Guest Editorial - The DayJet Business Model
There’s no way a DayJet customer pays $3,200.00 for a round trip from Boca to Pensacola and then agrees to a 20 min. stop on the way to pick-up a stranger. I honestly believe the market for that type of service, with those conditions, is small.
My opinion is, the DayJet model is doomed to failure. The market is too small, the service area is too small, the number of DayPorts too small and the jet too small. Granted, the service area and number of DayPorts can be expanded, but the plane and Market (at the posted prices) are very limited and fixed. These early limitations will cause the market, and thus the number of DayPorts to remain small and the rapid demise of DayJet.
The premise of an air taxi is convenient point to point transportation. Just like an auto taxi or limo.
Traditional charter attempts to fill this market, but it is very costly due to the “dead leg”, the empty flight to pick up the customer, and the empty flight back to base. Traditional charter operators fly to and from the closest airport to your ultimate destination. Not, to potentially inconvenient ports. DayJet attempts to solve this problem with DayStops, but the rate will be higher that of traditional charter. …I’m very sure there will be a traditional charter market for the Eclipse, but the market will dictate an hourly rate for the E500 that is substantially below the cost to charter a Citation or a multitude of other larger aircraft. ...Less than $1,500 per hour. DayJet can not operate at a profit for $1,500 per hour. The reason? Most charter operators do not own the aircraft they operate. They are not responsible for the maintenance cost, overhead (for the aircraft), carrying cost (cost of capital) and depreciation. These aircraft are generally owned by another entity and are place in charter for multiple reasons including, tax benefits, or just to generate some income to defray cost for the owner. The purpose of owning the jet, is not to generate a profit from charter revenue, but for their own use. The fractional companies also do this to generate additional revenue.
The ticket costs on an airline are relatively cheap, but you must fly large airport to large airport on “their” schedule, not necessarily close to your ultimate destination, on a potentially inconvenient schedule, the travel is not private, and there are security and check in and arrival hassles.
DayJet is trying to bridge the gap between charter and airline. A noble and novel idea. But DayPorts may not be convenient to your destination (similar to airline). The price, in order to fit your schedule, is very costly and it is not private (similar to an airline). The Profitability of DayJet is base on seat occupancy, not hours flown (similar to an airline). So, this type of service comes down to cost per seat/mile. The Eclipse airplane is too small and too expensive per mile for a “seat per mile” type of service. DayJet’s basis for service is DayPort to DayPort, similar to an airline. DayJet is foolish not to use larger aircraft. I’m not talking 737, but at least 8-10 comfortable seats. The per mile cost will go up only 25% – 30%, but potential profit per trip goes up by 100% to 500%. Larger aircraft (more seat capacity) is the only way to get cost/seat mile down, unless you go to small pistons like Cirrus.
There is always a cost/benefit trade-off. But DayJets =
1. Not a private “exclusive” flight.
2. The customer waits for the aircraft, instead of the aircraft waiting for customer.
3. The cost for last minute is greater than private charter.
4. The “cost effective” service is limited to a party of one.
5. The market is limited to people originating at a DayPort city… or it's not cost effective.
6. The destination is limited to those destined for a DayPort city… same reason.
7. No potty… even if its not used, just knowing its there for emergency is reassuring.
8. The sheer tiny size of the airplane will “turn-off” some people.
9. No meaningful room for baggage, presentation items, samples, ect.. and then for 3 passengers?
10. 20 minute stop (unrealistic, more like 45 min ave.)
11. Exclusive charter to where you really wanted to go on DayJet, costs more that traditional charter, in a much smaller jet… and will they wait for you?
12. The aircraft is not “cabin class”… refreshments, hot coffee, catering, meaningful reclining seats, legroom, work table, lav. Airshow map, video, etc..
The only thing DayJet has going for it is the elusive $1 per mile flight….and I’m quite sure they won’t stay in business on those economics.
Eclipse depends on DayJet, or other similar “air-taxi” ventures, in order to produce in volume and be able to sell Twin-Jets for 1.8 million.
The DayJet model will fail and Eclipse will be forced to raise the price of the E500, or never give the investors back the $1 billion already spent, not to mention a return on investment.
Contributed by cj3driver.