On-demand Air Taxis and Very Light Jets Predicted to Expand Air Travel Market According to Research 2.0 Report

Press Release
Source: Research 2.0

Wednesday September 19, 11:30 am ET


Low-cost, High-performance Jets to Greatly Expand Use of Municipal Airports; Offer Relief to Overburdened National Airspace System

BOSTON--(BUSINESS WIRE)--Research 2.0, a research firm that specializes in the analysis of emerging technology for the investment and business communities, today revealed findings from its new report focused on the impact of very light jets (VLJ) and on-demand VLJ air taxi services.

The report covers the growth of the VLJ services market, the predicted expansion of the Small Aircraft Transportation System (SATS) to local communities nationwide and the NASA-inspired technology that is enabling a potential seismic paradigm shift in air travel. The report also covers VLJ manufacturers, competition, manufacturing, regulatory, environmental and other issues specific to this new emerging market.

Summary of September 2007 Report Findings

VLJ Air Taxis Predicted to Relieve Overburdened Commercial Industry

Commercial airline traffic is predicted to see sustained annual growth over the next two decades, pressuring a lagging air traffic control infrastructure. VLJ air taxi services and increased utilization of hundreds of idle secondary landing facilities can substantially alleviate this pressure.

New Technologies Enable Small Aircraft Transportation System to Dramatically Expand

The Research 2.0 report affirms that only 660 of the approximately 5,400 public use landing facilities are used for scheduled air carrier flights as part of the standard commercial hub-and-spoke network system. Most of the other 4,800 facilities are utilized substantially below capacity. According to NASA, 93% of the U.S. population lives within a 30-minute drive of a SATS-type airport, while only 22% reside within the same distance of a major or hub airport. A NASA-sponsored five-year public private sector research project has shown that enabling technologies can support SATS's mission of providing a "safe travel alternative, freeing people and products from existing transportation system delays by creating access to more communities in less time."

Very Light Jets Offer Unique Advantages Over Existing Air Travel Options

The principal technological breakthrough behind the VLJ is a newly developed small, compact, lightweight jet engine with sufficient thrust force to propel the aircraft. VLJs are defined by several general specification factors, including a maximum passenger plus pilot capacity of seven, a maximum take-off weight below 10,000 pounds, acquisition cost of $1.2 million to $3.7 million and the performance capability to operate on runways approximately 3,000 feet long. Their maximum flight range is usually around 1,700 nautical miles. Fuel and maintenance direct operating costs for VLJs average $0.70 to $1.50 per mile. The report finds that VLJ manufacturers include a mix of new entry start-ups and traditional aerospace industry names. Forecasts for VLJ unit sales over the next decade vary considerably from 2,500 to a high of 8,000 or market sales of $6 billion to $20 billion.

Air Taxi Market Predicted to Create New Demand with Fresh Value Proposition

According to Research 2.0's analysis, with the emergence of VLJ air taxi operators, true on-demand personal air transportation can become economically feasible on a broad scale. These services will drive growth of the air taxi market, which historically has been more like the charter model. On-demand air taxi services, like traditional automobile taxis, provide one-way point-to-point personal transportation immediately upon request. These aircrafts operate between landing facilities or near traveler destination locations, thus delivering value and flexibility not possible with the traditional (scheduled) airlines.

The report finds that the market size for these services is an estimated $2 billion to $7 billion annually. Most new technology air taxi services are start-up operations financed through private equity sources and founded by individuals well known for previous leadership roles in IT, traditional air transportation, aerospace and finance.

"According to our research, on-demand taxi services and VLJs will create a new dynamic within the existing air travel industry," said Kris Tuttle, founder and senior analyst of Research 2.0. "For example, if 10% of travelers that use major metropolitan airports on a given day shift to more conveniently accessed small airports served by on-demand air taxis, the impact would be extraordinary. Beyond the airline industry, the ripple effects would inexorably alter regional economies by redefining overall travel related supply and demand patterns. These trends would likely usher in new economic development opportunities, particularly for those local areas closest to regional airports. The speed and magnitude of this prospective change will depend upon the ability of players in this personal air transportation sector to discern creative, compelling business models that clearly offer maximum quality, efficiency and customer responsiveness."

The On-Demand Air Travel report is available to Research 2.0 subscribers and via other outlets. For more information, visit www.research2zero.com.