Press on Regardless
FlightCenter reminds us of how DayJet costs changed but the business plan remained steady on course.
We've (the blog) talked a lot about the performance guarantees made by Eclipse to its customers.
As a number of folks have pointed out, Ed should have been able to find any number of other aircraft with the performance numbers required to start an air taxi business.
That's true except for the amazing direct operating costs originally promised for the Eclipse 500.
The promise that convinced Ed to launch his air taxi busines with Eclipse, was that the Eclipse 500 would have a direct operating cost of 56 cents per mile. ($204.52 DOC per hour)
Ed's initial air taxi model and his customer demand projections were based on the assumption that the Eclipse 500 would achieve that direct operating cost and based on that cost, DayJet (Jetson) could very profitably sell seats at between $1 and $2 a mile.
At the time, the IRS was allowing 34 1/2 cents a mile for automobile mileage deductions.
If Ed could profitably deliver a flight in an jet aircraft to his customers for 3x the price of driving their own car, the problem was going to be getting enough aircraft, not getting enough customers.
And that is why Jetson (now DayJet) booked 715 orders and 715 options for the Eclipse 500.
Then came the decision to switch from Williams to Pratt. Direct operating costs were raised to 69 cents per mile ($262.61 DOC per hour) in January 2003 and have been rising ever since.
According to the Eclipse website, the current DOC is $424.75 per hour or $1.28 per mile.
That's 2.3x the original promise of 56 cents per mile.