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AUGUST 28, 2002 NEWS ANALYSIS Many Are Hailing This Air Taxi Corporate orders are streaming in for Eclipse Aviation's small, cheap jet. Will it do for flying what the PC did for computing?
Eclipse's stake in the annals of flight? It hopes to revolutionize corporate flying by providing the most modern air-taxi service -- with a plane that's supercheap both to make and to fly. The goal: Providing busy execs the ability to hail a flying cab that will whisk them from one place to another, at a fraction of charter-flight prices. INSTANT APPEAL. Judging by the demand so far, Raburn may be on to something. Eclipse clocked 200 orders for its $837,500 plane on May 26, 2000 -- the first day it solicited business -- and the bids haven't stopped since. The latest volume order came three months ago from Aviace, a Swiss startup that wants 112 planes for a network of air-taxi operations around Europe. While Raburn won't divulge the total number of orders in hand, he admits to having "$30 million in deposits" and being sold out through 2007. The Eclipse 500's appeal is easy to understand. Its sticker price is less than 25% of an eight-seat Citation CJ from Cessna Aircraft, probably the closest rival now flying. Moreover, it's a much more fuel-efficient aircraft. Eclipse says the projected operating cost of its plane, which will cruise at 400 mph for up to 1,500 miles, is a miserly 56 cents a mile. That's one fourth the operating cost of a King Air plane and half that of a Baron aircraft, according to the company. Eclipse isn't alone in trying to bring such planes to market. Safire Aircraft in West Palm Beach, Fla., is working on a new six-seat jet that it plans to sell for a little more than $900,000. Other outfits are targeting the air-taxi market with propeller planes costing $1 million to $3 million, including Explorer Aircraft in Jasper, Tex., Farnborough Aviation.com Ltd. in Farnborough, England, and Pilatus Aircraft in Stans, Switzerland. AVOIDING DELAYS. So why the sudden interest in air taxis? They can fly into a lot more airports than today's rent-a-jet charters -- and for a lot less money. Eclipse claims that hailing one of its air taxis for a typical business flight (less than 900 miles and carrying two or three managers) will be competitive with the cost of full-price coach tickets on a regular airline. And the Eclipse 500 will avoid delays and plane changes at major airports post-September 11 because it can land at thousands of small airports where the runways are too short for any other jet plane. One key to the Eclipse 500's performance is the latest marvel from Williams International, an outfit famous in aerospace circles for the little engine that made cruise missiles feasible. For jet engines, the measure of performance isn't horsepower but thrust vs. weight. The new EJ22 engine, roughly the size of a bongo drum and weiging just 85 pounds, puts out 770 pounds of thrust for an incredible thrust-to-weight ratio of more than 8-to-1. That's 150% to 200% better than today's top jets. A jet-powered small plane has long been a cherished dream of Sam Williams, who founded Williams International in 1954. His company actually built such a plane, dubbed the V-Jet. It had twin 600-pound-thrust engines and was flown to the 1997 AirVenture show in Oshkosh, Wis., "in hopes of generating interest on the part of aircraft companies," says Williams. It succeeded -- it inspired the Eclipse 500. QUANTUM LEAP? Eclipse's Raburn first heard about the little engine in 1996. He was prowling for new investments as president of Paul Allen Group, which manages a portfolio for Microsoft co-founder Paul G. Allen. (Two decades earlier, Raburn had closed his San Francisco computer shop to join Allen and Bill Gates as Microsoft's 18th employee.) When Raburn visited Walled Lake, Mich, where Williams is headquartered, Sam Williams initially hoped he might have a backer to help take his V-Jet to market. Allen nixed the idea, but that didn't dampen aviation buff Raburn's enthusiasm. Soon, he and Williams were discussing a partnership. Raburn saw the V-Jet and its innovative engine as the basis for a quantum leap in technology that would do for general aviation what the personal computer had done for information processing. The pair agreed to form Eclipse Aviation in late 1997. If the Eclipse 500 design wins certification from the Federal Aviation Administration, and if the company can produce the plane for less than $850,000, it may vindicate NASA's Small Aircraft Transportation System (SATS), a scheme that envisions thousands of air taxis relieving the congestion at the nation's 31 hub airports. Funded in 2001 to the tune of $69 million over five years, SATS took a blow in March when the National Research Council's Transportation Research Board gave it a scathing evaluation. The TRB report, requested by NASA, recommended that NASA shelve the program and use the remaining funds for "other, more achievable goals." "CAN'T EXIST"? Eclipse's Raburn thinks the TRB report smacks of fuddy-duddy thinking. "It's fundamentally flawed," he asserts. "All the conclusions are based on what is, not what can be. Imagine trying to forecast the PC revolution in 1974," shortly after Intel introduced its first microprocessor but seven years before IBM came up with the personal computer design that would change the world, he says. The TRB, he charges, relied too heavily on experts from the aerospace industry, which is ultraconservative. The industry's mantra is "what doesn't exist, can't exist," Raburn says. "In the technology world, the outlook is totally different: What doesn't exist signals an opportunity to create a market." Some hardheads in the aerospace business, he predicts, "will still be saying, "Naw, it can't be done," even when we have 1,000 planes flying." Will Eclipse Aviation become the IBM of tomorrow's air-travel network or a modern day Spruce Goose? Enough companies have their eyes on the skies to make this innovative company one to watch.  By Otis Port in New York Edited by Patricia O'Connell Get BusinessWeek directly on your desktop with our RSS feeds.  Add BusinessWeek news to your Web site with our headline feed. Click to buy an e-print or reprint of a BusinessWeek or BusinessWeek Online story or video. To subscribe online to BusinessWeek magazine, please click here. Learn more, go to the BusinessWeekOnline home page  | | AUGUST |
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