March 23, 2005 12:12 PM PST
On-demand private jets nearing takeoff
But there are a lot of regulatory hurdles, technical issues and financial problems to be ironed out first.
Pogo Jet, founded by People Express founder Donald Burr, hopes to start flying four-seater jets soon. Passengers will pay about $1 to $6 per mile and have to buy all the seats, so a 200-mile jaunt will run from $800 to $4,800.
While that's not exactly People Express pricing, these new services aim to cut out lengthy delays--a serious problem on regional jaunts or long car drives. The planes, ideally, will run on an on-demand basis, so reservations and scheduling hassles are greatly diminished.
"This isn't (former GE CEO) Jack Welch private-jet travel. This is cheap private-jet travel," Burr said at Flight School, an offshoot of the PC Forum conference taking place here this week. (News.com publisher CNET Networks runs PC Forum.)
Pogo is aiming to have a few jets in service by next fall. Two years after that, the company hopes to have 50 under its command and be trying to expand into other regions. The company recently got a commitment from a major financial institution that will enable it obtain planes.
Competitors with similar ideas include Jetson Systems, started by Ed Iacobucci (an early investor in Citrix Systems) and Corporate Clipper. While Pogo will only sell seats on its own planes, Jetson and Clipper will aggregate and swap seats with competitors. Jetson hopes to begin on-demand flight services next year.
"If one person says you gotta go, you gotta go," Iacobucci said.
Overall, the upper-middle-class passengers this market will target are willing to pay a 130 percent to 150 percent premium for private plane travel, said Gavin Stener, CEO of Clipper. Put another way, Clipper will sell its services to those people who buy expensive fully refundable tickets, today a $30 billion business.
The model largely relies on the emergence of new types of planes, called Very Light Jets, that will come out from companies like Eclipse Aviation. Pratt & Whitney is producing engines for this segment. These planes weigh 10,000 pounds or less and hold up to six passengers. They have a flying distance of about 500 miles, Burr said.
Guidance systems are also being developed to make it easier to handle the anticipated increased airport traffic. In June, NASA will conduct a test of software that will allow multiple aircraft to land without radar, said Bruce Holmes of the agency's Langley Research Center.
But then there are the problems. These planes have yet to be licensed by the Federal Aviation Administration. Companies like Jetson and Pogo will also have to obtain licenses to provide commercial aircraft service.
While the FAA and the Department of Transportation are currently looking at how licensing regulations will need to change, aviation won't be deregulated to the same degree as many other industries because of the safety, maintenance, pilot certification and consumer protection issues, said Andrew Steinberg, chief counsel for the FAA. No one has ever been killed by spotty cell phone coverage, after all.
"The FAA is principally concerned about operator control. They don't want any confusion about who is in control," he said. The FAA also requires two pilots for commercial flights, which isn't popular with the new companies, he said.
The Department of Transportation has recently taken enforcement action against companies that advertise private jet services but then subcontract the flying part of the business to another company, said Katherine Perfetti, a national resource specialist at the FAA.
The new planes also represent a paradox. Typically, smaller, lighter planes are technically less complex than passenger jets. But all the new materials and devices that go into these planes reverse that situation, Steinberg said. The types of aircraft have not been certified for carrying commercial customers, although the plane manufacturers hope to obtain certification by the end of the year.
Turning a profit won't be easy, either. History is littered with dead aircraft manufacturers, said Vern Raburn, CEO of Eclipse.
Customer satisfaction will also be a huge problem.
"The first time they miss their flight, they will say, 'Thanks, but I'm driving next time,'" Iacobucci said.
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