Wednesday, December 29, 2010

Very Light Jets (VLJs): Hype or real necessity?

Here is what I thought of the (then) new Very Light Jet segment. Unfortunately, it now seems that I was right. Don't you just hate that.
It happens to me more and more. Whenever I am attending a seminar or conference, one of our business partners approaches me and tells me that he heard about the new “Wunderwaffe” of executive air travel: the Very Light Jet or VLJ in short. Imagine, they will say, the aircraft flies as fast as conventional jets at a fraction of the cost! Now, why don’t you (and by you they mean Gulf Executive Aviation) offer a VLJ for our travel missions? Instead of spending a few thousand Dollars for conventional jets we could cover the same distances, at the same speed, and at the same comfort level for a few hundred bucks, right? Well, yes… but also no. Here is why:

A VLJ is per definition a small jet with a maximum take-off mass of under 10,000 lbs (4,540 kgs) and approved for single pilot operations. Fabulous, you will say but what does this mean? Well, it generally means that you will fly fast and at high altitudes with no more than 7 passengers on short routes, say from Bahrain to Jeddah. Further good news is that the aircraft will be able to take-off from airstrips as short as 3,000 ft (900 m). The thing however is, most civil airports in the Middle East are designed for wide-body jets and feature therefore runways of at least 9,000 ft. So, what is the real major benefit of operating a VLJ as opposed to a conventional business jet? Well, remember the second part of the definition of a VLJ: approved for single pilot operations. Believe me, this is exactly what makes your CFO smile all day long!

Current Civil Aviation Authority regulations all over the world stipulate that all commercial passenger flights in a jet (such as you are flying when hiring-in GEA or Gulf Air, for example) must be operated with at least two cockpit crew members. Therefore flying by VLJ means that you actually cut flight crew costs more than in half (since the cabin diameter of a VLJ is comparatively small, you probably won’t see a Flight Attendant onboard a VLJ). In addition, all VLJs are in the process of being designed as we speak. Therefore you can expect the most modern engines and composite materials, plus cockpit lay-outs that make the Airbus 380 look old fashioned. All this reducing further maintenance, and more importantly, fuel costs. You want more good news?

Here it is: VLJ manufacturer Eclipse and its CEO, Vern Raburn, a former Microsoft executive, had a vision of a low cost jet, first announced to be delivered for under $1,000,000.00. Imagine: a proper jet with a price tag of an (expensive) car! You want some bad news? Ok, Cessna estimates its VLJ, the Mustang, to cost almost twice the price. More bad news? Except for small scale deliveries of the Eclipse and the Mustang, the VLJ has not entered the operational market yet. So where does this leave the mighty VLJ?

My personal opinion is that the VLJ will not take-off as proudly as predicted a few years ago by the then potential manufacturers. We already have seen quite a few aircraft manufacturers declare bankruptcy over its VLJ program. Moreover, insurance companies will watch closely when the first VLJs fly. Will the single pilot part be a big concern to them? If yes, the industry will face further problems since no lessor will lease out any uninsured risk. How will the pre-owned aircraft market react to the VLJ? Do the used composite materials last as long as old-fashioned aluminum?

All in all, who will be the potential buyers of the VLJ? Will it be the new to be formed air taxi operators, connecting large airports with small airfields not being served by airlines as per the manufacturers’ vision? I doubt it sincerely. Except for maybe the United States, no country has the infrastructure to support a new operation on such a large scale. Just think of all the small airfields that need to be built right in the middle of the large cities throughout the Middle East. This requires not only a major change in strategic urban planning but also needs to be done at extremely low rates in order to justify the inexpensive ticket costs of the air taxi operators to be.

However, remember when a few years back airlines replaced its propeller driven fleet by regional jets? I am convinced that we will observe something similar in this case as well: you will see at least a number of charter operators replacing its propeller aircraft with the new VLJs. Especially when fuel prices stay at the same level as they currently are. Now obviously this is a completely different topic. Do ask me about fuel prices when you see me the next time at a conference!

1 comment:

  1. Yes, the market really never took off. The economics are just way to far off. I am not saying that it was a stupid idea but the hype created was coming from a few ill-informed hot-shots who saw easy and big bucks in the concept.