Monday, September 24, 2007
FAA Confirms VLJ Commercial Regs
Sparrow’s three-year-old division handles Part 135 on-demand services as well as Part 142 training centers. Sparrow hopes to have the proposed rule out of the FAA by January when it will have to undergo scrutiny by the Department of Transportation and the Office of Management and Budget.
The agency is in the process of writing a draft rule allowing Part 23 jets to operate in commuter service under Part 135. Currently, the rules preclude turbojets from being used in scheduled operations unless they operate under Part 121. Sparrow would not say whether these commercial operations would have to meet all requirements of the single-level-of-safety standards imposed in 1997 which dramatically increased the cost of operations and led to the wholesale abandonment of many communities, including those that were not subsidized.
”There are a number of items operators are required to meet in order to operate in commuter service,” he said. “It’s still being decided about the single level of safety [requiring commercial to follow Part 121 regulations] but there will be no degradation of safety.” In addition, Sparrow said that it remains undecided as to whether or not to include jets certificated under Part 25. (A complete analysis on the impact of the single-level-of-safety rule was covered in a five-part series in Regional Aviation News)
The ARC recommendations sought to resolve current issues affecting this part of the industry and enable new aircraft types, size and design and new technologies in air transportation operations. Its recommendations also covered the provision of safety and applicability standards that reflect the current industry, industry trends and emerging technologies and operations, as well as addressed international harmonization and ICAO standards. It could potentially rescind part 125 from 14 Code of Federal Regulations.
Sparrow indicated that small commuter air services are certainly up to operating small jets and the new regulations are simply a part of the agency’s continuing effort to promote growth in aviation. “We are actively working on the rule because of the number of new very light jets on the market,” he said. “Cessna and Eclipse have already been certificated and there are a number in the process of certification. Sparrow was part of the flight standardization board for the Cessna Mustang.
He does not expect VLJs to “flood the skies” but noted that because of new technology and the use of composites and improved engines and avionics systems, they have changed the economics of operating the aircraft. “They allow operations at a lower cost compared to classically built aircraft,” he said. “We anticipate the use of them to provide additional service to the public. That is why we are taking a hard look at allowing them to operate in commuter service under Part 135. Part 25 jets are just not cost effective for some services.”
DOT has been working on new and creative ways to provide small community air service and has pointed to VLJs as a potential solution. Sparrow said that both FAA and DOT are looking for ways to provide opportunities for business to capitalize on new aircraft and “the spinoff would be improved air service to small communities.” However, the GAO and industry analysts doubt VLJs will be used in such service because essential air service points are just too small. However, allowing their use in commercial operations could produce other opportunities. Even so, most doubt their use in filling the void in small community air service.
The advent of VLJs and on-demand, air taxi service offer exciting prospects but this technology and business model remains unproven. The concern is that, knowing the DOT would be receptive to creative ways to address community air service, they would apply for subsidies for serving small communities that have been dropped from the national air transportation system in order to bolster their balance sheets as they develop. The government has often been a patron of such emerging services but it would likely come at the expense of such programs as essential air service and would be unlikely to achieve regular community air service.
There is certainly no dearth of proposed air taxi services in the offing including charters and fractional ownership business models that are already well established and growing. Related Story
But many on-demand air taxis, proposed in the last several years have not lasted illustrating how competitive this business is. There are other hurdles to overcome for on-demand services and that is traveler behavior. Michel Merluzeau, principal with the aerospace consultancy G2 Solutions, said in a recent AviationToday.com webinar that travel rules at businesses, including restrictions against top executives flying on the same plane, could preclude their success. The question is whether corporate travel departments change their rules, especially with respect to what they will pay for short-haul travel. To listen to the webinar click here.
Still, the concept is intriguing, especially in the face of a demand for about six million passenger trips per year in a mature air taxi system, according to an independent analysis by the Velocity Group. Velocity’s assessment of U.S. air taxi opportunities included an analysis of demographics and current services levels.
“We developed a ‘you-can’t-get-there-from-here’ index,” said Velocity Partner Gerald Bernstein. “We evaluated the connectivity between all commercial airports 300 to 600 miles from one-another. The greatest number without direct or non-stop service was in the southeast – particularly Georgia and contiguous states. The next [most populous] cluster was a band of states from New York, through Pennsylvania, Ohio, Indiana and Michigan. West of the Mississippi, except for Texas and California, few states have sufficient population centers within close proximity to one another for economic VLJ-type service. The 300-600 mile range exceeds the distance business travelers are willing to drive, is less than a two-hour VLJ flight and it is the range targeted by current developers.
“About 40 million domestic passenger trips a year cost $0.25 to $0.35 per passenger mile for full-fare coach, business class or first class service,” Bernstein continued. “Approximately 13 million trips are made annually on corporate jets and turboprops with costs ranging from $2 per passenger mile to over $30 per passenger mile, depending on aircraft type and passenger loads. Air taxis will provide a new option for $1 to $3 per passenger mile. We anticipate a good market for Very Light Jet sales with market demand by all users to be in the 600-700 aircraft per year range.”
But Velocity, in a separate report, indicated the share of full-fare traffic is constantly diminishing, dropping 11 percent since 1998 to nine percent of major-carrier traffic, further widening the gap between the cost of scheduled service and very light jets. The demand calls for about 2,500 VLJs over the next decade, said Bernstein.
DayJet, which launched its per-seat, on-demand service this month, is focusing its opening volley on the southeast, specifically Florida, promising to bring millions of dollars in new economic activity to Boca Raton, Gainesville, Lakeland, and Pensacola named last year as DayPorts. Tallahassee, which was previously named its first Center of Excellence, is the fifth DayPort. Calling its service the "next major advance in regional business travel," the company, which will operate under Part 135, is seeking partners with regional economic authorities, airports and FBOs that want DayJet as part of their business structure.
“This is a model still to be validated,” said G2’s Merluzeau. “The issue for VLJs is going to be training. The coming avionics, including ADS-B, will be critical components that will take them to the next level in terms of situational awareness. The big question is will they be able to operate safely and ADS-B will be a key enabler for places not equipped with radar capability.” He predicted that more and more avionics systems will be very intuitive and will emphasize anything to do with easing the pilot workload. However, he cautioned that some avionics cost $400,000, an enormous number for a $1.3 million aircraft. Still, to gain the credibility of the rest of the industry and assure high safety levels such avionics may be necessary, if not mandated.
Predicting travel managers will insist on a certain type of aircraft with a good safety record, Merluzeau and Richard Aboulafia, vice president-analysis, The Teal Group, indicated that Embraer and Cessna would have an advantage because of their reputations. Others, however, are unknown quantities which may forestall recommendations from travel managers. “If the Sino Swearingen and Eclipse do succeed, it will be the first in a long time,” concluded Aboulafia. Related Story: Webinar: Coming Aircraft Technologies Will Redesign Landscape