What is Air Taxi?

The term air charter is a phrase that refers to the renting of an entire aircraft as opposed to individual aircraft seats. While the airlines specialize in selling transportation by the seat, air charter companies focus on small groups for specialized itineraries, urgent or time-sensitive freight or cargo, air ambulance and any other form of ad hoc air transportation.

Generally speaking, air charter is also known as air taxi, executive charter, jet charter and more broadly as a part of general aviation. In the United States air charter and air taxi operations are governed by Part 135 of the Federal Aviation Regulations, unlike the larger scheduled airlines, which are governed by more stringent standards of Part 121 of the FARs, which are regulations designed for scheduled air carriers.

It is believed that over 70% of the private air charter in the world is within the United States, the largest market for private aviation globally.

History

Aircraft charter can trace its roots back to the dawn of civil aviation. The true growth, however, or corporate aviation and related air taxi, air charter suppliers, boomed following the close of World War II. With excess / surplus aircraft (lower start up costs) both corporations and stand alone air charter companies entered the business of dedicated charter flights for executives, high end travelers, special missions (such as organ donor flights, critical auto parts freight, etc.), sports teams, entertainers, etc.

Technology and business structure

The 1960s saw the arrival of the first small jets, such as the Learjet. The Learjet was adopted by some of the first jet air charter operators, such as Hop-A-Jet and Clay Lacy. Both companies still exist today as larger charter management firms. Charter management became popular at the dawn of the private jet age as a way for companies to own aircraft "off their books" - namely away from the prying eyes of shareholders. Local entrepreneurs realized that by managing the aircraft that belonged to another entity (one that could afford to buy the multi-million dollar aircraft) they could help offset the cost of ownership through rental income and aggregate owner costs for insurance, fuel, maintenance, etc. Today, this type of aircraft ownership arrangement forms more than 75% of the on-demand air charter industry for the United States, which encompasses about 70% of the air charter activity in the world.

In 2004, the FAA began the process to re-regulate the Part 135 industry, mainly due to the widespread problems created by the tension between aircraft owners and management companies. The FAA felt that air carriers (the air charter companies) had in some cases begun to lose operational control. The term "operational control" indicates that an air charter company can know where and when its aircraft are at all times and dictate their movement. The complications caused by these owner relationships and historically minimal FAA oversight was fertile ground for the air taxi revolution.

Growth factors

Beginning in the late 1990s the air charter / air taxi interest moved into mainstream media and discussion with the growth and advent of several key factors:

• Very light jets or VLJs popularized the concept of small affordable jets that would bring the capital carrying cost of aircraft down enough so that many more could be sold and operated. The very fist VLJs have just been rolled out of the factory. Eclipse Aviation is perhaps one of the most well known new aircraft brands, although other companies including Adam Aircraft, Cessna, Honda, and Embraer have designed or built VLJ's of their own. While the air taxi debate is concerned with whether these aircraft will actually contribute to change, the mere discussion, media coverage and excitement over new technology is bringing more and more attention to the concept of ad hoc air transportation. Even with all the media attention the VLJ might be a total flop due ot its hight cost of sale and inefficacity of transporting clients
• Internet Communication: Because air charter was never part of the major GDS or travel distribution systems, it could not reach wider audiences. With the advent of the Internet, distribution of information regarding the availability of aircraft, placement, pricing etc., became more available to the increased broker and buyer community.
• Problems: Growing dissatisfaction with the scheduled airlines over security and congestion related delays. While not all airline passengers could afford alternatives, the upper echelons of airline passengers sought ways to stop flying commercially and started to explore corporate aviation, fractional, jet cards or air charter.
• Alternatives: Fractional ownership programs popularized the notion of private aircraft use and ownership. Fractional aircraft ownerships growth led to the advent of a distinct set of regulations in the United States designed specifically to regulate fractionally owned aircraft companies. These new regulations are spelled out clearly in Part 91 Subpart K and bring fractional aircraft operations into line with existing air charter regulations, making fractional ownership into simply another flavor of ad hoc air transportation.

Aircraft manufacturers, such as Eclipse Aviation and Adam Aircraft Industries, maintain that the construction of cheaper, smaller and faster jets will enable inexpensive point-to-point private aviation, creating a new industry. Others maintain that these new aircraft will lower the barriers to ownership enabling more wealthy individuals to own jet aircraft, but will not result in their wide adoption for commercial applications. Critics [1] [2] argue that basic economics, demographics, industry inertia and operational constraints will automatically limit the birth of an air taxi industry.

Recent developments

Due to the synergies of a number of technological advancements, some aviation professionals foresee the middle class traveling easily and with much less expense than is currently possible, using VLJs (very light jets) and other types of comparatively inexpensive aircraft. New technologies in engine design, airframe manufacturing methods, computer aided design and avionics as well as ATC upgrades, many say, will come together to drastically reduce cost while increasing efficiency, comfort and safety. These aircraft (such as the Eclipse 500) are said easier to fly and much cheaper to produce than current production jets. 5,400 small airports across the United States make point-to-point air travel on smaller jets quicker for travelers than the airline hub and spoke system. Next generation avionics and systems may also make these small airports accessible even in poor weather conditions.

RTI International, a nonprofit research organization, has developed a modeling and simulation tool which allows operators (or potential investors) the opportunity to craft a living business plan to gauge the potential of any prospective air taxi operation. Developed to answer questions about the economic and operational feasibility of the air-taxi market/business case during the SATS program, it has now been adopted in Europe and the US by a broad user base desiring to plan and optimize operations.

Skepticism of change

Despite the substantial investments by firms such as DayJet, other aviation professionals remain skeptical on whether we can expect this mode of travel to flourish due to the decreased cost of personal air travel. The primary obstacles being that aircraft utilization is the largest limiter in reducing costs of operation (fixed overhead) not necessarily advancements in technology.

The most notable evidence / example of this problem is the fact that direct operating costs of VLJs are not substantially lower than existing turbofan and turboprop technology that can carry larger loads, greater distances, and in some cases for a smaller initial investment.

Publications

• Evaluating the Efficiency of a Small Aircraft Transportation System Network Using Planning and Simulation Models (2006)
• Nationwide Impacts of Very Light Jet Traffic in the Future Next Generation Air Transportation System (NGATS) (2006)
• A Transportation Systems Analysis Model (TSAM) to study the impact of the Small Aircraft Transportation System (SATS) (2005)
• An Integrated Model To Study The Small Aircraft Transportation System (SATS) (2003)

References

• Your Air Taxi Is Almost Ready A business week article on the advent of air taxi using today's and tomorrow's aircraft.
• Air Taxi—Myth or New Market Niche? An article outlining different perspectives within the industry.
• Private jets for non-gazillionaires. An article about the changing landscape of air taxi and air charter.

External links

• The National Air Transportation Association
• FAA Regulations (FARs)
• BBC podcast on air taxis
• FAQs Frequently asked questions about air charter.
• Transportation Systems Analysis Model - TSAM is a nationwide transportation planning model to forecast air taxi demand in the United States.