Why Top Techies Take to the Skies


By Robert D. Hof At first glance, the technology business and the aviation industry look galaxies apart. Tech is entrepreneurial, fast-moving, driven by a relentless improvement and cost reduction in the underlying technology of chips and networks. Aviation and aerospace have been dominated by government control, huge aircraft manufacturers, big airlines, and a slow pace of change.

So it may seem surprising that so many tech folks, from Amazon.com (AMZN) Chief Executive Jeff Bezos to software veteran Vern Raburn, are launching space and aviation ventures. Yet the can-do energy they're bringing to the often bureaucratic flight industries suggests enormous changes to come in how businesspeople and ultimately the general public travel by air -- even where they live and work.

"I'm not sure there's a Moore's Law for aviation," says Federal Aviation Administration Chief Counsel Andrew Steinberg, referring to the dictum in the tech industry that chip processing power doubles every 18 months. "[But] the one thing that tells me something big is happening is the presence of entrepreneurs."

FLY ON-DEMAND? Those entrepreneurs, along with other flight enthusiasts, flocked to Scottsdale, Ariz., on Mar. 23 for Flight School. That's a new workshop put on by Esther Dyson, the longtime operator of the PC Forum tech conference, which ran just before Flight School (see BW Online, 3/20/05, "Yahoo Snaps Up Flicker"). The startups are trying new concepts in everything from aircraft and spacecraft designs to the way flights are priced and scheduled.

Taken together, the advances could spur entirely new markets, such as air taxis and research in space, and perhaps even challenge the dominance of both traditional aircraft manufacturers and major airlines. The upshot: Air travel, like computing and communications, could soon become much more pervasive, even running on an on-demand basis.

Former Microsoft (MSFT) exec Raburn's Eclipse Aviation, for instance, is building very light jets, sometimes called microjets, that he says operate at 40% of the cost of today's cheapest business jets. Ed Iacobucci, founder of software maker Citrix Systems (CTXS), has hired mathematicians and programmers at Jetson Systems in Delray Beach (Fla.) to develop an Internet-based flight-planning system for on-demand air travel. Bezos recently chose a site in Texas for his Blue Origin startup that's ultimately aimed at colonizing space.

PC CONNECTION. There's certainly some potent innovation already happening in parts of aviation. The Global Flyer plane that Steve Fossett recently flew around the world was the creation of Burt Rutan's 23-year-old company, Scaled Composites. But the tech crowd has one essential edge over mainstream aviation companies, says Bruce Holmes, director of strategic partnerships, planning, and management at NASA's Langley Research Center in Hampton (Va.): "These guys are comfortable with technology and risk in a way the old industry never was."

What's sparking their enthusiasm? They're dreamers, of course, just like all aviation and space pioneers. But it goes beyond that: The coming revolution in flight has remarkable parallels to the rise of computers and networking. PCs and the Internet shook up the status quo for mainframes, minicomputers, and communications, giving new tools to a much wider audience. Likewise, these upstarts believe they're doing the same thing for aviation and aerospace as they create cheaper airplanes -- and, eventually, space vehicles -- and devise technological advances in air traffic control and passenger demand management.

For one, it may not be too much of a stretch to look at these new aircraft as playing a similar role to the original PCs. Some of the newfangled aircraft producers are using new design technologies and composite materials to produce planes that are much cheaper to build and operate. Rick Adam, founder and CEO of Adam Aircraft Industries in Englewood, Colo., says his jets are modular, so he can more rapidly bring out new models that share up to 70% of the same parts. "We're essentially like the IBM PC of airplanes," he says.

TRAFFIC BLOCK. What's more, the new services being developed to use them may have an impact like that of the Internet. Dyson borrowed an in-vogue phrase, the "long tail," that's being used to describe the success of niche products on sites such as eBay (EBAY) and Amazon. The "long tail" refers to the huge backlog of products that follow the top-sellers at the head. Taken together, they can be even more profitable than the most in-demand offerings. "It's exactly the same paradigm" in aviation today, says Iacobucci. "We think this is like the birth of networking -- a new way of doing things that's an incredible value proposition for businesses."

Iacobucci thinks these new products and services will allow people to make money on the long tail of aviation -- that is, the myriad small trips that either require many hours of driving or cost thousands of dollars to make by air charter. Right now there are few passenger flights between the more than 5,000 local airports around the country because the aircraft, traffic control, and scheduling technologies don't allow economical flights. "We'll steal lots and lots of car traffic," says onetime People Express founder Donald Burr, now CEO of upcoming air taxi service Pogo Jet in Stratford, Conn. "It's all about letting people have something they didn't have before."

There are some huge differences from the tech industry, however, such as regulation and product development times. And they could slow or even put the kibosh on these ambitious plans.

UP, UP, AND AWAY. Raburn notes that building a new aircraft is more like creating a new drug than a new computer. "It takes a long time, and there's heavy regulatory oversight," he says, as well as a need for enormous amounts of capital. Then there's the challenge of upgrading thousands of local airports to handle more traffic, not to mention finding location for launching vehicles into space. "We're at the very early point of this evolution," says Burr.

That goes double for space flight. Carbon Designs, of Bridgeport, W. Va., which is proposing a space elevator for moving payloads into space, says it will take $10 billion and 15 years. And that's if physicist Freeman Dyson, Esther's father and a leader in the early space program Project Orion, is wrong: He thinks space elevators won't work. But as Dyson points out: "Almost always, when old people say something can't work, they're wrong." The new aviation and aerospace upstarts sure hope so. Hof is BusinessWeek's Silicon Valley bureau manager


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