INNOBLOG

The Wall Street Journal carried an article on March 1st entitiled "The Next Thing in Jet Travel" that announced the imminent approval of the Eclipse 500 minijet by the FAA. The arrival of the Eclipse 500 represents a major early milestone for the much-discussed minijet industry. These small aircraft, also called very light jets, carry 4-6 passengers at costs per mile that approximate full coach fare or business class fare on commercial jets. They differ from existing small jets in that they require much smaller runways, which will allow them to service thousands of small community airports that are currently too short for jet use.

One of the holy grails of this innovation is a robust air taxi industry, which would allow passengers to use aircraft on short notice and pay only for the flying part of each leg of the trip. In other words, one would not have to pay for a charter aircraft to wait on the tarmac for one's return from a meeting. Travellers could arrange for travel much like arranging for an airport limo--with very short notice and with no complicated scheduling concerns.

One requirement for an air taxi industry is a critical mass of available aircraft so that travellers could be certain that minijets would be available. To achieve this critical mass, the WSJ article suggests that a company called DayJet is employing a strategy associated with disruptive innovation--finding a foothold niche market and them moving your business upmarket as it grows. DayJet, based in Delray Beach, Florida, seems to be trying to establish this foothold by ordering over 300 jets from Eclipse.

While I have no knowledge of DayJet's chosen strategy, they seem to be following a strategy similary to one I learned about a couple of years ago with another company. I once participated in an analysis of a potential air taxi business, and our team concluded that Florida was a great niche market because of its population density, size, business vitality, and multiple cities. We also concluded that a critical mass of 500 jets would be needed for a viable air taxi industry in the state, which could then grow up the eastern US and westward to Texas. These air taxis would appeal to a mixture of current consumers of air travel who are dissatisfied with the time waste associated with commercial travel and nonconsumers who currently drive or telecommute. DayJet appears well on the way of reaching this critical mass; competitors will surely add to the company's planned inventory.

The expected air taxi business would be deeply disruptive to the commercial airline industry and have implications for many other industries (e.g., residential housing, because economical custom air travel may change where people choose to live relative to their workplaces). To be sure, the industry will evolve in unexpected ways. However, the Eclipse 500 might be one of those innovations that future generations will mark as causing a major change one of the important components of contemporary life.