Iacobucci and his colleagues were sufficiently convinced of these advantages to keep raising money and laying plans, even as the air-travel industry reeled after 9/11. By early 2002, a team of 30—many of them from Citrix or other Internet companies—was working in Boca Raton. On Thanksgiving weekend of 2002, their own shock came: Vern Raburn announced that the Eclipse airplane would have to be redesigned because its ultralight new jet engine, adapted from the military’s cruise-missile program, was not passing performance tests.
Eventually this crisis passed, when Pratt & Whitney Canada agreed to create a new engine for Eclipse that was only slightly heavier than the original design. But the delay lasted more than two years. (Eclipse has survived other crises, the gravest of which was a cash-flow emergency that threatened to put the company into bankruptcy late last year. A European consortium called ETIRC put more than $100 million into the company, in exchange for an agreement to open an Eclipse jet factory in Russia.) Eclipse still faces serious financial challenges, but aviation analysts I spoke with said that even if the company went bust, the airplane itself is attractive and proven enough that some other company would likely buy the rights to make and sell the plane.
But the engine problem changed everything for DayJet. By that time, it had agreed to buy as many as 300 Eclipse jets, and it expected to put them into service and start its business in 2004. “Suddenly we had a 27-month ‘insertion’ in the schedule,” John Staten told me. The company couldn’t make its first dollar until it got its first plane, and meanwhile it had a staff to pay. Members of the DayJet team fanned out to inspect small jets then being developed—by Honda, Cessna, Embraer, and others—and decided that it made the most sense to stick with Eclipse and wait. In retrospect, the two-plus years of forced gestation may have been a godsend to the company.
Here we come to the members of the DayJet team I was most surprised to find at its headquarters, and the ones who, according to Ed Iacobucci, are the real secrets to its success. These are the ant farmers and the Russians.
Jim Herriott and Bruce Sawhill, computer scientists in their 40s, are the ant farmers. They have worked together for 10 years—the first five at the Santa Fe Institute in New Mexico and the past five at DayJet. When we met, they had a comedy-team manner, with Herriott playing the straight man, carefully explaining the principles, and Sawhill the mad scientist, exclaiming about the elegance of the underlying math. Their job has been to determine exactly how many people might pay to use an air taxi, and where they would want to go. Their answers have come through ant farming, which could less colorfully be called inductive reasoning.
For instance, to predict how many Floridians would pay to fly from Pensacola to Naples, they start not by gathering gross-travel or population figures but by trying to simulate the decisions that hundreds of thousands of individual travelers will make. Their computer models resemble a much more complex version of an “artificial life” computerized game like SimCity or SimLife—or, to explain the nickname they gave themselves, programs that simulate the paths a colony of ants will take across a floor as they discover and retrieve pieces of food. This process is also known as “agent-based modeling.” The ants, or agents, in DayJet’s model are the 500,000 people per day in the seven southeastern states who take business trips of 100 miles or more. Some 80 percent of these trips are now made by car. Commercial airlines account for most of the rest, with trains, buses, charter flights, etc. making up the remainder. (In the Northeast, commercial airlines represent less of the total, and trains more.)
Herriott and Sawhill have developed a model to simulate the individual decisions that go into every one of these business trips. The model starts with the likelihood that a person in any one city, let’s say Mobile, will want to go to another, say Savannah, on any given weekday (for now, DayJet is a weekday-only service). These predictions are based on average income in each city, business relations, and other factors, and are constantly tuned to reflect real data. “It’s like the pull between two planetary bodies,” Herriott said. “Almost a Newtonian law!” (He was joking.)
The DayJet model factors in all relevant variables that could affect the traveler’s decision—something that is hard enough for a real person in real time. It contains up-to-date listings of all flights offered by all commercial airlines serving the region, and the prices for short-term bookings and seven- or 14-day advance-purchase fares. It has average highway-speed and congestion data for the routes people would drive between any two cities, and real-world travel time from different parts of a city to the nearest airport. It includes lodging and restaurant costs, if a driving trip means an overnight stay, and rental-car and gas rates.
Also, crucially, it tries to place some value on people’s time. Time value obviously varies: being three hours late for a wedding is different from being three hours late for a meeting on a Thursday afternoon. Because its target customers are business travelers earning from $75,000 to several hundred thousand dollars a year, income levels at which the time savings are worth the cost, the model uses salary to approximate the business value of time. (People making even more, it assumes, might use “normal” corporate jets.)
With this information and more plugged in, the ant farmers run the model—over and over and over. While we watched on a big-screen map projection from Herriott’s computer, the whole possible range of trips taken by one typical day’s 500,000 business travelers whizzed by in a few minutes: Miami-Atlanta, Key West–Jacksonville, Savannah-Biloxi. The point was not to predict exactly which trips travelers would take on any particular day but instead to see which patterns of travel emerged and where there might be a market for air taxis. In theory, DayJet could offer service from any airport to any other airport within the plane’s 650-mile nonstop range. But to minimize the number of empty “deadhead” legs its planes might have to fly back from remote locations and to maximize the number of paying flights each plane could make per day, the company planned to start in a concentrated area and then expand as it became sure there was more demand.
For every simulated trip, the computer was comparing all the alternatives—take the whole trip by car, take a train if there was one, drive to the nearest major airport and take Delta or JetBlue—and predicting whether a traveler would choose any of them over a possible flight with DayJet. A counter continuously tallied how many trips would be made using each option. For people taking one of the “trunk routes,” like Atlanta to Miami, the airlines were the obvious choice. But enough people heading from one small place to another created a market DayJet could tap.
“We’re not really going up against the airlines,” Herriott said. “Where there’s good air service, we want to stay out of the way. Our sweet spot is the trip of 300 or 400 miles where the air travel is so complicated or inconvenient that you finally throw up your hands and say, ‘I’ll just drive!’ We can beat driving, especially with time and lodging costs.”
During the years of waiting for Eclipse, the ant farmers ran and refined their models and DayJet refined its idea of where it would start offering service. The analytic process underscored, for instance, the importance of including Tallahassee in the list of cities it would fly to and from. Like all state capitals, Tallahassee generates lots of business travel—and like many others (Sacramento, Springfield, Albany, Salem), it is in an out-of-the-way location with bad and expensive airline connections.
DayJet noticed that a shift in airline policy was helping it. As airlines “upgraded” the equipment they used for small cities—sleek-looking 50-seat regional jets in place of clunky 13-seat turboprops—many of them had to downgrade their service. This shift was bad news for small cities in many ways. For instance, Lakeland, where I went on my DayJet flight, had with federal and state funding built a new $6.8 million terminal in 2002. The investment was based on the assumption that a feeder airline would add Lakeland to its schedule—probably Comair, a Delta subsidiary, which had served Lakeland with small planes in the 1980s. In fact, no airlines came, and the expensive terminal stood empty—until the first Dayjet flight arrived last October. Cities that could keep small turboprops full might generate too little traffic for larger regional jets, but plenty to sustain an air-taxi business.
Herriott and Sawhill emphasized that the market for business travel had a “long tail” pattern, much like book sales on Amazon. A few main trunk routes, say New York–Miami, and the familiar handful of major airports account for most commercial airline traffic, just as a few Harry Potter–style blockbusters outsell anything else. But most business trips are from one obscure destination to another, just as books most people have never heard of together account for most Amazon sales.
By the time DayJet got its first airplanes from Eclipse last year, it had an idea of where it would find its initial market. By March, it was serving 60 cities in the Southeast. Trips had to start, end, or pass through one of 10 “DayPort” cities, as in the familiar airline “hub and spoke” model. The difference is that the company is expanding the number of these “hubs” every month, building toward a network that won’t cover every possible city pair but will cover a lot. By the end of this year, DayJet expects to cover 100 cities in six states, 30 or so of them hubs. Its map of planned expansion, pushing steadily northward from Florida, reminded me of Cold War–era posters about the potential spread of Communist influence.