. How about helping the airlines who are already providing a critical component of our national transportation infrastructure?  

As a small business, if our company was required to spend big money to upgrade our aircraft, it would be devastating to us coming out of a deep recession.  Additionally, I don’t see too many banks willing to loan small businesses money to fund anything, much less something like aircraft avionics upgrades.  So, where does the money come from? No one in any sector of the aviation industry has the ability to print money like the federal government!

Commercial aviation providers pay taxes into the system every day in the form of Federal Excise Taxes at the rate of 7.5% of the price of an airline ticket or 7.5% of the cost of a charter flight. For individuals or corporations flying their own aircraft, there is a fuel tax of $.24 per gallon. How about using some of that funding on NextGen cockpit upgrades as opposed to spending it on congressional pork projects?

Could the guys in D.C. at least offer some no-interest or low-interest loans to the airlines to fund their end of the deal? If the airlines profit from the new system they can and should pay it back.

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My mother was a chemistry teacher who, much to the dismay of her chart memorization-minded colleagues, left a copy of the periodic table uncovered on the wall for student reference.  I’m sure that period table memorization is just another circle in Dante’s Hell, but I digress.  Mother’s belief was that the students would end up remembering what they needed from using the chart.  Those that didn’t probably weren’t going to be chemists, anyway; so, it didn’t matter in the long run.  Her belief was that if they used information and skills, students would learn the basics in a more organic way than by memorization.

In his book Fate Is The Hunter, Ernest K. Gann describes crossing the North Atlantic using basic navigational tools of a watch and a sextant.  Certainly, today’s aviators have it much easier using radio beacons and even GPS.  Glass cockpits have replaced many gauges and dials with heads-up displays and automatic computation.  Once at cruising altitude, aircraft fly themselves, as some Northwest passengers unwittingly found out.  But what happens when these automations are interrupted?  Are today’s pilots comfortable enough with the basics?

When cell phones were new technology, people talked about losing reception due to solar activity.  Since normal cell phones don’t actually use satellites, dropped calls may have been more the result of the lack of a tower than a solar flare.  However, today’s technology is worlds different and global navigation systems do use those satellites to triangulate signals to pinpoint a location.  In a BBC News article, author Jason Palmer points out that the navigation systems use signals that are “incredibly weak and, as researchers have only recently begun to learn, sensitive to the activity on the Sun. … Solar flares – vast exhalations of magnetic energy from the Sun’s surface – spray out radiation across the electromagnetic spectrum, from low-energy radio waves through to high-energy gamma-rays, along with bursts of high-energy particles toward the Earth. The radiation or waves that come from the Sun can make sat-nav receivers unable to pick out the weak signal from satellites from the solar flare’s aftermath.”

While Business Week’s Jeremy van Loon contends that solar activity is currently at its lowest point in the century, Stuart Tiffen of Das Welt quotes Dr. Dirk Soltau of the Kiepenheuer Institute for Solar Physics as saying that sunspots seen on the face of the sun in recent months indicate that the star is at the beginning of another 11-year cycle.  Using past cycle activity to predict the behavior of this one, “by 2015, more charged particles from the sun will be interacting with the ionosphere in the Earth’s upper atmosphere. This can lead to the ionosphere thickening and interfering with orbiting satellites, Soltau said.”  However, Tiffen notes, many global agencies are working towards a solution, including the European Space Agency (ESA), which “recently launched the European Geostationary Navigation Overlay Service (EGNOS), which improves the accuracy of satellite navigation signals over Europe. … Using EGNOS, signal accuracy can be improved down to 1.5 meters, according to ESA.”  And Mark Petovello and Joe Kunches add in Inside GNSS, that agencies are constantly monitoring solar activity and are constantly moving satellites to avoid or diminish the effects of the increased radioactivity.  Clearly the global navigation industry is taking the situation seriously and is actively planning solutions.

What does this mean for aviation?

Since many aircraft currently use some sort of global positioning device for navigation, devices disabled or misdirected by the sun’s interference could wreak havoc with the entire system.  As antiquated and inefficient as the current ATC system in the United States is, it is less vulnerable to solar activity than the proposed NextGen system based on satellite communications.  Now, I’m no Luddite; so, I’m not about to propose that we stick with our current system any more than I would propose that we go back to flying low, following highways and train tracks.  The vulnerability of the system does make me a little uneasy, though, particularly given the newest generation of pilots who, while certainly capable, have not been trained to navigate the old-fashioned way.  What sort of back-up system do they have in their knowledge bases to deal with an outage of computer navigation systems?

Stay with me now, I’m going to make a big leap.

Colgan Air lost flight 3407 as a result of many factors culminating, according to the extensive NTSB investigation, in pilot error.  The pilots’ error was not leaving the autopilot engaged when they encountered icing conditions (as I originally asserted), but (as a reader John Herbert pointed out) “continuous violation of the sterile cockpit rules, resulting in a total loss of situational awareness, so that the flight crew let the aircraft speed decay until the plane stalled. When the aircraft tried to recover automatically, the pilot overrode the nose-down stick and pulled back, basically dropping the airspeed to zero.  Fatigue and limited training and experience were also involved.”  In response, the US Congress proposed legislation in H.R. 3371 requiring, in part, that pilots “have at least 1,500 flight hours to qualify for a certificate.”  To be honest, I’m not sure that section of the bill really needs to be there since both of the pilots involved in the event prompting the measure had more than 2,000 hours.  Earlier sections emphasize training, which is a more important issue.  After all, you can have 50,000 hours of flying tourists in the tropics, but that’s not going to help you in Sweden.  It’s not all about experience.  Training plays a huge role.

Now, let’s get back to solar flares.  How many pilots today routinely receive navigation training using any method other than global navigation or other systems vulnerable to solar activity?  Not that many.  So, unless we want to find ourselves back on the train, I would propose that pilot training include more navigational basics.  It’s not quick.  It’s not sexy.  But it works.

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In recent posts I have talked about the need to bridge the price gap between travel using private aviation (corporate jets) and using air mass-transit ( the airlines) if private aviation is to expand its market.

The gap can be incrementally closed if the costs of flying in private aircraft can be reduced with lower operating costs using new generation aircraft, utilizing aircraft more efficiently and selling seats on the aircraft instead of buying the whole aircraft for a charter flight.

In a March 4, 2010, Popular Mechanic online article by Glen Harlan Reynolds has the following headline about the new HondaJet:

Can Honda Bring Corporate-Style Jet Travel to the Masses?

Included below are excerpts from the article which is well worth the time to read in its entirety.

Private jet travel is convenient, luxurious and, of course, very expensive. The Honda Jet represents an effort at changing that, by using technology and design to bring costs down and allow private-jet travel at costs that approach commercial ticket prices

So my column for the magazine in a couple of months is on new approaches to air travel. In the course of writing it, I spent a day with the pilots, engineers and designers of an aircraft that’s meant to bring about just that sort of new approach: the HondaJet, a fast, comparatively cheap five-passenger Very Light Jet that Honda hopes will not only appeal to the usual run of corporate-jet purchasers, but that will also promote an entirely new way of flying, one that’s capable of bridging the gap between cheap-but-unreliable commercial jet travel and swanky-but-expensive corporate jet travel. What I saw makes me think that the Honda folks just may be onto something.

This is no secret, of course, to the people who travel by private jet now. But private jet travel is very expensive, which is why it is the domain of CEOs, celebrities and the like. The HondaJet represents an effort at changing all of that, by using technology and design to bring costs down and allow private-jet travel at costs that approach commercial ticket prices.  (Fully loaded, Fujino says, the cost per seat on the HondaJet should be roughly comparable to a first-class commercial ticket). To keep costs down, the Honda folks have put a lot of thought into ways to make the plane as small and inexpensive as possible, without sacrificing comfort or speed. .

Overall, the HondaJet has a sleekness and a friendly, pleasing personality that reminds me of an iPhone, or some other cleverly designed bit of consumer hardware. You just want to like it.

What about the environment, though? Won’t all these small jets zipping around be worse for emissions than a few big ones? The answer seems to be no. Based on fuel consumption, speed and range, the HondaJet seems to be just about exactly as efficient per seat-mile as the ubiquitous Canadair CRJ-200 regional jet. But that probably understates things, because if I were flying from Knoxville to, say, Washington, D.C., I’d be traveling a straight-line distance of 353 nautical miles, while if I took a commercial flight, I’d probably be going by way of Atlanta for a distance of 605 nautical miles. (I’d also have a travel time of about an hour on the HondaJet, rather than something like 4 hours traveling via Atlanta.) So while the precise environmental impact of replacing hub-and-spoke commercial travel with direct-flight travel on the HondaJet is open to dispute, it seems unlikely that there will be much impact.

Honda hopes that the plane will sell not only to the usual run of jet customers, but to air-taxi services, and, in fact, Fujino, who makes a point of calling the HondaJet an Advanced Light Jet rather than a Very Light Jet, tells me that they expect this to be a case of the product driving the market. Although other efforts to build an on-demand air-taxi market at low cost have stalled with the current economic downturn, those efforts faced financial and technological problems that Honda expects to avoid, and by the time the HondaJets are rolling off the line at full speed, there’s a good chance that the economy will have recovered. So the air-taxi model—where you got to a website, enter your destination, and have a small jet swoop down to pick you up, possibly at a small business airport rather than a big one where parking and security hassles are greater—may well have a chance.

I certainly would like to see something like that happen. I fly coach myself; I’ll occasionally spring for an upgrade to first class when the airline offers me a deal, but when I do take the upgrade I’m usually underwhelmed. To me, the problem with air travel as it exists now isn’t a lack of free drinks, but a lack of convenient scheduling, and the risk of delays caused by missed connections.

If Honda gets it right they will certainly be part of the solution. I hope they do and I look forward to seeing them flying next year.

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The Next Economic Paradigm is a very simple idea yet the overwhelming majority of people have absolutely no idea what we’re talking about.  The strangest part of this work is the knowledge that eventually this will become completely obvious to everyone and the transformation, from beginning to end, will take a very short period of time.

My greatest curiosity is imagining when and how this moment will arrive.

I recently saw the latest Star Trek re-boot where an old Dr. Spock encountered the exiled young Space Propulsions Engineer named Montgomery Scott who had been convicted of attempting a mash-up between warp drive and atomic particle transporting with the commander’s pet schnauzer – where the term “mash-up” was implied to be quite literal.

Um,…the dog wags the tail.

The epiphany came when the older Spock suggested that Scotty’s approach was backward.  Instead of assuming that Space was stationary and the spacecraft was moving, Scotty should assume that the Space is moving and the spacecraft is stationary.

In one fell swoop, all the calculations finally made sense.  A good theory became practical.  All those nasty side effects – like bringing the schnauzer atoms back together – were no longer a problem.  Lo and behold, the Federation was saved.

Of course everyone knows what warp drive is and what transporters do, yet the science involved with their actual construction of these devices remains intensely complex.  The same can be said for our financial system. Everyone knows how to buy a can of tuna fish, but the actual formulation of that transaction is intensely complex.

We have developed a vast set of processes, techniques, and infrastructure around the basic idea that markets are dynamic.  Everyone knows that markets change and move and they behave in many strange ways in response to price inputs, scarcity, surplus, legislation and ideology.

Meanwhile, people are defined by what they consume – like red dots and blue dots on a political district chart, demographic data points, owner/renter, winner/loser, jobbed /not jobbed, young /old, first class/coach, etc.

And that is just the way it is … and the only way it can be.

Now suppose Dr. Spock was to beam down and suggest that markets are static and people are dynamic.  Imagine everyone staring at the can of tuna just sitting there, lonely, dusty and static, doing absolutely nothing except being a can of tuna on a stationary shelf, in an inanimate “market”.

The epiphany is that human knowledge assets are completely and irrevocably tangible in every way, shape, and form. Humans allocate and trade social capital, creative capital, and intellectual capital with each other in infinite ways, sometimes resulting in a can of tuna in a market.

All knowledge assets are tangible in the right exchange system.

I wonder what they will call it?

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4 in a 4 part Series:

In the previous posts in this series, we discussed the gaps in Price and Time between Private Aviation and Air Mass Transit travel.  This time we are going to look at the gap in customer experience.

It is easy to measure price in terms of actual dollars and in terms of the value of our time, which we can use as an offset of the price gap. The more difficult gap to measure is the difference in the experience of the two forms of travel. To date, I am not sure if anyone has been able to accurately quantify the difference in the traveler’s experience. The ability to measure the traveler’s experience on either a private aircraft or an airline and compare that to the alternate experience, would give us a more meaningful comparison between the two.  That comparison could then be quantified and translated into a monetary measurement, which would go towards offsetting the price gap.  I believe that offset would be a valuable tool in selling private aviation services.

Here is what we know for sure!

Those who have experienced private aviation as a form of travel often justify the high price by speaking of the better experience as opposed to traveling by air mass-transit.  Call it the Hassle Factor of the airlines: the anti-social behavior of the passengers we share space with in an airliner, the rude treatment we sometimes receive, the lack of control over where we go and how we have to get there, the uncomfortable feeling of being compressed into a space that is measured in inches of seat pitch, the food served (or mostly not served) on the planes, the baggage abuse (bags don’t have feelings but I don’t like my stuff being abused) and on and on……

You get the point.

Stack that against the experience of private aviation.

Not one single person I have spoken to in 28 years of being in this business has ever said to me, “I can hardly wait to go back to traveling on the airline since I can’t afford to travel in a private aircraft anymore.” Not one. Every aircraft owner, charter customer or private pilot / aircraft owner pilot cites the better experience of flying by private aircraft as the number one reason to close the price gap. They don’t know how to quantify it but they know what they know. How good would it be for our industry to develop a tool that measures the experience, quantifies it and then translates it into dollars?

As consumers, we purchase experience with our hard earned money every single day. We pay more for an iPhone than for a Blackberry because we like the experience. We ride in a luxury car rather than in a compact car because of the experience. Both serve the same purpose since we arrive at the same time regardless of the type car, but what a different experience to ride in a nice driving, luxury car as opposed to a compact.

If we can ever measure and quantify the experience and then communicate that measurement to the market we might be able to come a long way in bridging the price gap that has prevented the many from experiencing the joy of travel by a mode that the few have become accustomed and maybe even addicted to!

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Part 3 in a 4 part Series

There is a huge gap between the time it takes to get from origin to destination by Private Aviation and the time it takes on the Airlines. In some cases, even a small, single-engine, propeller aircraft can get you there quicker than the airlines. In all cases, a business jet aircraft can get you there quicker and here is why:

• Your schedule:  You start by setting your own schedule when you use private aviation. If it makes sense to leave at 7am, then you leave at 7am. You set the time of departure based on when you want to arrive on the other end. Have a meeting at 10am?  Then you set your departure time to arrive in time to make your 10 am meeting. Easy enough. No traveling the night before.
• Closer airports: With over 5500 airports in this country and only 500 of them having any commercial service at all you have an additional 5000 airports to choose from when you take a trip via private aircraft; so, in all cases you can get closer to your real destination. Instead of going into the large commercial airport closest to where you want to go, most of the time there is a smaller airport that saves a lot of driving once you get there. That also works on the departure end. In larger cities there are several airports located on different sides of town, allowing you to pick the one closest to your home or office and leave from there. If you live in a small town, then you no longer have that sometimes one to two-hour drive to a big city to catch an airline flight. In our home state of Tennessee, we have more than 80 airports; so, no matter where you live in our state, you are no more than 30 minutes from a public airport. Smaller airports are less congested, giving you the added benefit of less time holding in the air or on the ground due to busy airport traffic jams.
• Direct Flights: You always go direct with private aviation; so, you waste no time going though a hub airport with one to four-hour layovers and multiple boarding processes just to get to your destination.
• No standing around: Flying in private aircraft, you can show up between five and ten minutes prior to the departure time you set, park close to the private aviation terminal and, in some cases, pull up next to the aircraft to unload bags. You are greeted by the pilots and you board immediately. You can skip the time wasted riding the shuttle to the terminal from long-term or off airport parking, queuing up for baggage checks, security screening and then waiting at the gate for 45 minutes.  There is no way you can plan on getting to the gate just five minutes before scheduled departure – the air mass-transit’s Contract of Carriage forbids it.

When you compare the two methods of air travel, the savings of time by flying private aircraft can be hours per trip and, in many cases, even days.  When we get people to their meetings and back on the same day, they tell us that the airlines would have taken two days with a limited meeting schedule or three days if they wanted a full day of meetings.

Everyone has a value on their time and it is especially important to quantify that value when you think in terms of productivity in business. Those who charge directly for their time like accountants or lawyers can easily quantify their time and compare the options to see if they can gain productivity by using a more efficient means to travel. Most travelers don’t think about it because they assume that they don’t have an option. What if we gave them a tool to measure the productivity of alternate means of travel? Could that close the gap?

What is your time worth?

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When you go into a store to buy anything, the rational person will always compare the quality of the object against the price of the object versus any alternative products or markets.

When you buy a home, the property is characterized by descriptions for “quality” (construction, neighborhood, schools) and a series of  ”quantities” (number of bedrooms, square footage, price)

When you cross the road, you look both directions in order to assess the quantity and the quality of the traffic that may or may not kill you.  Are the traffic slow moving pedestrians or are they fast moving trucks?

When a bank makes a loan, they “quantify”  all of your valuable things like your home, cars, 401K, and personal income and they use the credit score to measure the quality of your finances (debts, credit pulls, past history, bankruptcies, etc).

Supply and demand cannot, absolutely cannot, be determined by any other means other than by measurements of quantity and quality.

In fact, economics is the science of incentives where the fundamental graph is the supply and demand curve.  Both supply and demand behave according to inputs of quality and quantity, specifically price and availability.  Supply and demand for anything absolutely cannot be determined by any other means than by coordinates of quantity and quality.

Investors manage risk.

Risk is an asset, if it weren’t, insurance companies would not exist.  There are three things that an investor must know in order to manage risk.  1.  They MUST be able to identify their exposure to peril.  2.  They MUST be able to estimate the probability that the peril will or will not impact them.  3.  They MUST be able to determine the cost of the consequences in the event that the peril happens.

Again, within the definition of risk – to which ALL INVESTMENT RESPOND, are the characteristics of an asset; what is the quantity (1) and (3) and what is the quality (2) of the peril.  If the investor does not CLEARLY SEE these three positions, they will not invest. Period.

This is what drives successful markets and what kills unsuccessful markets.

To ignore the fact that all rational human behavior, intentions, decisions, reactions, conversations, relationships, education, ideology and every other state of human consciousness in a market, corporation, community, family, or social network ARE NOT characterized in the form of a quantity and a quality, is frankly, ignorant to ones market, irresponsible to one’s community, and incompetent to one’s profession.

Yet so many people do not see themselves as an asset.  Maybe someone should give people permission.

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In spite of what my sister says, I’m not a terribly girly girl.  Even so, every great now and then, I’ll go do a complete Girl Day. I’ll get my hair and nails done, maybe a massage, whatever. I walk in the door and pretend I’m Elizabeth Taylor. (The reference dates me, I know. But I just don’t think there’s any glamor like old Hollywood glamor.)  I have very clear expectations about what I want from those rare days:  a comfy chair, a raspberry cosmo, pleasant fragrances and quiet.  Selling anything involves a tremendous amount of talking; so, when I’m unwinding, I covet silence.  If I don’t get what I expect (like the time I ended up with magenta hair – not a good look), I expect an adjustment to my bill or I may just not go back to that salon.

When I go out to eat, I expect good service, good food, a pleasant environment and a predictable price.  If my expectations are not met, I may reduce the tip, I may complain (though probably not), or, again, I may just not go back.

When I fly commercially, I should be able to expect someone to greet me at the ticket counter, smooth movement through security, orderly enplaning and deplaning, reasonably priced refreshments or the ability to supply my own, on-time departures and arrivals, and a pleasant environment.  What I get is: self check-in at a kiosk, security hassles with my coat, shoes, and laptop case, 45 minutes hanging around at the gate, overpriced food and beverages, enplaning and deplaning hassles (you know all those people who just stand in the aisle for no apparent reason), tension on the aircraft with screaming children or obnoxious passengers, etc. That’s really kind of sad, isn’t it?  I expect to be annoyed and tired by the time I reach my destination.  If I don’t like my experience on any given airline, I’m pretty much out of luck, though, right?  They’re all basically the same, offering very little positive customer service, 80% on-time reliability, and no recourse for those made miserable by disruptive passengers (unless the carrier wants to be lambasted on Twitter or online news outlets).

So, here’s my question to you: what do you want?  We’re not talking operational issues here, just customer experience.  If you could design an airline from tip to grip, what would you do?  What would your expectations be and how would you meet them?

Think on that and let me know.  I’ll be waiting right here, sipping a cosmo.

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2 in a 4 Part Series

In this discussion, we will focus on the gap of pricing between Private Aviation and Airline Travel. Is there a way for us to partially bridge the gap? And, if so, how much do we need to bridge it to make it worth the time savings and better experience?

A round-trip airline ticket from Nashville, Tennessee, to New York City (BNA to LGA) costs between $525 (with one stop) and $1100 (non-stop).  Expedia publishes a travel time of 3:45 for the one stop and 2:00 for the non-stop, a difference of an hour and 45 minutes.

Flying the same route in an eight-passenger private jet costs approximately $10,000.  That price is the same whether you fly by yourself or if you take seven friends or business associates with you. You save at least two hours of terminal time avoiding the airline and your experience will be better.

Most of us have difficulty justifying this price since we seldom need to take seven friends or business associates with us; so, the price per person is $10,000 or maybe, at best, $2500 if there are four of us going.  That’s often still a tough sell.

As I see it, there are only two ways to bridge the gap between the two modes of travel:

• Bring the total price of the private aircraft charter down relative to the mass-transit price
• Fill the aircraft with eight travelers

The first solution can work from both sides.  The gap shrinks if either airline fares go up or air charter prices go down.  If both things happen, the gap shrinks even more.   While I don’t believe the gap will ever be totally closed, every incremental movement works to the advantage of our industry, taking into account private air travel advantages in the other two gaps – passenger experience and time savings.

Private air travel can bring the price down when fleet utilization goes up. Many of the costs of traveling by private jet are fixed; so,  you can lower the overall operating costs with higher utilization, which allows you to spread the fixed costs over a wider base AND which allows the traveler to buy at a lower price point.

Private air travel can also bring the costs down by utilizing new technology aircraft that are more fuel efficient and cost less to maintain, thereby driving down the variable operating costs to deliver the service.

These two ways of driving down costs have been used by the airlines to deliver a consistent service at lower price points. Southwest and JetBlue are the best current examples of this in the US air mass-transit system.

That leaves us with the problem of filling the seats. How do we fill enough of the seats on private charter flights to drive the costs down for each person traveling? Can we solve this problem? Would travelers migrate to a private jet flight if they could buy the seat for $1250 round trip ($10,000 divided by eight) when they could pay $1100 on the airlines?

A 10% pricing gap put into the overall matrix of price, time, and experience is a game-changer.  With that narrow of a gap, those who are used to the airline experience, but who tolerate it only because there is no real alternative, are likely to move to private aviation. Those who are already used to the price of private aviation might not sacrifice aircraft exclusivity; but, realistically, they aren’t the ones walking the bridge we just made from air mass-transit to private aviation anyway.  While some of them make take advantage of the shared aircraft, they aren’t really our target market.  We want the passengers using air-mass transit only because they have no alternative.  We want the passengers who have given up flying altogether due to the negative experience and wasted time.  We want the passengers who are in search of the better mousetrap because we believe that private aviation is it.

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