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Will Air Taxi Service Really Fly?
Will Air Taxi Service Really Fly?

DayJet and others in the nascent air-taxi business may well be the savior for small regional airports.

Since the airline industry deregulated after 1977, the number of regional airports in the United States with commercial service has dwindled by one-third from 643 to 434, the Washington-based Velocity Group said.

If air taxis have a chance to succeed, it´s in the Southeast, said Richard Aboulafia, an analyst for Teal Group in Fairfax, Va. This region of the country has its share of rich people as well as spread-out geography and good regional airports.

Guy Kemmerly, a NASA manager who has studied the trend, said a NASA report concludes that 20 percent of the nation´s air traffic will come from very light jets, like the ones used by DayJet, by the year 2025.

But they will primarily keep to the underserved "gaps in the air space." "The large airports are very congested areas and the small airports, because they are not fully utilized, offer an opportunity to relieve some of that stress," Kemmerly said.

The chief executive of PBG Homes in North Miami Beach develops small to mid-sized housing communities in Central Florida. With no easy way to get from Point A to Point B, he frequently drives up and down Florida´s Turnpike to look at property, start new projects or monitor the ones under construction.

"It´s three hours´ drive each way. I´m usually too tired to drive back," Gross said. That´s why Gross is ready to hail an air taxi. He is among about 700 business travelers who have signed on as potential commuters on DayJet, a Delray Beach-based air taxi service set to launch this month in Boca Raton and four other Florida cities.

Gross anted up $ 250 to get in on DayJet´s service because it will improve his travel time to an hour and 20 minutes. But critics question whether there are enough Jarret Grosses out there for DayJet to survive.

"Somebody has too much money for regular airline service or to drive. But he hasn´t made the leap to (expensive) charter service. He´s somewhere in this netherworld?" said Richard Aboulafia, an aviation analyst with the Teal Group in Fairfax, Va. "That doesn´t sound like much of a market," he said.

Even so, that´s exactly the market Ed Iacobucci envisions for DayJet. The computer software guru of IBM and Citrix Systems fame is taking a novel, and some say risky, approach to solving the problem of the nation´s diminishing service at regional airports. Iacobucci´s strategy is based on math, science and plenty of money.

While at Citrix in Fort Lauderdale, he bought a $ 9 million Lear Jet to make better use of his time. After leaving what is now a $ 1 billion global software outfit after a run-in with directors, he and wife Nancy began to charter it. Later, they added three jets.

It didn´t take long for Iacobucci to notice how inefficient a charter service is. A businessman rents the entire plane for the day. Often it sits at the airport more than it´s in the air. And sometimes, the aircraft will return to its home base on a "deadhead" flight - without any passengers at all.

Then Iacobucci heard Vern Raburn, another former computer wizard who was one of Microsoft´s first employees, speak at an aviation conference in 2001. Raborn founded Eclipse Aviation in Albuquerque, N.M., to design and produce a new type of aircraft.

Known as the very light jet, its light frame allows it to fly almost 1,300 miles on one 249-gallon tank of gas, and it sells for the vastly more affordable price of $ 1.5 million. "He wanted to build the Model T of jets, and I thought that was the right approach," Iacobucci said.

In his younger days as a programmer at IBM, Iacobucci worked with Bill Gates on the first generation of the PC operating software. In founding DayJet - then called Jetson Systems - in 2002, Iacobucci is attempting to break into a business where even seasoned veterans struggle to turn a profit.

To pinpoint the best regional markets, he hired two theorists in complexity science from the Santa Fe Institute in New Mexico. Their specialty is the study of systems such as stock markets, forest ecosystems, hospitals and ant farms, and how behavior shapes them.

They used travel patterns, airport schedules, income data and focus-group surveys to create a psycho-demographic database, and computer simulation to determine the markets where travelers would most likely switch from driving to flying.

The simulation helped Iacobucci´s crew choose which markets to serve. DayJet will start by flying between Boca Raton, Gainesville, Tallahassee, Pensacola and Lakeland, which Iacobucci calls "DayPorts." He has contracted with fixed-base operators at each airport for use of their space for DayJet.

At the Boca Raton Airport, DayJet occupies a small corner of the Avitat terminal. A DayJet banner is tacked to the back wall. Posters of DayJet´s aircraft and a mock-up of its future ticket counter with computer stations for passengers to check weather, news and their flight information sit where DayJet´s customers will check in.

After deciding on DayJet´s destinations, Iacobucci brought in two mathematicians to create an algorithm that would map the most efficient way to fulfill the needs of DayJet´s passengers while still making money. The company utilizes 30 computer processors and 40 to 50 servers for routing and problem-solving.

"We have to invent a trip, but we also have to fit that trip in with all the other trips we´re making," Iacobucci said.

DayJet´s pricing is based on an on-demand, per-seat model. Though customers must pay a $ 250 annual fee to subscribe to the service, they also must pay for a seat on the plane. To schedule a flight, they give DayJet a window for travel. That´s when DayJet´s computer program starts to churn, evaluating the time to carry each passenger aboard and how much to charge them.

The larger the travel window, the cheaper the flight. For example, a flight from Boca Raton to Gainesville will cost between $ 380 and $ 960, depending on how much time DayJet is given to fly there.

The company has ordered 310 jets from Eclipse. It has six so far, and will need eight to 10 for launch. Iacobucci says DayJet needs 30 to make a profit. So far, he has 150 employees, including 25 pilots.

The Eclipse 500 has only three sky-blue leather seats available for passengers. DayJet plans to confine its trips to 300 to 600 miles, so there´s no toilet. DayJet´s ability to make a profit depends on whether it can fill all its seats. "I lose a little money with just one filled, make a little money with two and a lot more money with three," Iacobucci said.

DayJet had initially expected to start in mid-2006. But because of production and other delays at Eclipse, DayJet´s own operations schedule has slipped. Eclipse spokesman Andrew Bloom said the company will meet DayJet´s launch plans this month: "We´re on track."

If DayJet makes it off the ground by the end of this month, it has enough cash to operate through the end of the year with $ 68 million in investment capital that Iacobucci has raised since DayJet´s inception.

Dean Rotchin, chief executive of Earthjet of West Palm Beach, another air-taxi service that has yet to fly but will use a slightly larger jet, questions whether DayJet can turn a profit with so few passengers. "Passengers who are normally high-paying like to get on a plane that has some room," he said.

R

oger Cohen, president of the Regional Airlines Association in Washington, said members of his group, such as Comair and American Eagle and Gulfstream International, already are serving small and mid-sized cities with service. Increased traffic from air taxis will only cause more engine noise.

"It´s a concept that has yet to demonstrate that it can be economically viable," Cohen said. Officials like John DuBose don´t question whether there´s a market or worry about the noise. The director of Lakeland Linder Regional Airport hopes DayJet will bring more air traffic to the city. "It will bring back a presence to the airfield that hasn´t been here since commercial service went away in the mid-1980s," DuBose said.

Ultimately, DayJet´s success may depend on whether it can create the momentum necessary to change a travel culture grounded in large commercial airliners, pricey charters and short-haul puddle jumpers.

If you ask Richard Paul-Hus, part-owner of Hypower Inc. in Fort Lauderdale, he´ll tell you it´s an easy switch from either ill-timed commercial service or driving. He remembers a recent flight to Tallahassee, followed by drives to meetings in Panama City and Jacksonville. It cost him two overnight stays.

"This is going to work out cheaper. But even if it´s a little more expensive, it may still be a better value when you look at your time," Paul-Hus said.


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