GAO Reins in VLJ Forecasts

While the Government Accountability Office (GAO) joined the rest of aviation pundits in saying the role of Very Light Jets (VLJs) in the National Airspace System (NAS) is uncertain, VLJs are expected to be a game changer for transportation and the advent of commercial regulations would heighten that potential. (See related story FAA Confirms VLJ Commercial Regs)
Despite the uncertainty, one thing is clear, VLJ operators and manufacturers can take stark lessons from the regional airline industry in just how these aircraft will be welcomed by the FAA and can only hope FAA will do a better job.
"If this sector expands as quickly as expected, FAA inspectors could face further workload challenges..and...controllers could face the challenge of further congested air space, especially at smaller airports," said DOT Inspector General Gerald Dillingham, who also expressed concern about the influx of new pilots using VLJs, calling for a new training standard. (See related story – Eclipse Opens New Training Center, Training Standards Outlined)
The GAO report’s greatest contribution is its baseline coverage of an emerging industry, including charts and lists of the players and their aircraft although it cited only some of the 12 programs in the works in its charts. It also compared eight forecasts and their assumptions, illustrating just how uncertain predictions are. It also said that experts believe the U.S. will constitute 70 percent of the market in terms of deliveries. (See sidebar below –Forecasting Problematic – VLJs Drive Corporate Boom – for forecast comparisons.)
The agency also offered up a definition of VLJs that is otherwise just a marketing term with no single definition. “Most experts describe these aircraft using a combination of weight and price,” said GAO, identifying nine proposed models as of July, two of which – the Cessna Citation Mustang and the Eclipse 500 – have already been certificated and delivered.


For now, however, GAO could only report on the potential of the aircraft in private and air taxi operations, which offer up a mixed picture – one in which they will have little impact and another saying they will complicate an already-complex environment. However, contrary to apocalyptic predictions by the commercial aviation industry, GAO indicated the VLJ impact on the National Airspace System as well as on safety should be negligible.
“FAA officials told us that they do not expect very light jets to significantly affect capacity in the next five to six years because of the incremental integration of very light jets into the airspace,” said GAO. “Most experts believed that very light jets would have little effect on safety, owing to FAA’s certification processes and procedures for aircraft, pilots, and maintenance.” In addition, manufacturers have gone out of their way to develop creative and intensive training and skills assessment programs.
However, in an earlier report, DOT Inspector General Gerald Dillingham said, "FAA estimates that if two percent of airline passengers switch to VLJs, air traffic controllers will have to handle three times more take-offs and landings."

Learning from the Regional’s Experience
The greatest indicator of the FAA’s reaction to VLJs is reflected in the agency’s treatment of another generation of game-changing transportation developments – the regional airline industry since the dawn of deregulation. Its new aircraft – from the first, new-generation turbo-props introduced in the 1980s to the regional jets introduced in the 1990s – were universally met with a complete underestimation of their operating characteristics and how they could fit most efficiently into the system. FAA’s failure to allow these aircraft to operate to their maximum efficiency only served to point up its inability to adapt to new technology and created a questionable impression with the public forced to fly low and rough despite their impressive operating ceilings.
Even now, on the 30th anniversary of deregulation, the FAA has failed to accommodate regional jets. Instead, the agency blames them for creating the congestion that has been such a big story this year. The agency fails to recognize that they are an example of the marketplace at work and a natural evolution of air transportation in the post-9/11 period. While it remains to be seen how FAA will treat VLJs, it is likely the advent of this new technology will receive much the same treatment as previous new-technology aircraft. This syndrome is aptly illustrated by recent events in the regional airline industry, in which the agency blamed the aircraft for FAA’s own failure to produce a system that keeps up with the marketplace, even after 40 years of so-called “modernization” efforts.
A perfect illustration of the disconnect between operating characteristics and the air traffic control system came with a contribution to the GAO report from industry experts discussing how VLJ success might be limited. “Very light jets might operate shorter flights and travel at lower altitudes than commercial planes and have little effect on capacity. If many very light jets fly at higher altitudes and longer distances, they could have a greater effect on capacity, resulting in delays and congestion,” the un-named industry experts said.
Indeed, that is why FAA kept first-generation regional aircraft from operating at peak efficiency. The only hope for VLJs is the implementation of new NextGen ATC technologies for which manufacturers have already equipped their aircraft.
Experts also pointed to VLJ’s different performance capabilities saying they have slower climb rates and cruising speeds than commercial airlines, which could influence their effect on capacity when mixing with other aircraft in the terminal and en route environments. That is all FAA needs for limiting VLJs. In fact, GAO reported, “FAA and several experts, including experts representing active air traffic controllers, believe that very light jets will increase the complexity of the airspace due to their performance capabilities. FAA indicated that controllers will segregate very light jet traffic from airline traffic if they travel in the same airspace.”
While some still say that VLJs will operate at large hubs, the emerging air taxi services – such as DayJet or Linear Air – are designed to capitalize on the fact their efficiency is best suited to connecting communities of interest where more traditional transportation is more of a hassle than a help. (See Linear Air Profile this issue) DayJet is also capitalizing on technology such as ADSB, and its wide-spread deployment with VLJs, providing a significant competitive advantage because they springboard passed scheduled airlines and take advantage of more efficient routings through satellite technology.
The GAO report cited the establishment of a cross-organizational group by FAA to facilitate communication about very light jets across FAA departments to address both safety and integration issues. While FAA expressed confidence in its ability, critics have long cited its inability to adapt to changes in airline maintenance and in flight operations given a lack of inspectors and air traffic controllers. Witness the impact of the plethora of new entrant carriers in the 1990s and the failure of FAA to adapt, culminating in the ValuJet crash owing to maintenance problems and carriage of hazardous materials in 1996. Related Story
In addition, GAO also discussed VLJ impact on funding concluding that, although VLJ will increase FAA costs, they would also increase revenues because they would be used more than non-commercial operators.
“Some commercial operators predict that very light jets used in commercial air taxi operations would be flown more frequently than in current air taxi operations thereby generating relatively more fuel and passenger ticket tax revenue,” said the report concerning their impact on system revenues. “A couple of aviation experts suggested that successful air taxi operations may attract new passengers who currently travel by automobile, potentially leading to increased demand for commercial flights and additional revenue. It will be at least 10 years before there is an observable decrease in the number of commercial airline flights because of passengers transferring to air taxi operations, though effects on revenue could appear earlier.”
FAA says it is preparing for the new aircraft. Part of its efforts include bringing air taxi operations into the collaborative decision-making process now used by government and airlines to smooth out system operations. It is also making air traffic control centers aware of any unique very light jet operational requirements through bulletins, briefings, and traffic management courses. Notice it said “operating requirements” rather than “operating capabilities.” That is what tripped up the regionals.
FAA is establishing a very light jet computer simulation model for use during qualification and annual refresher training for air traffic controllers. It is also planning operational test flights with DayJet to observe a very light jet as it works through the airspace environment as well as a wake-turbulence study to examine potential impacts of turbulence generated by large aircraft on very light jets. Finally, FAA is funding research on the potential effect of very light jets on U.S. airports, including an examination of future operations by category of airport, geographic location, and type of operation, as well as potential infrastructure, facilities, and services that particular airports will need to accommodate future very light jet activity.

Air Taxi Development
A Teal Group forecast predicted the air taxi market would not expand on a large scale. However, several other forecasts include predictions of several thousand very light jet deliveries to air taxi operators. For example, Embraer forecast that the air taxi market might be responsible for 2,500 to 3,000 very light jet deliveries by 2016 if there is demand for air taxi services.
The largest factor in predicting the impact of VLJs is the development of the air taxi market, although the report also cited economic growth, production constraints, insurance and training requirements. GAO said several experts doubt the success of new air taxi operations, saying if the point-to-point, on-demand air taxi business model were so attractive, it could have become popular already using similar existing business jets and propeller aircraft. However, that ignores the promise of the differing economics of VLJ operation, new-technology engines and new computer reservation programs for air taxis being pioneered by DayJet as well as the creativity of matching passengers to individual seats and travel flexibility rather than the entire aircraft. Indeed, GAO said the low purchase price and operating costs could increase demand, adding that VLJs could replace existing aircraft as customers trade up or retire aircraft.
GAO reported that experts cited four basic requirements to attract air taxi operations including: a fixed base operation for fuel and supplies; availability of ground transportation, such as taxi or rental cars; close proximity to customer populations; and, technology providing precise navigation and landing guidance. In addition to airport type, GAO said experts indicated that the effect of very light jets on the NAS also depends on trip length and flight altitude, implementation of new air traffic control technologies and equipment, and aircraft performance capabilities.

Sidebar
Forecasting Problematic:
VLJs Drive Corporate Boom
As an indicator of how important their role is in business jet forecasts, Raymond Jaworowski, senior aerospace analyst for Forecast International, said if VLJs are removed from forecasts for business jets, the growth rate for the business aircraft market would be relatively flat between now and 2016. Jaworowski analyzed the business jet market during an AviationToday.com webinar – An Inside Look at the Business Jet Boom, aired June 28 and archived on the AviationToday.com web site along with forecast charts here.
“The growth trend is largely due to VLJs who have a high market in terms of units but not in value,” he said, adding he expects the business cycle to soften in 2010 and 2011, impacting business jet sales until it picks up again in 2013. “The growth is now 60 percent, which may sound like a lot but is nothing like the 200 percent growth rate experienced between the mid ‘90s and 2001. The growth of corporate profits tracks closely with business jet growth with fractionals playing a more significant role. Today they account for 12 percent to 15 percent of sales but by 2016 they will be 20 percent of annual deliveries.”
The question remains how fast manufacturers will increase production and how many customers will convert to firm orders. His prediction for VLJs is more conservative than VLJ manufacturers but still accounts for significant growth. There will be a jump in deliveries in 2008 and 2009 when production of the Cessna Mustang and Eclipse 500 hit their stride and then again in 2009 which will see the first full year of production for the Diamond D-Jet and the Embraer Phenom.

GAO Analysis
GAO analyzed eight forecasts which provided a “range of both the number of very light jets projected to be delivered (roughly 3,000 to 7,600) and the dates by which those numbers would be reached (from 2016 to 2025),” according to GAO. “Four of the eight organizations with very light jet forecasts that we examined also produced overall business jet forecasts for the years 2015 to 2016. The range in the predicted number of very light jet deliveries for these four forecasts is from 3,016 to 5,715 aircraft, an approximately 47 percent difference. However, the range in predicted number of other business jet deliveries for the forecasts was much closer, from 7,000 to 8,984 aircraft, only an approximately 22 percent difference.”
GAO also said that past forecasts proved inaccurate. “For example, in February 2006, FAA predicted 100 very light jets would enter the active air fleet during fiscal year 2006, but manufacturers did not deliver any very light jets during the fiscal year. The other three forecasts also overestimated the number of very light jet deliveries for 2006. In addition, in 2002, a Transportation Research Board workshop suggested up to 5,000 very light jets may arrive by the year 2010. Yet none of the eight current very light jet forecasts that we examined predict 5,000 deliveries over the next three years. Meanwhile, commercial air travel is projected to increase from 740 million passengers flying in fiscal year 2006 to one billion passengers in 2015, according to the FAA.
“We found that the eight forecasts we examined were based on limited information,” said the GAO report. “For example, since very light jet manufacturers have just begun to produce new aircraft, there is little information on delivery trends for these aircraft. In addition, there was less consensus [for VLJs] compared to other business jet forecasts, and past very light jet forecasts have failed to accurately predict when these aircraft would enter the NAS. For example, since very light jet manufacturers have just begun delivering the new aircraft, there is little information about product demand. Forecasters indicated that they based their assumptions about demand on information about past deliveries for other aircraft in comparable price classes, such as light jets and turboprop airplanes.”
The report continued. “However, these aircraft do not have exactly the same performance characteristics as very light jets. For example, several forecasts examined the markets for turboprop aircraft and predicted the proportion of customers who might instead purchase new very light jets.”
GAO also reported that the definition of a very light jet differed from forecast to forecast. “For example, some of the forecasts included predictions for single-engine very light jets, such as the proposed Diamond D-Jet, while other forecasts did not include single-engine aircraft,” it said. “However, most of the forecasts included five new aircraft models that manufacturers have scheduled to enter service over the next several years: Adam A700, Cessna Citation Mustang, Eclipse 500, Embraer Phenom 100, and HondaJet.” GAO noted that FAA’s 2007 forecast assumes that very light jets operating as air taxis will average 1,500 hours per year, fractional owners 1,200 per year, and recreational use 350 hours per year. Very light jets operating as recreational aircraft would likely have less effect on capacity owing to lower utilization rates and operating at general aviation airports with excess runway capacity.
If you find the chart's difficult to read, please click on "View" on the toolbar and click on "Text Size" to enlarge