RichardAboulafia.com 

:: May 2007 Letter ::

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Dear Fellow Old School Travelers,

Planning a flight? If you aren’t corporate top brass, very rich, or a guest on any of their business jets, here’s what to expect: You will enter a tube with one or two aisles. Your seating area will measure two by three feet. You will be surrounded by 100-500 other people, many of whom you will come to dislike during a 1-14 hour flight. The plane will take off conventionally from a >6,000 foot runway using public facilities. It will be propelled by burning hydrocarbons in podded engines mounted on the rear fuselage or beneath the wing and will travel at about Mach 0.82. If you don’t have a first or business seat, don’t try to use first or business amenities. As you probably know they are no great prizes anyway.

This practical, safe and inexpensive transport system results from longstanding and generally inviolable laws of economics. The smaller the plane, the more you lose the economies of scale that enable affordable air transport. Faster aircraft were either hyper-elitist (Concorde) or aeronautical dead-ends (Sonic Cruiser). Taking off vertically uses exponentially more fuel. But if you work hard and get rich, private jets are more affordable and widely available than ever.

I offer this reminder to you, the business planner at a manufacturing company; you, the financial investor; you, the aviation fan: If someone tells you about a “whole new way to fly,” RUN! RUN IN THE OPPOSITE DIRECTION AS FAST AS YOU CAN, AS IF YOUR LIFE DEPENDED ON IT! A series of whole new ways to fly (WNWTFs) have recently emerged or re-emerged:

Tiltrotors. This WNWTF first emerged decades ago with the birth of the XV-15 and V-22 programs. The V-22 is finally working out well for the Marines and SOCOM and will help them do their jobs. Unfortunately, this happy outcome means the unwelcome return of nonsense about tiltrotor airliners. When was the last time you patronized your neighborhood helicopter service? Same great convenience, same very high prices.

Seaplanes. New York City transportation officials are looking into seaplanes as a way of relieving congestion in LGA, JFK, and EWR. Point: This is dumb. You could add 300 19-seat seaplane flights a day. The capacity would replace <1% of New York airport departures and would further congest the region’s air space. Counterpoint: Who cares about facts? The only thing cooler than a seaplane is a flying boat. Sad comment: one account implies NYC officials think the biggest seaplane seats 100 passengers (www.nysun.com/article/52668). Must be an FAA STC for a B717 with pontoons.

Air Taxis. I’ve written enough about why this much-hyped WNWTF will be hobbled by low utilization and high prices, and why it will come to resemble the charter business. It’s fun to dream that air taxis will free the masses from airline shackles, but look at the traffic. Assume NASA—the most fervent air taxi proponent agency (far more than the FAA)—is right. Assume 10,000 air taxis by 2020, flying three passengers at 320 miles per hour, times six hours of utilization per day, times 360 days per year. Each of these numbers represents ridiculously optimistic assumptions. But that’s 21 billion Available Seat Miles (ASMs) annually out of a 1.7 trillion ASM system, or 1.2% of 2020 traffic. And those 10,000 little planes will clog the skies and airports for the other 98.8% of traffic.

These WNWTFs (and others) are with us for many reasons. Every gimcrack idea is eagerly embraced as a source of industry growth, congestion reduction, or service improvement. For manufacturers, especially subcontractors, WNWTFs offer a visa-free passage to the magic land of double-digit growth. They sex up a business case, with unwarranted production expectations. They help entrepreneurs entice investors with an unrealistically broad customer base.

Visionaries and futurists embrace WNWTFs because…well…they sound futuristic. Flying from a rooftop in a tiltrotor is way more futuristic than schlepping to an airport and flying in some old RJ, despite the tiltrotor’s 5X cost difference. In The Shock of the Old: Technology and Global History Since 1900, historian David Edgerton defines futurism as the tendency to overrate the impact of dramatic new technologies. The current crop of new ideas has a rich heritage—decades of Popular Mechanics covers with jet packs and family homes sporting two-car garages and a hangar for the auto-gyro. The future has never had much use for sound economics.

Calling something a WNWTF draws cash from national and local governments, who love serving as midwives for half-gestated technology babies. Proclaiming WNWTF status also disguises welfare for the rich. WNWTFs need government money for infrastructure or product development, but they all cater to a very elite market. It’s easier to fleece taxpayers if they are deluded into thinking that a WNWTF might actually benefit them.

Air taxis, for example, have absorbed considerable public cash. For a taste of what’s coming look at the recent failure of Point2Point (cyber-crypt: www.flyp2p.com). It was funded with $2 million in federal and local money including NASA SATS cash. We’ll hear more news like this as air taxi fiscal carnage accelerates. And remember that hyper-optimistic 1.2% air taxi traffic outcome? It’s the richest 1.2% of traffic (or .001%, really). Is there a box I can check on my 1040 form to give more of my tax dollars to this noble cause?

On a positive note, I was recently a guest on an A380 demo flight. It flew beautifully. The interior was very well designed. But it was configured in a remarkably familiar way (see this letter’s first paragraph). Seems the hype about the A380 as a WNWTF (exercise rooms, cafés, casinos, etc.) was just a way of sexing up a business case that badly needed sexing up. Even Richard Branson, an early A380 WNWTF bathwater drinker, has changed his mind. I’m sure everyone involved regrets the misunderstanding.

Clearly, the universe has a way of restoring equilibrium. Tiltrotors will be left to the military. Seaplanes and private jets will be left to rich folks, top executives, and lucky hobbyists. And I’ll see you at Le Bourget—I’ll be flying there in my well-appointed Gulfstream 550 (just ignore the guy who looks like me in the back of an Air France jet). Until then, updated reports this month include the Commercial Jets overview, the ATRs, Hawk, MB.339, C-130, UH-60, SH-60, CH-53, A310, and the Atlantique 2. Have a great month.

Yours, ‘Til My Auto-Gyro Gets Back From The Shop,
Richard Aboulafia

 

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