Air taxi chronicles: bad news

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.

Strands include:

  • The intimate connection between DayJet's fortunes and those of Eclipse Aviation, which are in their own intensifying snarl;

  • The simultaneous spread and success of the small-air taxi business in general (eg this), while its most visible champion has been struggling;

  • What conclusions should be drawn from one obvious contrast between DayJet and some other air taxi companies still expanding operations. The latter, of which SATSair is best known, mainly use cheaper, slower, propeller-driven Cirrus airplanes that require only one pilot. DayJet has flown Eclipses, which are faster and more comfortable and offer the perceived safety of a two-pilot crew, but are correspondingly much more expensive to buy and operate. Is this a permanent market condition for air taxis -- propeller planes are the sweet spot economically, while jets are not? I don't know: I am saying the question is interesting.

  • This is related to a question of even greater personal interest to me. Nearly ten years ago, I began reporting the emergence of two aircraft companies with radical new visions of how small aircraft would shape the future of air travel. One of them, Cirrus Design, has gone on to unquestioned market success, producing the world's best-selling single-engine piston plane for many years in a row. Eclipse is ... having its problems. Ten years ago, the industry's best seers, at least the ones I talked with, were not so certain and clear-minded about these differential paths. ("It's always hard to make predictions, especially about the future.") Sorting out what pushed the two companies in such different directions will be interesting too. Eg: Did Eclipse try to make too many technological leaps all at once? Was it a difference in the nature of management and corporate culture? Was the size of Eclipse's bet -- in capital requirements and unit airplane costs -- so large that its margin for error was reduced? Etc.

That's it for now. Sorry for DayJet. There is much to examine, explain, and learn from here.

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James Fallows is a national correspondent for The Atlantic and has written for the magazine since the late 1970s. He has reported extensively from outside the United States and once worked as President Carter's chief speechwriter. His latest book is China Airborne. More

James Fallows is based in Washington as a national correspondent for The Atlantic. He has worked for the magazine for nearly 30 years and in that time has also lived in Seattle, Berkeley, Austin, Tokyo, Kuala Lumpur, Shanghai, and Beijing. He was raised in Redlands, California, received his undergraduate degree in American history and literature from Harvard, and received a graduate degree in economics from Oxford as a Rhodes scholar. In addition to working for The Atlantic, he has spent two years as chief White House speechwriter for Jimmy Carter, two years as the editor of US News & World Report, and six months as a program designer at Microsoft. He is an instrument-rated private pilot. He is also now the chair in U.S. media at the U.S. Studies Centre at the University of Sydney, in Australia.

Fallows has been a finalist for the National Magazine Award five times and has won once; he has also won the American Book Award for nonfiction and a N.Y. Emmy award for the documentary series Doing Business in China. He was the founding chairman of the New America Foundation. His recent books Blind Into Baghdad (2006) and Postcards From Tomorrow Square (2009) are based on his writings for The Atlantic. His latest book is China Airborne. He is married to Deborah Fallows, author of the recent book Dreaming in Chinese. They have two married sons.

Fallows welcomes and frequently quotes from reader mail sent via the "Email" button below. Unless you specify otherwise, we consider any incoming mail available for possible quotation -- but not with the sender's real name unless you explicitly state that it may be used. If you are wondering why Fallows does not use a "Comments" field below his posts, please see previous explanations here and here.


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