Air Taxi Association (ATXA) members did not miss a beat last week after DayJet announced the cessation of its operations for lack of funding. Saying they “fully support DayJet customers and communities,” SATSair, ImagineAir, and North American Jet swooped in like circling vultures to grab up the business as DayJet continued to try to figure out what is next.
While DayJet was not talking last week and its fate remains unknown, it’s actions are just the latest blow in a year-long series of punches at the emerging very light jet industry. Last year, many who were trying to start consulting businesses around the new aircraft type, were worried about the public relations, criticizing publications for covering the bad news. However much they may want to boost the industry through rosy analysis, it is clear that this is an industry in its infancy with all the accompanying teething problems.

DayJet Discontinues Operations
The abrupt shutdown of DayJet’s unique, per-seat, on-demand service came the evening of Friday, October 19, even as it was marking its first anniversary. It is the latest aviation victim of the unfolding financial crisis on Wall Street. The world’s first per-seat, on-demand charter service, cited its inability to gain new financing. It had earlier signaled problems in May when it suspended its expansion program. Related Story
The company also cited Eclipse Aviation’s troubles, saying it failed to install missing equipment or functionality or repair agreed technical discrepancies in accordance with the terms of DayJet’s aircraft purchase contract. Related Story
For its part, Eclipse Aviation issued a statement saying it was aware that DayJet eliminated most of its workforce and ceased commercial air taxi operations, but did not address the assertions cited in DayJet’s announcement. However, it did say that DayJet had taken delivery of 28 Eclipse 500s.
“While DayJet was Eclipse's largest customer, Eclipse's business model and success has never relied solely on DayJet,” the troubled manufacturer said. “Eclipse still has hundreds of orders to fill independent of DayJet, and existing customers will be happy and eager to move up in line. DayJet is accredited with starting the air taxi revolution with its affordable per-seat, on-demand jet service. The air taxi market is now a proven market and Eclipse anticipates other companies will look at the market to determine how the needs of the regional executive traveler can be realized.”
Founder Ed Iacabucci stepped down as DayJet president and CEO, but continues to serve as board chair. He is succeeded by John Staten who was named interim CEO with responsibility for managing the affairs of the company during its next phase. Staten served as DayJet CFO and senior vice president of operations for the past six years.

Industry Will Continue to Grow
While the air taxi industry in certainly growing and continues to benefit from the growing hassle factor of airline service, DayJet’s business model promised to return air service to a host of communities that had lost it with the growing mainline and regional airline capacity cuts since 2000. But it was not alone. Certainly, many others are adopting its approach to lowering the cost of personal air transportation to equal business fares. Indeed, it is likely the industry will grow further with the latest round of capacity cuts as travelers discover how hard it is to get where they need to go by commercial airline.
Those seeking to replace DayJet provide on-demand air transportation to all 60 of the affected communities and offer service with over 30 Cirrus SR-22 and Eclipse 500 aircraft, according to ATXA.
“DayJet [shone] a bright light upon the emerging next-generation air taxi industry and it is our duty to help affected passengers and communities,” stated ATXA President Joe Leader. “Immediately after DayJet's operations stopped, our air taxi carriers in the region stepped forward to help. SATSair, ImagineAir, and North American Jet already serve these communities and have committed to increase service to meet passenger needs.”
While referring passengers to its air taxi members, ATXA said communities, businesses, and customers needing air taxi service added to their area should contact the organization. It added that special discount and support will be provided by ATXA member companies that have volunteered to provide special service to these affected communities, businesses, and customers.

A Maverick Company
The DayJet failure is distressing news given the fact it was a new, untried business model, which most predicted would not work. Given its pre-launch press coverage, it was clear that a lot of people were rooting for it to succeed and anxiously awaiting its appearance at their local airport. Even so, the year-plus-long financial crisis means that the carrier’s model remains untested since start-up coincided with the crisis. Ironically, markets were becoming more comfortable with the aviation industry with the drop in fuel with investors seeking airline stock bargains, but with the collapse such optimism died.
At least one observer, who asked that he not be identified since he was working on developing his own air taxi operation, said DayJet’s model was flawed because of incorrect assumptions on how people behave, especially with regards to demand aggregation (night-before-schedule notice). He said that limited the market adoption rate. He also suggested that since the aircraft only held three that it provided only a small difference between renting a seat and the entire aircraft.
“The same wouldn’t be true for jets with higher seating capacity but that probably wouldn’t work so well under their demand aggregation model,” he said. “SATSair has shown the SR22 to be highly capable on the ultra-short-haul routes and the time savings between jets and pistons is minimal on a 150-200nm trip but costs are vastly different. Perhaps the single-engine jet is good when higher speeds are needed but is the E500 really the right platform given the operating costs relative to an SR22 or DA42 even assuming there weren’t the quality and avionics issues?”

For now, it remains to be seen whether the financial meltdown and the losses incurred will lead to more victims like DayJet.