This news has been brewing for weeks, but it appears to have reached a critical point. The assets of the ill-fated Eclipse Aviation company, whose rise is described here and here, and demise here and here, may be sold at auction today to a new group of investors doing business as Eclipse Aerospace. The head of the new company, Mason Holland of South Carolina, was a deposit-holder for an Eclipse jet when the company went under. (He also owned and flew a Cirrus propeller airplane, and I know him slightly through the Cirrus pilots' organization.)

The Eclipse jet was to be the backbone of a new small-jet air-taxi network. Operating on what is often known as the "second mouse gets the cheese" principle, Holland appears to be interested in retaining what was valuable about the airplane's design, after the wreck of the original company's finances. More background on the sale here, here, and here. Interviews with Mason Holland here and here. Good luck!

Which follows on this positive update and some earlier sobering news.

1) Another company covering a lot of territory with propeller-driven Cirrus SR-22 airplanes is Midwest Air Taxi, which is based in Iowa and says it serves 450+ airports in the sizeable area below:

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Attentive readers will be familiar with the trail of tears recounted here, involving the dashed hopes of the small-jet maker Eclipse and the pioneering air-taxi company DayJet. Sigh sigh sigh.

But all along, air taxi companies that have flown passengers not in the spiffy new Eclipse jets but rather in also-spiffy Cirrus SR-22 propeller planes have survived and have steadily been expanding their service. For background on the best known of these, SATSair, see this; for info on another called Miwok, see this. For more on the propeller/jet difference in business models, see the second half of this post.

Recently, there's another entrant, which will use the same Cirrus SR-22s to transport passengers on short-haul trips around the SF Bay area. It's called Indigo Flyer, and its service map is here (detailed pricing and route info at its site):



Will it succeed? Lord knows. But the entrepreneur in me, and the aviation enthusiast, and the person who thinks this air-taxi model actually has a future, all wish it the best. (Thanks to Chris Baker, my instrument-rating instructor ten years ago, for the tip.)

It has been coming for a while, and today it came: Chapter 11 bankruptcy for Eclipse Aviation, pioneering maker of the Eclipse 500 Very Light Jet. For more background than you'd want to know, check the posts assembled here.

Gives an additional bittersweet twist to the splash page on the company's site, here, which (as of this instant) still has this message from another era.
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You might say we're dreamers.

Eclipse Aviation was formed with the humble intention of transforming the aviation industry into something better than it was before. You can't do something like that by half measures. That's why we embrace and incorporate innovation, imagination, and boldness in everything we do. There is an intensity and a passion here you just don't find anywhere else. We love what we're doing, and it shows in all we do.

Possible grounds for residual thankfulness? That it's not "abandon all hope" Chapter 7 bankruptcy, as with its poor former client DayJet.

... but its goal, operating plan, and marketing language live on in India!

Check out the site for MyJet, based in Mumbai, and its upcoming "Per Seat, On-Demand" air taxi service in the subcontinent. "Values" rendering from the site:



For background on this whole concept, see this article and this book. For the sad story of DayJet, which has just now filed for Chapter 7 ("no light at the end of the tunnel") bankruptcy, see the long skein of postings here. As for MyJet, I say: Godspeed! Attentation of success! And all other appropriate good wishes.

Time and again I've praised (or eulogized) DayJet, the radically innovative but now out-of-business air taxi company based in Florida. And I've praised VMware, the still-in-business California company that lets you run Windows and Mac software seamlessly side-by-side on a Mac.

Now it turns out that one of VMware's main backers is... preparing to invest in the software from DayJet!

In my Atlantic article on DayJet earlier this year, I emphasized that it was, in its founders' view, a software company that happened to operate airplanes. That is, its real strength lay in the sophisticated algorithms for matching airplanes, passengers, pilots, and destinations. The weakness was the real-world big-ticket cost of the airplanes, which brought the firm down when the credit crisis began.

Paul Maritz, a Microsoft veteran who is now CEO of VMware, is according to this TechFlash report, interested in DayJet Technologies, a spin-off company designed to apply the DayJet systems elsewhere As the TechFlash story said:
 

There are some interesting clues as to why Maritz and others in the technology industry are excited about DayJet.

Georgia Tech professor George Nemhauser, who helped develop DayJet's technology, said via phone that the system could help airlines, trucking firms and other transportation companies plan more-efficient routes between locations. Or, he said, it could be used by government agencies to plan evacuation routes during public emergencies. The original promise of the DayJet airline, he said, was to allow travelers to book flights when they wanted them rather than relying on an airline's set schedule.

"The whole idea is disruption technology," said Nemhauser. "You get a plan for something, and then a disruption occurs -- weather or something else -- and you have to make a new plan very quickly."

What's left for me to dream of, in the convergence department? Maybe news that a craft-beer company is investing in software that will make it easier for me to speak Chinese.

... the innovative, Albuquerque-based small-jet company that appears to be in deep economic distress. Background here.

- An irate perspective from a New Mexico political commentator, here. (Sample: "Eclipse has been on the ropes for years, yet our political and economic establishment kept pumping it up.")

- An apologia pro mananagement sua from Eclipse's now-ousted founder, Vern Raburn, here. (Sample:  "The reason I got fired was simple: I pissed off the investors.") Note: the link above, to the original AINOnline story, is sometimes slow to load. If it doesn't work, a text-only cached version from Google is available here.

- And after the jump, official word from the Eclipse PR department about the whole dicey payroll situation. (Summary: No one got paid on payday, yesterday. They "will receive their pay" by next Tuesday.)

Here endeth the Eclipse watch for now. Thanks to Mary Grady, Jim Terr, David Strip.
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Background: the "air taxi" model, discussed in these posts, this article,  this book, and this website, is showing viability around the world -- especially with companies using relatively inexpensive SR22 propeller planes from Cirrus, rather than faster-but-costlier small jets. Transportation of every kind is under pressure because of worldwide economic collapse and environmental concerns, but in the circumstances air taxis are doing OK.

And the "Very Light Jet" movement, discussed at all the places above and also here and here, has led to the development of several smaller, cheaper jets that are thought to have a commercial future, of which the best known is the Eclipse 500.



But oh, my, the poor Eclipse company that actually came up with these new planes. As chronicled here frequently in the past, it has had management struggles and financial crises and legal disputes that have called its existence into question. The latest discouraging news is here and here and concerns such ominous subjects as not meeting the payroll and employees emptying their desks. (Update: more end-of-days news here.)

The general economic and credit chaos that is felling older, stronger companies in more established industries is obviously doing no favors to these startups. And anyone who has seen the life cycle of, say, the computer business knows that Wang, KayPro, Eagle, Altos, Victor, Osborne, and other once-promising firms went down but that the computer industry itself surged forward. So it may be with the Eclipse company and the transportation systems it helped make possible. But this is another sad chapter in the era's economic contraction.

I have argued for decades that the press pays too much attention to daily stock market movement. Their immediate fluctuations are of interest mainly to day traders (ah, remember when that was a popular pastime). Their longer term connection to real national wealth, welfare, and happiness is imprecise, to put it mildly. This is especially so in the volatile and panicky mood of the moment.

Obviously my effort to get the daily market reports pushed to the inside pages is a doomed crusade. But in the short run, I wish that, instead of the DJIA / S&P 500 / NASDAQ etc, we had some comparably precise seeming, attention-getting, publicized* measure of credit availability. From all evidence, that is the real emergency driving real destruction of real companies creating real products and about to eliminate real jobs.

While waiting to see what President Bush (ah, remember him!) might have to say on the topic, anecdotage that is getting my attention:

Three weeks ago, I mentioned that DayJet, the pioneering air-taxi company, was shutting down not (it claimed) because of overt business problems but because of the impossibility of getting short-term finance. At the time, the credit squeeze might have seemed an excuse for the inevitable diceyness of the air travel business.

But just in the last few days, I've heard separately from three friends who run objectively "viable" businesses that they are on the verge of closing permanently, or laying off much of their staff, because they can't get short-term working capital. One said he was on the verge of having to close a manufacturing facility in the Midwest that, as he put it, "realistically will never open again." And this is from a group of friends that is heavy on writers, political people, academics, etc rather than a lot of business owners. I have never heard stories like this before. When I was living in northern California during the tech crash early this decade, the story was about the relatively slow deflation of (mostly) unrealistic plans rather than the widespread destruction of enterprises with a future.

My minor point: mainly because they're so precise and fast-moving, financial-market measures crowd out attention from what we really need to worry about, the imminent destruction of businesses and jobs that "should" survive.

My major point: the United States is near a moment of fundamental political choice. To have the discussion distracted by -- well, it would be nice to be even-handed about this, but the truth is that the distraction has been 99% from the McCain side, with the ongoing crap about the Weathermen in the 1960s -- is suicidal. A few weeks ago Senator McCain "suspended" his campaign because of what now seems a mild early phase of the financial crisis. Maybe he and Barack Obama could agree over the weekend to suspend discussion of any topic other than avoiding real economic devastation for the time being, at a minimum until their debate next week on economics.

Now waiting to hear Bush.
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* The LIBOR, the London Interbank Offer Rate, is one well known proxy; my point is that the DJIA gets 100 times the attention but is not 100 times as important right now.

From the Albuquerque Journal, this is what it looks like when an American small-jet company (Eclipse) prepares to open a production plant in Russia:
 

Maybe this is what we've been warned against? Thanks to David Strip.

Update: To clarify matters for several readers who wonder whether I'm alarmed about a Russkie takeover of America's strategically-vital air taxi industry: this whole post is in the "just a little joke" category. It is meant to be a joke concerning Sarah Palin's "Putin rears his head" construct and a joke about my own small jet/air taxi emphasis.

Now if only I could find a photo of Putin boiling a frog while he looks at a Cirrus or Eclipse airplane -- with a Windows Vista computer paralyzed by the Blue Screen of Death sitting in the background.

And, just to round out the joke, here is the standard "Putin Rears His Head" image widely circulating on The Internets:

Over the months, starting with this article, I have chronicled the ambitions and operations of the most highly publicized of the new air taxi companies, DayJet. Late last year, it began service in Florida and rapidly expanded to nearby southeastern states. This past May, it laid off some pilots and scaled back flights, saying that the worldwide credit freeze kept it from getting the working capital it needed to expand its network. Two months later, in July, it was expanding again, taking passengers to more than 60 cities.  (General air-taxi background here and more broadly here.)

Yesterday, DayJet announced that it was flat-out suspending operations, grounding all but one of its Eclipse EA-500 jets and laying off virtually its employees. 

The stated reason was the intensifying credit crisis. As the founder and CEO Ed Iacobucci put it in the company's press release:

"Twelve months ago our team launched a new regional transportation model. During the past year, we have demonstrated, beyond a reasonable doubt, that customers will sign-up, purchase, and become frequent users of this new service - the DayJet 'Per-Seat, On-Demand' model works. It is unfortunate that these developments have come at the same time our nation has fallen into the most serious capital crisis of our lifetime. Regrettably, without access to growth capital, we have no choice but to discontinue operations." 

To me that is plausible as far as it goes. My posting today, hammered out during momentary access to The Internets, is explicitly a "to be continued" starter entry, because there are so many rich themes worth further exploration. I am already receiving leads about and will pursue them soon.

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1. Miwok: As mentioned recently, yet another air taxi company has started up. This one, Miwok Airways, is using small, posh Cirrus SR22 propeller-driven airplanes and serving Southern California roughly between San Diego in the south, Oxnard in the northwest, and Palm Springs in the east.

The Air Taxi Law blog -- yes, there is such a thing, a sign in itself -- has more interesting info about the thinking behind Miwok. It also includes a service area map and this comment about its strategy:

Miwok's business plan is making several interesting assumption. First, one assumption is that people will use an air taxi for much shorter trips. While Miwok has entered a partnership with Enterprise Rental Car, will the added factor of a rental car (even with a premium no wait service) or a taxi at the destination outweigh the pain factor in just driving your own car for such a short trip? Second, another assumption is that the passenger is willing to trade low fares for a shared airplane although Miwok will price the trip higher if no one else joins your trip. Sharing an Eclipse is one thing. Sharing the back seats of a Cirrus is a little more intimate, but still much more comfortable and more room than a center seat on an airline coach class flight!

Also, I see that AVWeb has just put up an interview with Miwok's founder, here.

2. SATSair: This note from an employee of probably the best known air-taxi service that uses Cirrus airplanes:

I read your original article about Air Taxis years ago [2001] while I was a UPS driver.
Now I am a pilot at Satsair. They still have a way to go but it is a brilliant plan almost like when fedex came out with the overnight letter. Everyone needs the service, sometime they just did not know it, same way with air taxi.

This faith in the "ahah!" potential of the small-airplane taxi model is what motivates people trying to get these companies going.  My thinking is: if times get tough enough in the print journalism business, like the ex-UPS driver I can consider other career options...*
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*Note: this is a little joke, based on my having flown a Cirrus for many years. And things are actually great in this part of the print journalism business!
 

For years and years now -- nine years, to be precise, since this 1999 article in the NY Times magazine and my subsequent Atlantic article and book Free Flight -- I've been arguing that the mounting hassles of airline travel, and the emergence of radically cheaper, safe small planes, would make "air taxis" increasingly popular.*

DayJet, the best-funded and most widely-known of these services -- plus the one I have found most interesting --  ran into setbacks this summer during the credit and fuel-price crunch, but it now is expanding again. SATSair, which uses new, small Cirrus SR22 propeller airplanes for routes on the East Coast, has seen a significant rise in business this year.

Now comes Miwok Airlines, run by a software entrepreneur and Israeli AF air traffic controller named Gad Barnea, which will provide short-haul service using Cirrus airplanes in and around the LA basin. LA Times article on Miwok here; analysis by my friend Chet Richards here. The company plans to serve 40 small airports from roughly Oxnard to San Diego. According to a CaltTech professor quoted in the LAT, "It's not competition to the airlines but a competitor to driving."

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After the jump, text of a press release just out from Eclipse Aviation, timed for the mammoth EAA Oshkosh AirVenture show,  announcing that the company has received a new infusion of capital -- and that Vern Raburn, whose role in founding the company I described in Free Flight and whose airplanes I described in this recent Atlantic article, is out as CEO.

Rumors of something like this have been brewing for a long time. Good for aviation, bad for aviation, good or bad for Eclipse, I don't know and am not in a position to find out at the moment. But here is the press release, FYI. Good wishes to Vern, good wishes to the company, let's see where this leads.

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Two months ago, the DayJet air-taxi company of Boca Raton, Florida, which I described in this Atlantic article, announced layoffs and a slowing of its expansion plans.

Today DayJet announced that it was expanding again -- very substantially, adding service to 15 cities in the Southeast, for a total of more than 60. Many of them had recently lost their normal airline service, as airlines (which have generally not raised prices as fast as their fuel prices have increased and therefore lose money every time they fly) have cut back. This business model has a future, I contend -- including companies that use not jets but deluxe propeller planes from Cirrus, like SATSAir.

Today's NYT story on DayJet and other new air taxi companies makes the important point that what has slowed them at the moment is not (necessarily) a flaw in their own business model but the general collapse of the U.S. credit market. Joe Sharkey of the NYT says of Ed Iacobucci, CEO of DayJet:

Just as his company, DayJet, had proved that there was a business in using small jets for short-haul, on-demand service and was poised to expand its market, the credit market froze.... "All of the metrics are wonderful," [Iacobucci] said. "We're getting repeat buys. We're getting people paying at the price points we want. But we haven't been able to raise the capital.

In case it's not obvious, companies like DayJet need to expand to succeed because of the same network-efficiencies principles that determine the value of cell phone systems, social-networking sites, companies like FedEx and eBay, and modern networks in general. The more people who are already connected, the more attractive it becomes for each new member to join. Thus the familiar Metcalfe's Law, from Bob Metcalfe: the value of a network is proportional to the square of the users it connects. For an air taxi company, this means: the more cities it can fly to (that is, the more "nodes" in its nework), the more attractive it becomes to new customers and the more efficiently it runs (because fewer wasted return trips and "deadheads.") That is why the DayJet plan called for adding new cities every month. And this is why, according to the DayJet officials and others, their business plan would have supported continued expansion through this year and beyond -- in "normal" credit circumstances. Their plans had allowed for oil at well over $100 a barrel -- but not for an inability to get working capital at all. Where, when, and whether small-jet taxi services will become successful is impossible to say. But it's worth noting, as this Times story does, that the impediment to date has not been the airplanes or the cost structure or customer demand but rather the current credit freeze, and whoever you want to blame for that.

After the jump, via general-aviation news central here at its temporary HQ in Shaanxi province, China, another perspective on the DayJet situation. (Original Atlantic article here; recent news updates here and here.) This is from Bruce Holmes, a prominent figure in my story (and in my 2001 book Free Flight, about the innovations that gave rise to Day Jet, SATSair, and similar companies.). He presents the "slowdown in growth is good for long-term success" outlook. Several other interesting items have arrived, which I'll add after I check with the senders to make sure they're meant for "publication."

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The excellent industry newsletter AVweb has just reported that DayJet, subject of this story in the current Atlantic, is scaling back expansion plans and laying off (an undisclosed number of) employees. Here is the story from AVweb:

Start-up air taxi operator Dayjet has announced it will "scale back" its immediate growth plans and lay off employees in all areas of its operations. In an email release today, company founder and CEO Ed Iacobucci did not detail the numbers of people let go. Iacobucci blamed weak capital markets and not the company's early performance for the decision. He said expanding the company to the point of profitability would require a $40 million capital infusion and he apparently couldn't find that money. "I won't dwell on this point, but suffice it to say that given the current state of the U.S. capital markets, the timing of our planned financing could not have been worse," he said.

Iacobucci said the "proof-of-concept phase" the company is now in has proved the market is there for the small-jet people mover system he envisioned but it has to grow from its current fleet of 28 aircraft serving 11 "Dayports" to as many as 50 aircraft branching out from up to 30 hubs to be profitable and that's why it needed the $40 million. While DayJet seems confident that it will eventually find the money and markets it needs, the larger question might be what the delay in doing so will do to Eclipse Aviation. DayJet is reported to be Eclipse's largest customer with orders for 1,400 of the estimated 2,500 aircraft on Eclipse's order book. Calls requesting comment from Eclipse were not immediately returned.

When I was at the DayJet headquarters three and a half months ago, the company was hiring like crazy and talking about its month-by-month expansion plans in cities served, passengers carried, and aircraft in the fleet. At the time it had five (I think) "DayPort" centers -- bases from which flights go to a variety of smaller cities. Apparently it has now grown to 11 DayPort centers serving 60-plus cities. The plan that was laid out to me was to get to 30 DayPorts serving 100-plus cities by the end of the year. Whether this is a "growth slowdown" or an actual cutback, and what it portends, I obviously don't know. For now just passing on the news.

My article on DayJet in the current Atlantic is about an air taxi service that uses new, efficient, relatively cheap small jets. For several years, other air taxi companies have opened up using new, efficient, and relatively fast and comfortable small propeller planes, notably the four-seat Cirrus SR-22. I've paid particular attention to SATSAir, which like DayJet is based in the Southeast. This week it announced that it had flown 16,000 such Cirrus trips in 2007, a 60% increase over the year before. Its press release made a point similar to what I heard at DayJet:

Traditionally, the use of the air cab service has been a remedy for driving trips of 2-5 hours, not a replacement for other forms of air travel. However, 2007 saw a shift with a significant number of new SATSair customers using the point-to-point air cab operation as a solution to their hub-and-spoke airline frustrations and woes, in fact decreasing the door to door travel times.

Several economists and aviation experts have written me to say that, in principle, the air taxi model just can't work in the long run. Too expensive; market too small; and so on. Could be. I'm just reporting that at several companies it's working now.

As mentioned two days ago, the DayJet company of Florida has just carried its first paying passenger on a small-jet "air taxi" trip. The trip was from Boca Raton to Tallahassee.

Dan Hobby, of Coconut Creek, Fl., writes to point out an implication that probably was obvious to those who have more Florida reference points in the brain than I do:

The DayJet from Boca to Tallahassee may be even more viable once the Florida Legislature convenes next year.

During session the direct flights are usually booked up, and one is often forced to fly to Tallahassee through Orlando or Tampa, adding additional time to the flight.

While legislators may be hesitant to be seen taking a DayJet flight, I suspect many lobbyists will make it their first choice.

The "for lobbyists only" image is one the air taxi business would presumably like to avoid -- their goal is to make the fares economically competitive, not Corporate Excess Lite. But the basic point is exactly right: Tallahassee, like Sacramento (an example that springs more readily to my mind) is a place a lot of people have to get to during certain periods, and where normal connections are not so convenient.

I'm still curious about what DayJet will charge in the long run, though presumably this first passenger knows.