Personal Travel on 'Microjets' Expected to Grow

SCOTTSDALE, AZ - The promise of inexpensive personal jet flight for commuting and hassle-free short hops to the weekend retreat is closer to reality than you might think.

The prospect has the Federal Aviation Administration (FAA) hustling to create new regulations, experts said Wednesday, and they say the shift will remake the travel industry.

Travel in "very small jets" operating outside traditional commercial airline rules is expected to explode in coming years and is already causing congestion at some small airports.

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Snowbirds migrating to Fort Lauderdale, Florida on personal jets have created a 40 percent increase in traffic at the local airport and congestion that the FAA is seeking to resolve. The problem is expected to spread rapidly to thousands of other small and regional airports when very small jet traffic goes commercial.

Several companies are preparing to offer such services but are waiting for the FAA to make it legal.

Meanwhile, as the cost of very small jets - typically carrying six passengers or less - declines and new financing is poured into novel business models, the airline industry is poised for quick change, several industry leaders said. At the same time, the traditional "legacy carriers" are dealing with tens of billions of dollars in debt.

"Suddenly frequent jet service suddenly seems possible," said Andrew Steinberg, general counsel to the FAA. The promise: "You'll go from one hassle-free airport to another," he said.

Advantages include flexible scheduling and parking spaces right next to the airstrip, proponents say. The expected lack of procedures on both ends at small airports would cut significant time off an overall trip.

The ideas were presented here Wednesday at Flight School 05, the first of what planners say will be an annual meeting of entrepreneurial minds and experts in aviation and commercial space travel. Roughly half the 100 or so attendees - CEOs of small companies and venture capital executives - have pilot's licenses.

Hassle-free alternative?

Microjets, as they are called, won't prove useful unless passengers can get where they want to go more quickly and/or for less cost than with conventional carriers. One idea is to create a system of air taxis, for which cheap flights can be requested on demand.

Anyone who has ever had a less-than-perfect experience at a major airport can grasp the appeal.

"People have demonstrated that they don't like to get screwed at the last minute," said Donald Burr, president and CEO of Pogo Jet, a proposed air taxi service he founded in 2002. Burr's most optimistic outlook has service starting in the Northeast in the fall of 2005.

Ultimately, he expects to service 5,400 small airports and even thousands more very small airstrips, depending on demand.

Pricing would be based on costs plus a small fee. So everyone on a flight would pay the same price, but the price would fluctuate based on whether the flight were full. Air taxis could provide an alternative to cars, too.

"We will steal traffic from cars," Burr said. "Lots and lots."

Much of the success of the new industry is expected to hinge on matching supply and demand in real time and providing inexpensive, reliable service, said Edward Iacobucci, president and CEO of Jetson Systems.

Customers initially will likely be business people who commute daily or must make travel plans short notice. Iacobucci said, but the phenomenon is expected to spread to occasional travelers, too.

Challenge to FAA

There are many regulatory issues the industry must deal with. Airport safety regulations, for example, will challenge the economic models of short-flight companies. The FAA is grappling with what sorts of rules should apply to traditional commercial carriers and the new microjet carriers, Steinberg said.

One way around many regulations is for passengers to be part owners in a small jet. Ownership can be a little as a one-sixteenth share, and even those shares can be subleased. NetJets operates along these lines and has a fleet of more than 500 small jets, more aircraft than Southwest Airlines or US Airways. Among the fractional owners is Warren Buffet, chairman and CEO of Berkshire Hathaway Inc. and one of the world's richest men.

Before the rest of us hop on an air taxi, there are issues the FAA must resolve.

It can be difficult to know who is responsible for flight control, maintenance, and other important issues as many small companies sprout up. And regulations for commercial jet flights don't allow single-pilot operation. All microjets are designed for a lone pilot.

"Some of these lines are becoming fuzzier," Steinberg added. "Things get muddled in a world of shared ownership."

Industry leaders don't agree on which business model might be successful, shared ownership or companies that own and operate their aircraft and profit by selling tickets.

Either way, the FAA will have to make "fundamental changes" to its body of rules and regulations to manage the explosion of small-jet traffic, Steinberg said.

"Technology should drive the regulations, not the reverse," he said.

We are looking at regulation changes that should enable operations" of small jets in the commercial market, said Katherine Perfetti, a flight standards specialist with the FAA.

"We're not just totally reacting to this," Perfetti said. "We've been a part of the process."

Serious entrepreneurs, meanwhile, cautiously welcome FAA regulation for the new industry. They are eager to make sure anyone with a web site and a credit card can't get into the air travel business, said Gavin Stener, CEO of Corporate Clipper.