Friday, April 21, 2006

Business Opportunities Supporting Air Taxi

Kevin sent me an email the other day about a conference in Florida dealing with the up and coming very light jet and air taxi businesses. For those of you unfamiliar with it, a new class of aircraft called Very Light Jets are soon to hit the market and have the potential to revolutionize air travel. They are small, single pilot jets that can carry 6-8 people with a transcontinental range. They are very quiet and have short takeoff and landing distances. Most importantly, they are cheap and have low operating costs. The first of these to hit the market will be the Eclipse 500 (featuring Avidyne flight displays!) later this year, which is slated to retail in the $1.5 million range, as opposed to the tens of millions for a Gulfstream or Lear. Others soon to follow will be the Cessna Mustang, Diamond D-Jet, Spectrum, Honda Jet, and more.

While also aiming for the corporate jet market, these manufacturers expect to sell a large number of aircraft to air taxi services. Charter service has been around since the 60's, but with the lower operating costs, the new air taxi companies like DayJet hope to keep prices competitive with first class on major airlines. Because of the short field capabilities of the VLJs, they will also be able to fly into many of the thousands of under-utilized airports around the country, thus avoiding the congestion of the major hubs, offering point-to-point service, and bringing the customer closer to many of the suburban destinations they are going to.

I think it will be a successful business, but there are already a lot of players in the primary market. But like any boom, there are plenty of ways to make money in secondary and tertiary businesses related to the boom. During the gold rush, someone who owned a saloon and sold provisions to prospectors likely cleaned up, and with a lot less risk than those who worked the mines themselves.

Are there similarly opportunities in the air taxi industry? Once people land at these small airports, they will still need transportation to their ultimate destination, and they will not have the benefit of numerous large car rental outfits on-site as the bigger airports have. Perhaps there is room for an innovative car rental business akin to Zipcar. Or maybe in a smaller, sleeker version of an on-airport hotel that rents zipcars. A lot of the smaller airports are in various states of repair, so possibly if you had the capital, you could start buying up old airports, restoring them, and building the infrastructure to support an air taxi service (though I suspect people are already doing this).

I'm sure there a lot of other ideas that I'm not thinking of. If you have thoughts, post them to the comments and we'll discuss.


At 2:38 PM, Blogger Dan Craig said...

One idea from a co-worker is luggage shipment. On a lot of these VLJs, the luggage capacity is a lot smaller than what you could take on a big jet. Maybe some kind of service that ships luggage so that it meets you at your destination. Or, alternatively, you could sell the passengers things they might noormally pack with them as luggage.


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